Centrepoint Alliance Limited · ASX:CAF
Centrepoint Alliance — H1 FY2020 Earnings Presentation
24 slides from Centrepoint Alliance's earnings presentation, Feb 21, 2020
Slide 1: FY20 First Half Results Presentation and Strategy Update
FY20 FIRST HALF Results Presentation and Strategy Update Angus Benbow, CEO 21 February 2020
Slide 2: Disclaimer
DISCLAIMER This presentation is for general information purposes only and should be read in conjunction with the Half Year Financial Report for the six months ended 31 December 2019 and the Appendix 4D lodged with the Australian Securities Exchange by Centrepoint Alliance Limited (ASX:CAF) on 21 Feb
Slide 3: Summary
SUMMARY Financial Results Industry Opportunities Priorities • Adviser fees up 37% • 55 new licensed advisers and • Drive organic growth in advisers 10% increase in net adviser numbers • Positive EBITDA (excluding legacy • Pursue inorganic opportunities claims) • Focussed on delivery of services to a
Slide 4: Financial results
Financial results 4
Slide 5: 1H20 Financial Results
1H20 FINANCIAL RESULTS $m 1H19 1 2H19 1 1H20 Key points Gross Profit 16.1 14.6 14.1 • Gross profit down on 2H19 due to continued rebate run-off Management Expenses (13.8) (13.9) (13.9) EBITDA (excl. Legacy Claims) 2.3 0.8 0.2 • Management expenses flat despite investment in Strategic Refresh transfo
Slide 6: Revenue Drivers
REVENUE DRIVERS Strengthened revenue mix Key points • Adviser fees up 37% due to strong adviser growth and $16.1m transition to new pricing model $14.1m $2.1 • Recurring adviser fees now largest source of revenue $1.7 Other • Legacy product rebates down 35% due to industry outflows $4.6 and regulato
Slide 7: Cash Flow
CASH FLOW Key points $0.8m $0.5m $7.9m $0.2m $0.9m $7.1m • Closing cash position of $7.1m • Neos Life loan repayment $0.8m • Software investment of $0.2m for online adviser portal, Centrepoint Connect Opening NEOS Life Net Cash Software Legacy Closing Cash Loan Flow From Investment Claims Paid Cash
Slide 8: Group Balance Sheet
GROUP BALANCE SHEET $m FY19 1H20 Key points Cash & Term Deposits 7.9 7.1 • Loans receivable includes $5.2m from Neos, of which $1.8m Loans Receivable 6.6 5.9 is scheduled to be repaid by June 2020 Claims Provision 1.3 1.0 • Substantial franking credit balance available of 12 cents per Net Assets 16.
Slide 9: Strategy update
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Slide 10: Focus, Recreate, Grow: Centrepoint reset its strategy in August 2018
CENTREPOINT RESET ITS STRATEGY IN AUGUST 2018 IN ANTICIPATION OF CURRENT MARKET DISRUPTION STRATEGIC REFRESH, AUGUST 2018 RECREATE GROW FOCUS Recreate a new offer that will Grow differently and Focus on our community of aggressively to build scale position Centrepoint as a advisers and the value as
Slide 11: Our strategy is delivering strong growth in adviser numbers
OUR STRATEGY IS DELIVERING STRONG GROWTH IN ADVISER NUMBERS Licensed advisers 10% increase in AR numbers in 6 months Record half for recruitment, losses stabilised Closing adviser numbers Advisers won/lost 351 55 329 Organic 300 36 10 growth 32 19 3 45 New 29 recruits 17 -23 -19 -52 -7 -23 -26 Exite
Slide 12: Centrepoint exists to help advisers thrive in business
CENTREPOINT EXISTS TO HELP ADVISERS THRIVE IN BUSINESS AND IS FOCUSSED ON DELIVERING SERVICES AT SCALE 12 * Source: Centrepoint Alliance internal management information
Slide 13: Centrepoint's services and adviser community are highly valued
CENTREPOINT’S SERVICES AND SUPPORTIVE ADVISER COMMUNITY ARE HIGHLY VALUED AT A TIME OF INTENSE PRESSURE FOR ADVISERS Education requirements Code of Ethics Royal Commission Recommendations • Purpose is to raise minimum education • Purpose is to transform financial advisers • Purpose is to improve cus
