Slide 1: Netwealth 1H2021 Results Presentation
Netwealth 1H2021 Results Presentation 17 February 2021
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 Agile Genuine Courageous
Slide 4: Our strategy is to deliver
Our strategy is Best-in-class technology to deliver Market leading, home grown platform, agile and tailored to client needs Best-in-class service Award winning, nimble and highly responsive Insights that matter Provide deep insights to our clients and spot change that matters
Slide 5: Presenters and agenda
1H2021 Results Presentation 5 Matt Heine Joint Managing Director 1. 1H2021 business and financial highlights 2. 1H2021 financial performance Grant Boyle Chief Financial 3. Outlook Officer 4. Questions 5. Appendix and additional information Michael Heine Joint Managing Director
Slide 6: Business and Financial highlights
1H2021 Business and Financial highlights 1H2021 Results Presentation
Slide 7: Financial Highlights 1H2021
1H2021 Results Presentation 7 Financial Highlights 1H2021 Netwealth delivered 34.5% NPAT growth on PCP $40.5M 56.0% $27.6M $72.4M EBITDA EBITDA Margin NPAT Total Income $40.5M1 11.3 cents 9.06 cps Top 2003 Operating net cashflow EPS2 Interim Dividend Company in the 2020 Forbes pre tax Awards 1. Oper
Slide 8: Business Highlights 1H2021
1H2021 Results Presentation 8 Business Highlights 1H2021 • Strategic Investment in Xeppo • Average annualised platform revenue per account increased to $1,666 for 1H2021, $38.8B FUA $9.3B FUM $7.6B MA up $102 (+6.5% increase) compared to 1H2020 • Average account size increased to $440,000 at 31 Dec
Slide 9: Wexit + Disruption = Opportunity
1H2021 Results Presentation 9 Wexit + Disruption = Opportunity Platform providers by FUA market share Platform provider net funds flows % market share (Sep 20 and Sep 19) Netwealth #1 for the tenth #7 #1 consecutive quarter 18.6%18.5% $9.5B 16.9% 15.8% 15.3% 15.0% 13.7% 13.3% $5.1B $3.9B 10.5% 10.3%
Slide 10: Continuing growth momentum
1H2021 Results Presentation 10 Continuing growth momentum Growth in FUA, Flows and Accounts 60.0 88,189 95,000 • Netwealth continues to be a leading beneficiary from ongoing 81,804 50.0 85,000 industry consolidation and 75,512 change 71,424 $9.3B 75,000 40.0 • Record half year FUA increase of 65,688
Slide 11: Driven by new and existing Financial Intermediaries
1H2021 Results Presentation 11 Driven by new and existing Financial Intermediaries 2,982 Financial Intermediaries on the platform at 31 Dec 20, up 139 (4.9%) compared to 30 Jun 20 FUA growth is driven by Breakdown of FUA growth FY2015 to 1H2021 half year growth $7.3B (+23.2%) Existing Financial Inte
Slide 12: Trends shaping wealth management
1H2021 Results Presentation 12 Trends shaping wealth management The age of the digital client experience + From investment expert to wealth coach + Proliferation of advice technologies = A need to modernise the advice delivery model Clients demand a digital An increase focus on Margin squeeze as a r
Slide 13: A single ecosystem for investors and wealth professionals
1H2021 Results Presentation 13 A single ecosystem for investors and wealth professionals Client portal Engage Transact Tasks, Investment Super Buy, sell, Wealth messaging, (IDPS) deposit, pay, professionals document SMART, vault Client data X-wrap Connect GSS Investors Software funds & data Managed
Slide 14: Strategic Initiatives
1H2021 Results Presentation 14 Strategic Initiatives Wealth Platform reporting provides clients with access to Evolved Wealth Products providing investors with unapparelled reporting and analysis tools greater choice and further diversifying our revenue base Joint Xeppo initiatives Accelerator Plus
Slide 15: Our strategic investment in Xeppo
1H2021 Results Presentation 15 Our strategic investment in Xeppo Business Apps Marketing Sales Workflow Documents Reporting Client portal All data is normalised into a common format allowing for seamless ,scalable two Open API Connection Matching & Grouping Data Sync Security way connections Engine
Slide 16: Xeppo partnership consolidated practice and client view
1H2021 Results Presentation 16 Xeppo partnership consolidated practice and client view
Slide 17: Award winning platform
1H2021 Results Presentation 17 Award winning platform Industry recognition for overall satisfaction, service excellence and technology Investment Trends 2020 Investment Trends Chant West Asia's 200 Best Platform Benchmarking Report Planner Technology Report Best Advised Product Under A Billion1 High
Slide 18: Financial performance
1H2021 Financial performance 1H2021 Results Presentation
Slide 19: 1H2021 financial results
1H2021 Results Presentation 19 1H2021 financial results 1H2021 financial commentary (PCP) 1H2020 1H2021 Change % Change Highly profitable Financials Actual Actual • EBITDA of $40.5M ($31.1M), up 30.1% to PCP Platform Revenue 57.3 71.2 13.8 24.1% Other Income 1.3 1.2 (0.1) (6.5%) • EBITDA margin of 5
