Netwealth Group Ltd. · ASX:NWL
Netwealth — H1 2023 Earnings Presentation
38 slides from Netwealth's earnings presentation, Feb 15, 2023
Slide 1: Results Presentation
2 V O 23 Results Presentation 15 February 2023
Slide 2: Important notice and disclaimer
Important notice and disclaimer General Information only Information provided is general information presented in a summary format as at 15 February 2023, and is therefore not necessarily complete. This presentation is for informational purposes only ands not to be relied upon as advice to investors
Slide 3: Our purpose
Our purpose is To enable people to ' see wealth differently XN VA and discover a ~a- brighter future 3 Results Presentation 1HFY2023 15 February 2023 | nw
Slide 4: Today's presenters and agenda
Today's presenters and agenda Meet: \ Matt Heine Managing Director Grant Boyle Chief Financial Officer 4 Results Presentation 1H FY2023 15 February 2023 Discover: 1.1H FY2023 business and financial highlights 2. Strategy and Product update
Slide 5: 1H 2023 Business highlights
1H 2023 Business highlights Results Presentation 1HFY2023. 15 February 2023
Slide 6: Business and Financial highlights 1H 2023
Business and Financial highlights 1H 2023 $62.4B FUA $5.0B it reached goaigr anon S32 3M FUA Net Inflows 1H 2023 (@) (a) $14.48 FUM @ $1.2B | Managed Accounts & GSS Funds FUM Net Inflows 1H 2023 (a) $12.28 MA $0.9B #1 Platform ; No? For Growth, Functionality & Service . a eos MnSieaN( AS oo 121,032
Slide 7: Netwealth as your #1 specialist investment platform partner
Netwealth as your #1 specialist investment platform partner Award winning platform 2022 Adviser Technok Needs Report @ veal Satisfaction: fet Pra Adviser Ratings fc Netweath Newweaty 2021 Platfor Competitive ‘Analysis and Benchmark Report Best Platform Overall WINNER [gy a ect ers 2022 Adviser Techn
Slide 8: Business growth drives market share gains
Business growth drives market share gains Growth in FUA, FUM and Accounts No of Accounts 140,000 121,032 120,000 107,103 100,000 75,512 80,000 65,688 58,012 60,000 40,000 of 38.8 20,000 | | 285 15. 0 Dec-2017 Dec-2018 Dec-2019 Dec-2020 Dec-2021 Dec-2022 mee UA mm FUM eee Accounts, Source: Netwealth
Slide 9: Organic FUA net inflows growth
O rga n i Cc F U A n et i nfl Ows g rowt h Half yearly FUA Net inflows analysis Both existing and new Financial Intermediaries contribute to yearly FUA net inflows Existing financial intermediaries _ s425 eg Continued migration of accounts from our existing Financial Intermediaries wont accounted fo
Slide 10: Strategy and product update
Strategy and product update 10 Results Presentati ion 1HFY2023. ‘15 February 2023
Slide 11: Accelerating change = opportunities and challenges
Accelerating change = opportunities and challenges os) <o Greater Greater computing power, accessibility, open architectures, cloud, decentralisation & * Mobile, multi-channel transparency, options a * Complexvs.cheaper ° ESG, digital assets, vehicles, 2 S exchanges & platforms ey, s ° % e % Regs, c
Slide 12: Supporting wealth professionals and investors to see wealth differently
Supporting wealth professionals and investors to see wealth differently 1 A focus on technology and platform innovation We have a home grown market leading investment platform that connects clients and advisers. It is agile and flexible to provide choice and remove barriers. 220+ IT staff dedicated
Slide 13: • • • • • • • • • • • • • •
• • • • • • • • • • • • • • • • • • • • • • • • •
Slide 14: Advice Efficiency focused on reducing cost of advice
Advice Efficiency focused on reducing cost of advice Reporting & Reviews Adviser efficiency Data and analytics * Report customisation * Tasks & activities por + 3rd party integrations, inc. * Bulk reporting + Managed Accounts Xeppo * Benchmarks enhancements & reporting + API & Developers portal + Re
Slide 15: Netwealth's whole of wealth platform
SMsr Netwealth's whole of wealth platform Introducing Wealth Accelerator MAPs Custodial (Multi-asset portfolio service) ustodial + Non-custodial Managed & Term deposits unregistered (IM) wholesale funds r Annuities Private label and retail Clientdata | managec account models: Domestic & internationa
Slide 16: The continued adoption of Managed Accounts
The continued adoption of Managed Accounts IMAP Managed Account FUM ($'B) $135.8B $111.08 $71.4B Jun-19 Jun-20 Jun-21 Jun-22 Source: Institute of Managed Account Professionals June 2022 16 Results Presentation 1H FY2023 15 February 2023 Netwealth Managed Account FUM ($’B) size $1228 $7.68 $4.4B Dec-
Slide 17: Client portal mobile app
Client portal mobile app White labelling Mobile ‘whole of wealth’ Daily business & finance news Activities on mobile Mobile app plus browser-based Bank and property feeds plus A daily feed of our morning Clients can view tasks and desktop configured to the brand. integration with Xeppo data. busines
Slide 18: Activities tasks, alerts and messages
Activities tasks, alerts and messages New Inbox-style feature-rich area of the platform, to enhance usability and team efficiencies, features include: + Corporate actions, wholesale certificate expiries, TD maturities, minimum cash alerts, open proposals + Notification of due and expiry dates - Abil
Slide 19: Corporate sustainability
Corporate sustainability This year so far... Protect and enhance our core business — Invest in system scalability and security. — Provision of more information and functionality to advisers. — Property data is live and available on the platform and mobile app. Be ethical, genuine, and transparent in
Slide 20: Insights that matter
Insights that matter Events, white papers, videos, webinars and podcasts 20 Results Presentation 1H FY2023 Women as _ the new face of wealth The Advisable Australian A content series that analyses the wealth behaviours of Australians with an examination of their financial literacy, investing attitud
Slide 21: Financial performance
1H 2023 Financial performance 21 Results Presentation 1HFY2023 ‘15 February 2023
Slide 22: 1H 2023 financial results
1H 2023 financial results Financials 0 2023 142022 Change» * ctual Actual Change Platform Revenue 99.8 84.6 152 18.0% Other Income 3.0 19 ua 61.3% Total Income 102.8 86.5 163 18.9% Employee Benefits Expense (38.1) (31.0) 71 22.8% Other Costs & Expenses? (173) (116) 57 49.3% Total Operating Expenses?