Slide 14: Adviser sentiment is at all time lows and increasing numbers plan to exit
ADVISER SENTIMENT IS AT ALL TIME LOWS AND INCREASING NUMBERS ARE PLANNING TO EXIT THE INDUSTRY Adviser sentiment Adviser intentions: Next 3 years Royal Commission Hearings 58 57 40% 5756 56 60 54 7,500 50 51 52 52 50 42 41 41 42 7,000 3739 39 39 Sentiment Index 30% ASX All Ordinaries Index 40 35 36
Slide 15: Industry disruption will continue to unfold, especially among smaller licensees
INDUSTRY DISRUPTION WILL CONTINUE TO UNFOLD, ESPECIALLY AMONG SMALLER LICENSEES Large licensees are growing Banks are exiting wealth 9,000 Large Licensees Banks 12 444 440 8,000 10 10 10 7,000 No of Licensees 9 420 8 406 6,000 8 400 No of ARs Avg ARs 390 6 383 380 5,000 6 8,691 8,390 360 4,000 7,652
Slide 16: Amidst disruption, there are clear opportunities for growth
AMIDST DISRUPTION, THERE ARE CLEAR OPPORTUNITIES FOR GROWTH Large licensees are growing Banks are exiting wealth • Centrepoint’s core market • Organic growth opportunity: • Strategic advantages: ‒ Attract dispossessed advisers to our licence ‒ First large licensee to move to fee-based model ‒ Growin
Slide 17: Market segments provide discrete opportunities to leverage scalable platform
THE VARIOUS MARKET SEGMENTS PROVIDE DISCRETE OPPORTUNITIES TO LEVERAGE CENTREPOINT’S SCALABLE PLATFORM OF SERVICES Licensee Self-licensed Wholesale Licensee Core business Extension New offer Definition Large licensee for individual advice Service provider for small self-licensed Licensee and tailore
Slide 18: We have the right strategy and a clear set of priorities
WE HAVE THE RIGHT STRATEGY AND A CLEAR SET OF PRIORITIES FOCUS RECREATE GROW • Drive organic growth in the licensed and self-licensed network • Pursue industry consolidation opportunities • Continue to refine cost base while transitioning to recurring fee-based model • Progress capital management in
Slide 19: Appendices
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Slide 20: Centrepoint's Advice Network
CENTREPOINT’S ADVICE NETWORK 110 (WA) 744 (QLD) Self Licensed 85 Self Licensed 541 Corp - Licensed 24 Corp - Licensed 138 Salaried 0 Salaried 2 Mortgage Brokers 1 Mortgage Brokers 63 183 (SA) 511 (NSW) Self Licensed 144 Self Licensed 398 Corp - Licensed 29 Corp - Licensed 66 Salaried 0 Salaried 2 Mo
Slide 21: Centrepoint's Experience
CENTREPOINT’S EXPERIENCE Fit for purpose Governance & compliance capability founded on hard lessons Culture & capabilty aligned to new world of advice Professional Centrepoint acquired • Contemporary business model enables advisers to Investment Services Professional Strategic Refresh select the pro
Slide 22: Firm Segment Analysis
FIRM SEGMENT ANALYSIS Firms AR's New Firms Ceased Firms New AR's Ceased AR's Firms AR's Key Performance Indicator FY19 FY19 1H FY20 1H FY20 1H FY20 1H FY20 1H FY20 Close 1H FY20 Close Corporate Licence 215 300 37 (13) 55 (26) 239 329 Self Licence (Normal) 225 1,138 9 (9) 142 (182) 225 1,098 Self Lic
Slide 23: Grandfathered Rebates
GRANDFATHERED REBATES $m 1H19 2H19 FY19 1H20 Total Rebate 6.2 5.3 11.5 4.0 Insurance Rebate 1.6 1.1 2.7 1.1 Platform Rebate 4.6 4.2 8.8 2.9 • Strategic Refresh began in August 2018 to address phase out of rebates and replace with a new sustainable revenue model • Grandfathered platform rebate run-of
Slide 24: Definitions
DEFINITIONS Term Definition AFCA Australian Financial Complaints Authority AFSL ARs Australian Financial Services Licence Authorised Representative AML & CTF Anti Money Laundering & Counter Terrorism Financing CAGR % Compound Annual Growth Rate % Includes assets and revenue in respect of self-licens
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