Netwealth Group Ltd. · ASX:NWL
Netwealth — FY2020 Earnings Presentation
38 slides from Netwealth's earnings presentation, Aug 18, 2020
Slide 1: Netwealth FY2020 Results Presentation
Netwealth FY2020 Results Presentation | netwealth
Slide 2: Our purpose
Our purpose is To enable people to see wealth differently and discover a brighter future
Slide 3: Our culture is value-driven
Our culture is value-driven Curious Optimistic Collaborative
Slide 4: Our strategy
Our strategy is to deliver Best-in-class technology Market leading, home grown platform, agile and tailored to client needs Best-in-class service Award winning, nimble and highly responsive — ‘we make our clients look good’ Insights that matter Provide deep insights to our clients and spot change th
Slide 5: Today's presenters and agenda
FY2020 Results Presentation Today's presenters and agenda Michael Heine Joint Managing Director Matt Heine Joint Managing Director Grant Boyle Chief Financial Officer 1. FY2020 business and financial highlights 2. FY2020 financial performance 3. Outlook 4. Questions 5. Appendix and additional inform
Slide 6: Business and Financial highlights
FY2020 Business and Financial highlights
Slide 7: Financial Highlights FY2020
FY2020 Results Presentation 7 Financial Highlights FY2020 Netwealth delivered 24.8% underlying EBITDA growth al & 8 6Oll $64.8M! 52.3%! $43.8M!' $123.9M EBITDA EBITDA Margin NPAT Total Income 4a Se,lU RB VM $64.5M! 179cents!' Dividend14.7cps | ASX 200 Operating net cashflow EPS Interim Dividend 6.9
Slide 8: Business Highlights FY2020
FY2020 Results Presentation 8 Business Highlights FY2020 = = == $31.5B FUA $7.3B FUM $5.8B MA Growth of $8.2B (+35.0%) Growth of $3.3B (+84.4%) Growth of $3.0B (+110.0%) all all call $9.1B $3.7B $3.3B FUA net inflows FUM net inflows MA net inflows Growth of $4.7B (+109.5%) Growth of $2.8B (+312.4%)
Slide 9: Strong financial and market position
FY2020 Results Presentation 9 Strong financial and market position Strong balance sheet * low capital High correlation between expenditure EBITDA and operating High level of recurring and * nodebt cash flow (99.4% growing revenue wae conversion + significant cash ) reserves Ongoing strategic investm
Slide 10: Significant market opportunity
FY2020 Results Presentation Significant market opportunity Platform providers by FUA market share! Platform provider net funds flows? % market share (Mar 2020) $'Billions (12 months to Mar 2020) 47 # 18.2% $9.1B 8.9% 3.6% 2.9% 19% g 2 g 3 Bs o A 1.9% = B v & 3S 3 3 a 73 -$5.0B 2 7. 9g 2 ¢ > & ef als
Slide 11: Sustained and accelerating growth
FY2020 Results Presentation 1 Sustained and accelerating growth Growth in FUA, FUM and Accounts Growth in market share to 3.6% for the year to Mar 2020 81,804 46,000, 42,059 25% 2.0% 1.4% Jun-2016 Dec-2016 Jun-2017 Dec-2017 Jun-2018 Dec-2018 Jun-2019 Dec-2019 Jun-2020 Mar-2016 Mar-2017 Mar-2018 Mar-
Slide 12: Driven by new and existing Financial Intermediaries
FY2020 Results Presentation 12 Driven by new and existing Financial Intermediaries 2,843 Financial Intermediaries on the platform at 30 June 2020, up 264 (10.2%) compared to 30 June 2019 FUA growth is driven by Breakdown of FUA growth FY2015 to FY2020 Existing Financial Intermediaries: * Continued m
Slide 13: Australia's leading platform
FY2020 Results Presentation 13 Australia’s leading platform Ranked No! for overall platform functionality for the fifth year in a row and achieved the highest overall satisfaction score among primary users for the ninth year in a row, according to research by Investment Trends Overall functionality
Slide 14: Development of our "Whole of wealth" platform
FY2020 Results Presentation 14 Development of our “Whole of wealth” platform Mass Affluent %, > Engage @r ct \ & “ ransa Tasks, Buy, sell, % Wealth messagin; deposit, pay, p : deen aes professionals Client data = == Connect ' Investors Software 3 &data 3 integrations Bo 3 a % Adviser portal Source:
Slide 15: Introducing Netwealth's enhanced client experience
FY2020 Results Presentation Introducing Netwealth’s enhanced client experience Secure mobile access to your most important wealth information At Netwealth we are fully invested in a digital future to help both investors of all types — from next-generation to high net- worth clients. Coming soon * Mo
Slide 16: Investment in technology
FY2020 Results Presentation Investment in technology A focus predominantly on a new digital client engagement and mobile first “whole of wealth” offering, as well as, enhancing reporting, transactional capabilities and client service tools and channels Expanding technology team * Hybrid scrum teams
Slide 17: COVID-19 response
FY2020 Results Presentation COVID-19 response Well positioned to meet the challenges presented by COVID-19 and subsequent economic disruption 7 * Successfully transitioned staff to remote working with limited disruption to service and operation and without anet increase to our operating costs * Inou
Slide 18: In the community
FY2020 Results Presentation 18 In the community Helping young Australians see wealth differently with Banger * Our joint mission is to help our primary school students be prepared for the financial world ahead * This our 4b year of supporting Banger as it expands into Australia, allowing Australian
