Insignia Financial : Appendix 4D

Appendix 4D

Rule 4.2A.3

Insignia Financial Ltd - Appendix 4D for the six months ended 31 December 2021

APPENDIX 4D

For personal use only

Interim Financial Report

Insignia Financial Ltd (previously IOOF Holdings Ltd)

ABN 49 100 103 722
1. Reporting period	31 December 2021
Previous corresponding period	31 December 2020
2. Results for announcement to the market
		% change from
	$'m	prior year
Revenue from ordinary shareholder activities1	1,145.3	up 73%
Profit from ordinary activities after tax attributable to owners of the Company	36.3	down 33%
Underlying Net Profit After Tax (UNPAT)2	117.9	up 79%
		Franked amount
	Amount per	per share
	share (cents)	(cents)
Final dividend for the year ended 30 June 2021
Paid: 22 September 2021	9.5	9.5
Special dividend for the year ended 30 June 2021
Paid: 22 September 2021	2.0	2.0
Interim dividend for the year ending 30 June 2022
Record date: 11 March 2022	11.8	11.8
Payment date: 1 April 2022

1Revenue from shareholder activities excludes those revenues attributable to the activities of the consolidated statutory funds of IOOF Ltd.

2UNPAT excludes the impact of certain non-operational financial items. An UNPAT reconciliation is provided on page 6.

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Appendix 4D

Rule 4.2A.3

Insignia Financial Ltd - Appendix 4D for the six months ended 31 December 2021

For personal use only

About Insignia Financial Ltd

Insignia Financial Ltd (previously IOOF Holdings Ltd) (the Company) is listed on the Australian Securities Exchange (ASX: IFL). The Insignia Financial Ltd consolidated group includes the Company and its controlled entities (the Insignia Financial Group).

The Insignia Financial Group has been helping Australians secure their financial future since 1846. During that time, the Insignia Financial Group has grown substantially to become one of the largest groups in the financial services industry. The Insignia Financial Group provides advisers and their clients with the following services: Platforms for advisers, their clients and hundreds of employers in Australia; Advice services via an extensive network of financial advisers; and Asset Management products that are designed to suit any investor's needs.

Effective 9 December 2021, the Company changed its name to Insignia Financial Ltd and commenced rebranding the corporate entity to Insignia Financial. The Insignia Financial name is a unifying brand for our people and represents our shared ambition of creating financial wellbeing for all Australians.

Financial highlights

Underlying net profit after tax for the half year ended 31 December 2021 was $117.9m (half year ended 31 December 2020: $65.9m), an increase of $52.0m driven by the inclusion of the MLC business, strong market performance as well as realisation of benefits and synergies from strategic initiatives. Net profit after tax was $36.2m for the half-year ended 31 December 2021 (half year ended 31 December 2020: $53.8m) a decrease of $17.6m driven by higher integration and simplification costs as synergy realisation accelerated, increase in provision for historical remediation costs and the inclusion in 1H21 of a one-off BT settlement ($59.2m pre- tax), partially offset by the inclusion of MLC.

Funds Under Management and Administration (FUMA)

At 31 December 2021, FUMA was $325.8 billion (30 June 2021: $318.7 billion). The growth is supported by targeted product enhancements and strong investment performance. FUMA includes $227.0 billion Funds under Administration (FUA) and $98.8 billion Funds under Management (FUM). FUA increased by $6.0 billion as a result of positive market movements and improved netflows into advised platforms. This was partially offset by pension payments and stabilising net outflows from the acquired MLC and ex-ANZ platforms which are showing signs of reducing following the delivery of product enhancements and strategic repricing initiatives. FUM increased by $1.1 billion driven by market gains, partially offset by mandate losses in MLC's global listed property capability.

Following the completion of the MLC acquisition, the Insignia Financial Group has revised the methodology used across the Group to calculate FUMA in order to ensure consistency of reporting across the business. In addition to consistency, the new methodology is to better align recognition of FUMA with the recognition of revenues. Under the previous FUMA methodology, the FUMA balance at 30 June 2021 was $453.4 billion1.

Advice

The total number of advisers in the Insignia Financial network was 1,765 at 31 December 2021, a decrease of 183 since 30 June 2021. The decrease arose primarily through the loss of smaller practices in the self- employed channel that are not able to transition to the new sustainable model.

1 FUMA has decreased by $134.7 billion to remove the impact of client monies being recognised as Master Trust FUA or Investment FUM and again as Portfolio Management FUM.

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Appendix 4D

Rule 4.2A.3

Insignia Financial Ltd - Appendix 4D for the six months ended 31 December 2021

For personal use only

Significant changes in the state of affairs

In the opinion of the Directors, aside from matters as disclosed in this half year financial report, there were no significant changes in the state of affairs of the Insignia Financial Group that occurred during the half year.

Principal activities

The principal activities of the Insignia Financial Group are:

• Platforms: Offering a wide range of financial services solutions on superannuation, investments, and trustee and estate management services to clients including investors, members, employers and advisers.
• Advice: Providing quality financial advice that is accessible, affordable and engaging for Australians, and helping clients navigate their way through a range of financial products and services and educating clients to improve their financial literacy.
• Asset Management: Delivering strong and consistent returns to clients with access to world-leading investment managers across a broad range of highly rated single and multi-manager funds and other attractive investment opportunities.

Purpose and strategy

The purpose of the Insignia Financial Group is to understand clients' needs, look after clients and secure the financial future for clients. The Insignia Financial Group intends to achieve this through delivering what matters to clients, continuing to promote a ClientFirst culture amongst our people and building a better tomorrow for the community and shareholders.

