Slide 1: FY16 Highlights & Key Performance Measures
FY16 Highlights & Key Performance Measures Life Business FUM Services FUA Group FUMA Life Product Sales $638 m $1,157 m $1,795 m $134 m 8.8% 61% 37% 16% Group Profit Group Profit Product Ratings Approved Product List $2.1 m $546 k Highly 246 Statutory Basis Underlying operations Dealer Groups Recomm
Slide 2: FY16 Financial Performance & Strategy Presentation
FY16 Financial Performance & Strategy Presentation Austock Group Limited ( ASX : ACK ) Ross Higgins – Austock Life MD Enzo Silveri - Austock Group CFO Melbourne 27 October 2016
Slide 3: Section 1: Business Overview
Section 1: Business Overview A Strategy Going to Plan Section 2: Market & Competition Section 3: Financial Year 2016 Results Section 4: Q1 & Outlook New Superannuation – the Game Changer
Slide 4: FY16 Highlights & Key Performance Measures
FY16 Highlights & Key Performance Measures Life Business FUM Services FUA Group FUMA Life Product Sales $638 m $1,157 m $1,795 m $134 m 8.8% 61% 37% 16% Group Profit Group Profit Product Ratings Approved Product List $2.1 m $546 k Highly 246 Statutory Basis Underlying operations Dealer Groups Recomm
Slide 5: Business Overview
Section 1 Business Overview A Strategy Going to Plan
Slide 6: Business Description & FUMA
Business Description & FUMA Austock Group’s FUMA $1,795m: • $638m Life’s FUM ~ 95% of Revenue + • $1,157m Services’ FUA ~ 5% of Revenue Austock Life: • can issue all life products - concentrates on insurance bond & endowment business • low capital intensive business – investment risk passed to inves
Slide 7: A Compelling Shareholder Value Building Model
A Compelling Shareholder Value Building Model AGL is an innately valuable structure – a PDF owning a recurring revenue producing Life Office: • Shareholders receive tax-free dividends • Shareholders benefit by tax-free capital gains on shares • most of Austock’s PDF income is taxed favourably Austoc
Slide 8: A Compelling Life Office Business Model
A Compelling Life Office Business Model High Margin Recurring Revenue - Based on Life’s FUM • REVENUE ~ 1.2% p.a of FUM (~0.8%% p.a Benefit Funds FUM + ~0.4% p.a Operational Tax Effects) • FUM has grown at CAGR of 21% over 4 years • Bond sales by numbers achieved a CAGR of 27% over 4 years Scalable
Slide 9: FUM Growth
FUM Growth Sales FUM $m • $533m or 59% made over past 4 years 700 • $901m sales since inception in 2002 600 CAGR 21% 500 400 300 301.2 373.5 480.9 586.8 637.8 200 100 0 2012 2013 2014 2015 2016 8 | Copyright Austock Group Limited – October 2016
Slide 10: Bond Numbers Growth
Bond Numbers Growth Bond Numbers FY 16 2000 • 56% Imputation Bonds – ave. $106k 1800 • 44% ChildBuilder – ave. $30k 1600 1400 CAGR 27% 1200 1000 800 600 717 809 1114 1632 1864 400 200 0 2012 2013 2014 2015 2016 9 | Copyright Austock Group Limited – October 2016
Slide 11: Investment in Operational Expenditure 2012 - 2016
Investment in Operational Expenditure 2012 - 2016 Our Investment in Product Development Products • ChildBuilder & BCT Developed & Annuity-Like Withdrawal Streams New IT/Marketing • IT Developer & Programmer • IT Digital & Social Media Marketing Website Development: • New Financial Adviser Portal – O
Slide 12: Investment in Operational Expenditure 2012 - 2016
Investment in Operational Expenditure 2012 - 2016 Our Investment in Distribution: • Built Sales & BDM Team to scale & national coverage • Deployed new Customer Relationship Management (CRM) for BDMs • New Investor & Financial Adviser Unit Services established: • Dealer Group & New Business Registry
Slide 13: Fund Growth Drivers – Product Development