Slide 19: Financial performance
FY2020 Financial performance FY2020 Results Presentation
Slide 20: Delivered scalable growth for FY2020
FY2020 Results Presentation 20 Delivered scalable growth for FY2020 FY2020 Total Income of $123.9M, up 25.5% FY2020 Underlying NPAT of $43.8M, up 21.7% $123.9M $43.8M $98.8M $36.0M $83.3M $65.3M $29.0M $23.2M $61.3M $50.6M $18.9M CH $16.8M $58.7M sou § $20.6M $40.5M casa $17.0M $8.8M FY2017 FY2018 F
Slide 21: • • • 52.6% 52.3% 52.0% 52.7% 36.4% 35.3% 35.0% 35.6% • 35.6% 35.2%
• • • 52.6% 52.3% 52.0% 52.7% 36.4% 35.3% 35.0% 35.6% • 35.6% 35.2% 35.0% 35.4% • •
Slide 22: Key performance metrics
FY2020 Results Presentation FY2020 key performance metrics FY2019 FY2020 Change %Change 1H2020 2H2020 Change %Change PlatformStatisties Actual Actual _19V20 1920 Actual Actual 1HV2H__1HV2H Funds Under Administration FUA (eop) 23337 315028165 35.0% 2st 31502-2981 —10.5% Fee Paying FUA % 610% 63.1% =
Slide 23: Key statistics analysis
FY2020 Results Presentation 23 Key statistics analysis To herp Fk Agarose 367 Focused on profitable & sustainable revenue growth 254 34 —e 2 — e-— © * Average Account size increased to $367K for FY2020 and $385K for Jun 2020 (Wrap $897K, Super $195K at Jun 2020) Fy20217 FY2018 FY2019 FY2020 — as ave
Slide 24: Platform revenue composition
FY2020 Results Presentation Platform revenue composition Non-administration fee income percentage of platform revenue increased by 4% to 47% for FY2020 Platform revenue split FY2019 & FY2020 @ = Administration fees FY2019 FY2020 Source: Netwealth Wrap Super @ = Ancillary fees Pool cash interest reta
Slide 25: Ongoing investment supporting ongoing growth
FY2020 Results Presentation 25 Ongoing investment supporting ongoing growth Strategic investments across IT infrastructure, people and software Total operating expenses s59.1M FY2020 commentary (comparisons FY2019) $41.0M FY2017 FY2018 FY2019 FY2020 m Employee benefits expense m Other operating expe
Slide 26: Strategic investment in our people
FY2020 Results Presentation 26 Strategic investment in our people Across technology, operations and distribution to support continued scalability and innovation Strategic increase in headcount, increase of 32 in Headcount by function 30 June 2020 Technology for FY2020 (10 Melbourne and 22 Vietnam) m
Slide 27: Strong cost management and exceptional cash generation
FY2020 Results Presentation 27 Strong cost management and exceptional cash generation High correlation between Underlying EBITDA and cash flow 50.8% 52.6% 52.3% —< —o nl 99.4%. $64.8M $64.5M) FY2017 FY2018 FY2019 FY2020 mmm Operating net cash flows before taxation Cash conversion ratio mmm Underlyin
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Slide 29: Outlook
Outlook FY2020 Results Presentation
Slide 30: Outlook
FY2020 Results Presentation Outlook Netwealth expects to continue to benefit from the significant changes currently reshaping the industry and remains positive about the future and continued market share growth In addition to growing market share within the affluent advice segment, high net-worth an
Slide 31: Outlook
FY2020 Results Presentation Outlook The COVID-19 outbreak has led to increased market volatility, world-wide economic disruption and continues to have a significant impact on individuals and businesses. Given the dynamic and evolving nature of COVID-19 and the unknown duration of this pandemic, Netw
Slide 32: Thank you
Thank you
Slide 33: Questions
Questions FY2020 Results Presentation 33
Slide 34: Important notice and disclaimer
FY2020 Results Presentation 34 Important notice and disclaimer General Information only Information provided is general information presented in a summary format as at 18 August 2020, and is therefore not necessarily complete. This presentation is for informational purposes only and is not to be rel
Slide 35: Appendix and additional information
Appendix and additional information FY2020 Results Presentation 35
Slide 36: Appendix 1 - Reconciliation of underlying adjustments
FY2020 Results Presentation 36 Appendix 1- Reconciliation of underlying adjustments Reconciliation from statutory results to underlying Fy2019 - FY2020. Change =% Change results Actual Actual 19201920 Statutory EBITDA on continuing operations 508 66.2 153 30.1% Rental expense (pre AASB 16) - (13) (1
Slide 37: Appendix 2 - Reconciliation to underlying net cash flow pre tax
FY2020 Results Presentation 37 Appendix 2- Reconciliation to underlying net cash flow pre tax FY2020 FY2019 Cash flowworkings Actual Actual Underlying EBITDA 64.8 52.0 Non-cash items in EBITDA 0.6 0.2 Changes in working capital (0.1) (1.6) Capital expenditure (0.9) (0.7) Net (purchases) / sale proce
Slide 38: Appendix - Consolidated statement of financial position
FY2020 Results Presentation 38 Appendix 3 - Consolidated statement of financial position Asat 30h 20_ 30-Jun-19 ‘ASSETS CCURRENT ASSETS Cash and cash equivalents 855, 585, 13 i Trade and other receivables 10.3 86 De’ bt free with $85.5M In cash Other current assets 44 35 . . . Financial asets 2 38 I