Slide 23: 1H 2023 key performance metrics
1H 2023 key performance metrics Platform 1H2023 2H2022 1H 2022 Perens iW ee ww Statistics Actual Actual Actual % Change _% Change FUA (EOP) 62414 55,652 56,654 12.2% 10.2% FUA inflows 8771 8496 ~—‘10,183 3.2% (13.9%) FUA outflows (3747) (3,143) (2.547) ‘19.2% 47.1% Funds Under FUAnet inflows 5024 5,
Slide 24: Revenue Margins
Revenue Margins Revenue per account and Revenue Margins improving 24 Results Presentation 1H FY2023 Platform Revenue per Account increased to $1,673, an increase of $71 for 1H 2023 Platform revenue/average FUA of 33.1 bps for 1H 2023, increased by 1.4bps compared to 2H 2022 The growth in revenue was
Slide 25: Platform revenue composition
Platform revenue composition Revenue structure has demonstrated resilience across various market cycles. Platform revenue split 1H 2021 to 1H 2023 Platform Revenue $M's 100 80 60 40 20 1H 2021 w Administration fees Source: Netwealth, Brokerage expenses, previously included “Net” in Platform revenue,
Slide 26: Focus on expense management
Focus on expense management Total underlying operating expenses $55.4M +$12.8M 30.0% 1H 2021 1H 2022 1H 2023 mEmployee benefits expense Other operatingexpenses_—_ am IT and communications Source: Netwealth Excluding share based payments expenses and recognised transaction fee revenue on a “gross” ba
Slide 27: Focus on operational leverage
Focus on operational leverage Continued investment in Technology and minimal operational headcount increases 1H new hires down ~ 50% of PCP Headcount by function 31 December 2022 m Technology mInvestor services Investment operations & +27 custody 1H 2023 Distribution, Prod & Mark +58 . 2H 2022 +55 1
Slide 28: Strategic capital expenditure
Strategic capital expenditure * To maintain efficiency and the ability to scale, we are enhancing our operational systems, strengthening security, and upgrading our IT infrastructure, including transitioning our systems to the cloud » Weare developing new features for Managed Accounts, Managed Discr
Slide 29: Summary Strong financial and market position
Summary Strong financial and market position Strong balance sheet Exceptional correlation B 6]6 between EBITDA and Cash 3 + low capital expenditure Flow * no debt + significant cash reserves Ongoing strategic Aleader in mass affluent, investment across IT high net-worth and private [s] infrastructur
Slide 30: Outlook
Outlook 30 Results Presentation 1H FY2023 15 February 2023
Slide 31: Outlook for 2H 2023
Outlook for 2H 2023 + Netwealth continues to gain market share with a strong pipeline and high win rate for new business across all key segments and has successfully secured several major new licensee relationships that will begin transitioning and funding new accounts in the current financial year.
Slide 32: Questions
Q ti 32 Results Presentation 1HFY2023 15 February 2023 | nw
Slide 33: Thank you
| Thank you netwealth
Slide 34: Appendix and additional information
1H 2023 Appendix and additional information 34 Results Presentation 1HFY2023 ‘15 February 2023
Slide 35: Investing in our people and technology
Investing in our people and technology Strategic investments across IT infrastructure, people and software Analysis of half yearly headcount increase Increase of 27 for 1H 2023 Increase of 58 for 2H 2022 1 5 4 -2 Increase of 55 for 1H 2022 5 19 Increase of 31 for 2H 2021 Increase of 32 for 1H 2021 3
Slide 36: Underlying profit for 1H 2023
Underlying profit for 1H 2023 Set out in the table below is the reconciliation from EBITDA to underlying EBITDA and NPAT for 1H 2023 to reflect an adjustment on non recurring costs Consolidated Group for Period Ended 31 Dec 2022 31 Dec 2021 Variance Variance $000 $000 so00 % EBITDA 46,183 41,468 475
Slide 37: Underlying profit excluding non-cash share based payments for 1H 2023
Underlying profit excluding non-cash share based payments for 1H 2023 Consolidated Group for Period Ended 31Dec 2022 31 Dec 2021 Variance Variance $000 $000 $000 % Underlying EBITDA 46,183 41,969 424 10.0% Add back: non-cash share-based payment 1221 1857 (636) (34.2%) Underlying EBITDA excludingnon-
Slide 38: Underlying Cash Flow
Underlying Cash Flow The table below sets out the summary of the underlying consolidated statement of cash flows for 1H 2023 and 1H 2022 Consolidated Group for Period Ended 31 Dec 2022 31 Dec 2021 Variance Variance $000 $000 $000 % Receipts from customers 104,196 91,172 13,024 14.3% Other operating