Fund Growth Drivers – Product Development Imputation Bond platform is a product development platform within itself: • Highly scalable & flexible - operates using entirely “in-house” administration & systems Sales & Distribution in 2015/16 • Sales and Distribution Team – unchanged, stable and at scal
Slide 14: Fund Growth Drivers - Distribution and Sales
Fund Growth Drivers - Distribution and Sales Sales & Distribution • Sales & Distribution Team - Managers (3), BDMs (5) – all in-field, a specialist team & national coverage • Technically adept on how our products integrate with the giving of financial, tax & estate planning advice • Team is at scale
Slide 15: Distribution – Financial Adviser Channel Changing
Distribution – Financial Adviser Channel Changing Future of Financial Advice (FOFA) Laws • FOFAs forces Advisers to act in the “best interest of clients” • “Tied” product & platform arrangements gone/weakened – creates new APL openings • Financial Advisers – Increasing Receptiveness to “Strategy-Bas
Slide 16: Imputation Bonds – Activity 2015/16
Imputation Bonds – Activity 2015/16 • Sales $111m * (down 20% - FY15 – $139m) • 1,046 Imputation Bonds issued (up 10% - FY15 – 947) • Platform FUM increased to $608m (up 10%) & $52.9m net FUM increase (2015 - $108.1m) • Savings Plans annually recurring business grew to $9.4m (up 37% - 2015 - $6.9m)
Slide 17: ChildBuilder – Activity in 2015/16
ChildBuilder – Activity in 2015/16 • Sales of $13.2m * (down 1% - 2015 - $13.m3) • 818 ChildBuilder Bonds issued (up 19% - 2015 685 Bonds) • Ave. ChildBuilder Bond size $30k (2015 - $30k) • ChildBuilder represents 44% of our new business mix by product type (2015 – 42%) Comparative Advantages • Comp
Slide 18: Insights to Austock Life’s Book of Business
Insights to Austock Life’s Book of Business Total Bonds Book – Business Durations (Estimated) • Value of Life’s book is growing as: – FUM increases – book quality mix and duration improves Current 3 Years 5 Years Year Ago Ago • Overall Book –improved to 12 yrs. ave. term Total Imputation Bond Book (
Slide 19: FUM, Aged Care Book & Outflows
FUM, Aged Care Book & Outflows Total Platform FUM Millions $900 $800 $700 $600 $500 $400 All Other Business ($) $300 $200 $100 Aged Care Book ($) $0 18 | Copyright Austock Group Limited – October 2016
Slide 20: FUM, Aged Care Book & Outflows
FUM, Aged Care Book & Outflows Outflow % of FUM - 12 month trend 5.00% 4.50% 4.00% 3.50% 3.00% 2.50% All Other Business ($) 2.00% 1.50% 1.00% Aged Care Book ($) 0.50% 19 | Copyright Austock Group Limited – October 2016
Slide 21: Market & Competition
Section 2 Market & Competition
Slide 22: Retail Funds Industry: Where Does the Insurance Bond Sector Sit?
Retail Funds Industry Where Does the Insurance Bond Sector Sit? Source: Plan for Life “Retail Managed Funds Retail Funds as at March 2016” – 15 June 2016. $745bn (100%) Retail Discretionary Superannuation Investments $541bn (73%) $204bn (27%) Unit trusts & Cash Super & rollovers Retirement Income in
Slide 23: The Old “Run-Off” $7bn Market
The Old “Run-Off” $7bn Market 1796 Australian Unity Group 847 IOOF Group Total Market OnePath Australia 790 June 2016 - $7.0bn Group June 2013 - $6.5bn Commonwealth / 789 Colonial Group 709 Centuria Capital Austock Life 635= 9% Imputation Bond & ChildBuilder 532 AMP Group National Australia / 251 •
Slide 24: The New “Reviving Market”
The New “Reviving Market” But the last 3, 5 & 7 year picture is far more insightful of the Industry’s $7bn FUM Total Inflows % Austock Life wrote 7 yr. Inflows 4,130.7m 18% 165.5 161.1 154.6 5 yr. Inflows 2,845.3m 21% 141.7 3 yr. Inflows 1,826.4m 23% 122.3 107.1 96.2 79.9 71.5 61.4 59.7 53.1 48.7 35
Slide 25: Financial Year Results
Section 3 Financial Year Results 2016
Slide 26: Results Summary