Key strategic initiatives

Progress against the Insignia Financial Group's key strategic initiatives is set out below:

Evolve 21

In December 2021, the Insignia Financial Group reached an important milestone in simplifying its platform suite with the completion of the Evolve21 programme, migrating $22.1 billion of FUA and 93,000 client accounts to the contemporary, client centred Evolve platform.

Evolve is Insignia Financial Group's proprietary, scalable technology platform that is well positioned to continue to adapt and support the changing needs of clients, advisers and employers, helping transform the wealth management industry. It now administers over $42 billion of client assets across 298,000 accounts and enables the ClientFirst service proposition across adviser, employer, member and investor segments.

Evolve Next migration project has been established to deliver next phase of platform consolidation.

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For personal use only

Appendix 4D

Rule 4.2A.3

Insignia Financial Ltd - Appendix 4D for the six months ended 31 December 2021

Advice 2.0

The key strategic priority to make advice more affordable, accessible and engaging for Australians while helping businesses become more sustainable and profitable. It consists of three pillars:

• Client Engagement includes goals-based advice that is accessible, affordable and engaging to Australians supported by clear and relevant client value propositions.
• Adviser efficiency includes market leading, next generation best practice advice models that streamlines advice generation, servicing and governance making advisers more efficient while uplifting advice quality.
• AFSL (Australian Financial Services Licence) sustainability involves offering compelling discrete value propositions across each advice channel, which are profitable without the need for cross- subsidisation, and provide advisers with choice reflecting value and risk.

Progress during the period against Advice 2.0 includes:

• The financial advice offering continues to transform under the new sustainable advice model to improve the efficiency of advice practices, reduce our cost-to-serve and support the path to break-even of the Advice business. As at 31 December 2021, the Insignia Financial Group holds active advice service relationships with 1,765 financial advisers, a reduction of 183 advisers from 30 June 2021, mainly from the self-employed channel. Adviser departures in the self-employed channel largely came from small practices that were not able to transition to the new sustainable model. The reduction in adviser numbers reflects the necessary changes required to ensure the financial advice profession can prosper after a period of change, while supporting continued investment in technology and process improvements.
• Integration between Bridges and MLC Advice is well underway for implementation of better ways of working (simplified and enhanced) for the combined business in FY22. This includes the go forward brand strategy for the new combined business, being the Bridges brand, which is most aligned to our future vision and strategy and will resonate most strongly with our current and future clients.
• Wealth Central is the digital engagement platform that is designed to help advisers deliver advice in a more efficient and engaging way, making it a unique differentiator and advantage for our adviser network. Wealth Central has now been rolled out to the employed channel (Shadforth and Bridges) and for self-employed practices in RI Advice, Millennium 3, Lonsdale and Consultum via a comprehensive adoption and implementation program. Plans are also underway to commence roll out to MLC Advice, TenFifty and the Godfrey Pembroke Group in the second half of FY22.

Integration, simplification and synergies

The Insignia Financial Group made further progress in 1H22 executing its integration and simplification priorities and synergy realisation, including the following:

• Strategic priority refresh: Articulation of the Insignia Financial Group's strategic ambition which is to provide financial wellbeing to every Australian. This is consistent with the Insignia Financial Group's purpose and ClientFirst foundation and aligned to the pursuit of that ambition. During the period, the Insignia Financial Group conducted a refresh of the governance model to oversee the execution of the strategic priorities: integration and operating model simplification, client engagement and financial wellbeing, product simplification, Advice 2.0, ESG uplift and cultural integration.
• Organisational design: Continued work to simplify and optimise the organisational structure. As part of this work, the Technology division was repointed to the Chief Operating & Technology Officer. This new operating model more closely aligns technology with the integration and simplification agenda and allows technology capabilities to be more deeply embedded in Insignia Financial Group's ClientFirst thinking, principles and ways of working.

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For personal use only

Appendix 4D

Rule 4.2A.3

Insignia Financial Ltd - Appendix 4D for the six months ended 31 December 2021

• Separation: Continued progress on the separation of the ex-ANZ Pensions and Investments (P&I) and MLC businesses, which the Insignia Financial Group is managing as a single program of work. Separation of the P&I business is expected to be completed in 2022, and until this milestone is achieved, ANZ will continue to provide services to Insignia Financial Group under a transitional services agreement. The Insignia Financial Group expects to finalise, by 30 June 2022, plans and timeframes for the separation of the MLC business and until that separation milestone is achieved, NAB will continue to provide services to the Insignia Financial Group under a transitional services agreement.

• Product simplification: Platform, product and entity simplification ('product simplification') is one of the Insignia Financial Group's strategic priorities and the key to unlocking benefits of scale for all stakeholders by creating opportunities for growth by investing in and focusing on what matters to clients, reducing risk by reducing complexity and cost to serve, thereby allowing the Insignia Financial Group to create improved outcomes for clients that are economically sustainable. A fundamental part of this simplification is Evolve, a cross functional program of work focused on the delivery of a single contemporary integrated platform for all products. As described above, the first phase of this work, Evolve21, which involved the integration of all heritage Insignia Financial Group proprietary products into Evolve, was completed on schedule in December 2021. During the six months to 31 December 2021, the Insignia Financial Group continued its work to simplify governance structures and processes which will provide a foundation for future production.
• Synergy targets: During the interim period to 31 December 2021, the Insignia Financial Group achieved in-period synergies of $22m and annualised saving of $66m. The Insignia Financial Group is ahead of its original plan to achieve the previously announced synergy goal of $218m per annum with cumulative run- rate saving of $122m achieved in the period. Having identified the next platform simplification opportunity, the Insignia Financial Group is continuing to invest in our technology with a new $40-$50million investment to support planned future platform simplification initiatives and to enhance functionality, expected to be complete by the end of FY23.

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