Slide 20: 1H2021 key performance metrics
1H2021 Results Presentation 20 1H2021 key performance metrics 1H2020 1H2021 Change % Change Platform Statistics Actual Actual 1H2021 performance commentary (Compared to Dec 2019) Funds Under Administration FUA (eop) 28,511 38,799 10,288 36.1% • FUA of $38.8B, up $10.3B (+36.1%) in CY2020 Fee Paying
Slide 21: Revenue trends
1H2021 Results Presentation 21 Revenue trends Average FUA / Average no of Accounts 351 411 296 255 • Average Account size increased to $411,000 for 1H2021, up $60,000 compared to PCP 1H2018 1H2019 1H2020 1H2021 as average Account size increases, revenue streams are diversified and ancillary revenues
Slide 22: Platform revenue composition
1H2021 Results Presentation 22 Platform revenue composition Further revenue diversification as non-administration fee income percentage of platform revenue increased by 6% to 51% compared to PCP Administration fees 49% Transaction fees 12% 4% 5% 6% • Wrap • Brokerage 12% • Super • Share settlement A
Slide 23: Ongoing investment supporting ongoing growth
1H2021 Results Presentation 23 Ongoing investment supporting ongoing growth Strategic investments across IT infrastructure, people and software Total operating expenses 1H2021 commentary (compared to PCP) • Total operating expenses of $31.9M ($27.5M), an increase of $4.3M $31.9M (15.8% increase) $27
Slide 24: Strategic investment in our people
1H2021 Results Presentation 24 Strategic investment in our people Investing in technology. Operations demonstrated scalability Investment in headcount of 32 for 1H2021 Headcount by function 31 Dec 20 0.5% Technology 3.8%2.7% 2 2 6 6.7% 25 -6 Investor services 3 35.0% Investment operations & custody
Slide 25: Proven cost management and cash generation
1H2021 Results Presentation 25 Proven cost management and cash generation High correlation between EBITDA and cash flow • Strong cost management, demonstrated operating leverage & further invested in the platform to continue to deliver operational scalability and efficiency 56.0% 51.5% 53.1% 50.5% •
Slide 26: Summary of business and financial highlights
1H2021 Results Presentation 26 Summary of business and financial highlights Track record of growth in FUA, FUM, Innovative platform initiatives Strategic Investment in Xeppo revenue and profitability Benefit wealth management professionals, • Partnering with a fintech data solutions • FUA net inflow
Slide 27: Outlook
Outlook 1H2021 Results Presentation
Slide 28: Outlook
1H2021 Results Presentation 28 Outlook FUA at 15 Feb 21 of $40.7B, an increase of $1.9B (+4.9% increase) since 31 Dec 20 • Continue to benefit from disruption, ongoing industry • FUA administration fee income is not expected to increase consolidation and change significantly in 2H2021 compared to 1H
Slide 29: Outlook
1H2021 Results Presentation 29 Outlook • Continued to increase investment in IT infrastructure and • Netwealth remains in a very strong financial position software, adding 25 additional technology resources in supported by: 1H2021 and will continue to increase technology Diversified and robust sales
Slide 30: Thank you
Thank you
Slide 31: Questions
31 Questions 1H2021 Results Presentation
Slide 32: Important notice and disclaimer
1H2021 Results Presentation 32 Important notice and disclaimer General Information only No representation is made that any of these statements or forecasts will come to pass or that any forecast result will be achieved, or that there is a reasonable basis for any of Information provided is general i
Slide 33: Appendix and additional information
33 Appendix and additional information 1H2021 Results Presentation
Slide 34: Appendix Reconciliation to 1H2020 underlying results
1H2021 Results Presentation 34 Appendix 1 Reconciliation to 1H2020 underlying results 1H2020 • Reconciliation is provided to underlying financial results Reconciliation to 1H2020 Underlying results Actual previously presented for 1H2020. Underlying results for 1H2020 EBITDA 31.1 were provided at the
Slide 35: Appendix Cash flow workings
1H2021 Results Presentation 35 Appendix 2 Cash flow workings 1H2020 1H2021 • 1H2021 Operating net cash flow pre tax excludes Cash flow workings Actual Actual investment in Xeppo and seed investment provided EBITDA 31.1 40.5 for Magellan funds Non-cash items in EBITDA 0.3 0.4 Changes in working capit
Slide 36: Appendix Consolidated statement of financial position
1H2021 Results Presentation 36 Appendix 2 Consolidated statement of financial position As at 30-Jun-20 31-Dec-20 ASSETS CURRENT ASSETS Cash and cash equivalents 85.5 79.8 Debt free with $79.8M in cash Trade and other receivables 10.3 12.3 Other current assets 4.4 4.7 Financial assets TOTAL CURRENT A