Results Summary FY16 FY15 Change Change % Revenue 7.646m 7.030m 616k 8% Expenses 7.100m 6.623m 477k 7% Underlying profit before tax 0.546m 0.407m 139k 34% Underlying EPS 0.5c 0.4c 0.1c 25% DPS 2.0c 2.0c 0 0 NTA (cps) 7.6c 7.8c (0.2c) (3%) FUM 638m 587m 51m 8% FUMA 1,795m 1,306m 489m 37% Cash & Cash
Slide 27: Austock Life - FUM Reconciliation for FY16
Austock Life - FUM Reconciliation for FY16 $51m net asset growth to $638m (up 8.7%) Opening FUM $586.8m Investment Growth $5.2m Acquired Business ($1.5m) Sales Inflows $134.2m Withdrawals ($29.5m) Maturities ($57.4m) Closing FUM $638m Imputation Bond Investment Growth Acquired Business • Markets dri
Slide 28: FUM Growth
FUM Growth Austock FUM Waterfall FY13-16 $800 $700 $638 $29 $51 $600 $106 $500 $107 FUM (m) $400 $72 $301 $300 $200 $100 $0 FY13 - Start FY13 FY14 FY15 FY16 FY16 - End Q1 FY17 27 | Copyright Austock Group Limited – October 2016
Slide 29: Achieving the benefit of scale
Achieving the benefit of scale 28 | Copyright Austock Group Limited – October 2016
Slide 30: ICAAP Capital Requirements
ICAAP Capital Requirements ICAAP Capital Entity / Management Fund 1. Entity Licence - $10m minimum capital (Normally within PCR, but A-Life is exempted & grandfathered) 2. Management Fund PCR - APRA minimum requirements (0.25% Operational Risk Reserve) - Servicing Expense Reserve - Sufficient capita
Slide 31: Surplus group assets & regulatory capital FY13-FY16
Surplus group assets & regulatory capital FY13-FY16 #039;000 14,000 Free Assets 12,000 Surplus 10,000 Regulatory Capital 8,000 9,139 6,762 6,000 5,027 3,605 4,000 575 449 635 684 2,000 2,541 2,817 2,960 2,443 - FY13 FY14 FY15 FY16 30 | Copyright Austock Group Limited – October 2016
Slide 32: Q1 & Outlook
Section 4 Q1 & Outlook New Super – the Game Changer
Slide 33: How Business is Tracking – Q1 2016/17
How Business is Tracking – Q1 2016/17 Q1 FUM Growth Growth $29m YTD & tracking to Budget Q1 Sales – Good New Business Volumes & Quality • Solid $33m - ave. $11m / month (Persisting market uncertainty & volatility impacting & New Super timetable uncertainties) • Bond Numbers – Record 500 New Bonds •
Slide 34: New Super – The Game Changer
New Super – The Game Changer Enshrining in Law – Superannuation’s Primary Objective “to provide income in retirement to substitute or supplement the age pension” • New Super is not for uncapped wealth accumulation - nor for estate planning or for inter- generational wealth transfers • Access & conce
Slide 35: Upside for the Insurance Bond Sector
New Super – The Game Changer Upside for the Insurance Bond Sector Source: Plan for Life “Retail Managed Funds Retail Funds as at March 2016” – 15 June 2016. $745bn (100%) Retail Discretionary Superannuation Investments $541bn (73%) $204bn (27%) Unit trusts & Cash Super & rollovers Retirement Income
Slide 36: New Super – Game Changer & New Strategies
New Super – Game Changer & New Strategies Reduced Contribution Caps • Major Reductions to Non-Concessional Contribution Caps - Use Bonds for discretionary investing windfall gains, estate distributions & home downsizing proceeds • Concessional Contribution Cap to lower $25k for everyone – Higher Inc
Slide 37: FY17 Life Business Priorities
FY17 Life Business Priorities Sales & Distribution Focus • New Superannuation – alternative & complementary • Savings Plans – a forgotten part of financial planning (esp. ChildBuilder) • Promote “annuity-like” withdrawal streams using the Imputation Bond • Estate Planning & Intergenerational Transfe
Slide 38: Concluding
Concluding We are steadily building Austock Life in to a high quality & trusted life insurance investment business. We want to be a large life office of creative “life-event” tax friendly investments that we have designed, manufactured and administer flawlessly. We have an overarching strategic obje