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## Further investment in organic initiatives while controlling costs 

IOOF’s strong record on controlling costs has been a feature of the company in recent years. During 2012, we have been able to invest wisely in important areas of our business, like marketing, technology and our employees, while continuing to control expense growth in other areas to at or below inflation. 

In 2012, IOOF embarked on an advertising campaign aimed at increasing awareness for the IOOF brand. Shareholders and members based in Australia may have seen the Melbourne based IOOF tram, the IOOF branded bus in Sydney or the advertising hoardings at Sydney’s Football Stadium at Moore Park. 

Importantly, there are early signs that the campaign has been successful, as awareness among financial advisers has improved noticeably since the advertising began. 

During the year, IOOF invested in new and existing products. 

The release of new low-cost products has seen encouraging growth in new areas for IOOF, with flows to Pursuit Focus and TPS Essentials exceeding internal expectations. 

In addition, key changes made to existing products such as AET’s Small Super products have repositioned them for future growth. 

Technology is an important part of IOOF’s business, as it supports the underlying products and service offerings IOOF promotes. During 2012, IOOF continued to invest in those systems to ensure they remain contemporary. 

## IOOF remains well positioned for changes in the regulatory environment 

The large volume of regulatory reform remains a challenge for the entire financial services industry. Even as at the date of this report, many key elements of these reforms have not been announced or finalised by the regulators, making implementation by the set deadlines particularly difficult. 

IOOF is well placed to respond to these regulatory changes as a business. The formation of a group-wide internal team will allow the business to address the product and system changes required to conform with regulatory change whilst still growing the business. 

## Key acquisitions a clear strategic fit 

It has been an active year on the acquisition front, firstly with the purchase of financial advisory group, DKN in late 2011. Then, subsequent to the end of the financial year, IOOF announced that it was seeking to acquire wealth management firm, Plan B. 

DKN has now been successfully integrated into the business, and is adding new advisers to its Lonsdale network, together with Avenue Capital Advisers who joined the group at the end of the financial year. 

The Plan B acquisition, announced after financial year end, is another clear strategic fit for IOOF. It boosts the number of aligned advisers, increases IOOF’s Funds Under Administration and provides access to two of Australia’s high growth states, WA and QLD. As at the date of this report, IOOF is in the advanced stages of an off-market takeover offer for Plan B that requires it to achieve 90 per cent of shareholder acceptances to acquire the company. 

The strategic investments IOOF has made during the financial year demonstrate our ability to grow the business in the key areas of distribution and platforms. 

## Outlook for IOOF 

As it is in all years, a result such as this one is impossible without the continued efforts of our leadership group and employees. I would like to take this opportunity to publicly thank each and every one of our 1,040 employees Australia-wide. 

While the external environment has remained difficult, IOOF has worked hard on the facets of the business that are within its control. Pleasingly, the early signs of growth we have seen to date are encouraging. 

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