Centrepoint Alliance Limited · ASX:CAF
Centrepoint Alliance — FY2018 Earnings Presentation
41 slides from Centrepoint Alliance's earnings presentation, Aug 23, 2018
Slide 1: FY2018 Results Presentation and Strategy Update
23 August 2018 For personal use only FY2018 Results Presentation and Strategy Update
Slide 2: Disclaimer
DISCLAIMER For personal use only This presentation is for general information purposes only and should be read in conjunction with the Annual Financial Report and the Appendix 4E lodged with the Australian Securities Exchange by Centrepoint Alliance Limited (ASX:CAF) on 23 August 2018. This presenta
Slide 3: FY18 Summary
FY18 Summary For personal use only $5.5m EBITDA ($6.4m) in one-off ($6.3m) statutory $6.4m Cashflow Capital excluding one off adjustments loss after tax from operation, an management expenditure up relating to legacy impacted by one off 18% increase, 8m executive 4% from FY17 claims, restructure and
Slide 4: Strategy update
For personal use only Strategy update FY2018 Results Presentation & Strategy Update 4
Slide 5: My priorities since joining as CEO in April
My priorities since joining as CEO in April For personal use only Stakeholder Completed Initiated Completed Against a engagement portfolio Strategic organisational backdrop including review of all Refresh re-structure of the Royal advisers, business program to to simplify Commission shareholders, un
Slide 6: Significant, multi-faceted disruption presents challenges and opportunities
Significant, multi-faceted disruption presents challenges and opportunities For personal use only (Baby) Boomers: those born between 1946 and 1965 HENRYs: High Earners Not Rich Yet FY2018 Results Presentation & Strategy Update 6
Slide 7: Other areas of the wealth value chain have experienced significant change
Other areas of the wealth value chain have experienced significant change, where to for the traditional dealer group? For personal use only • FOFA reforms, enshrining of best interest duty • Historical product revenue and commission incentive structures removed with some grandfathered Advice • FASEA
Slide 8: There remains a large and attractive market for the right network of advisers
There remains a large and attractive market for the right network of advisers For personal use only >2x 1/3 3million increase in licenses granted in 2016 & 17 than in the previous 2 years; driven by self-licensed practices Generation transition: 10% up to 1/3 of advisers Australians intend to turn c
Slide 9: Centrepoint is well positioned in a changing industry environment
Centrepoint is well positioned in a changing industry environment For personal use only Product manufacturer owned Other # of advisers # of advisers 10% decline in advisers >2x increase in licenses at the ‘big six’ in the 12 granted in 2016 & 17 than in months to July 2018 the previous 2 years; driv
Slide 10: Centrepoint's advice network
Centrepoint’s advice network For personal use only FY2018 Results Presentation & Strategy Update 10
Slide 11: Centrepoint solves two categories of problems for financial advisers
Centrepoint solves two categories of problems for financial advisers For personal use only A typical A typical SME advice firm • employs less than • employs on average 20 staff 8 advisers with each adviser servicing ~250 • engages > 15 vendors clients • works with 9 regulators Running a small • enga
Slide 12: Centrepoint services clients' needs as financial advisers and business owners
Centrepoint services clients’ needs as financial advisers and business owners For personal use only HR/legal New AFSL support setup Business Responsible Cashflow Governance manager coaching & tools training Compliance Business Acquisition management Licensee Licensee reviews and succession services
Slide 13: Centrepoint's future offer will have key elements
Centrepoint’s future offer will have 4 key elements For personal use only BUSINESS MANAGEMENT LICENSEE SERVICES SERVICES CLIENT GROWTH ADVICE SERVICES SERVICES FY2018 Results Presentation & Strategy Update 13
Slide 14: Centrepoint's future offer will have key elements
Centrepoint’s future offer will have 4 key elements For personal use only BUSINESS MANAGEMENT LICENSEE SERVICES SERVICES NEW AFSL SETUP BUSINESS COACHING GOVERNANCE AND COMPLIANCE ACQUISITION AND SUCCESSION RESPONSIBLE MANAGER TRAINING PARTNERED SERVICES LICENSEE REVIEWS DASHBOARD REPORTING FILE AUD
Slide 15: Centrepoint's new business model will be oriented around four principles
Centrepoint’s new business model will be oriented around four principles For personal use only Solving advisers problems through expertise, insight and scale benefits Standalone adviser community, not controlled by a product manufacturer Harnessing data to generate insights and create network effect
Slide 16: Financial results
For personal use only Financial results FY2018 Results Presentation & Strategy Update 16
Slide 17: FY18 Financial Results
FY18 Financial Results For personal use only Total • EBITDA excluding one-off adjustments $m FY16 FY17 FY18 grown by 4% to $5.5m Revenue 116.5 129.4 123.2 • Revenue continuing to transition from Adviser fees and commissions (84.5) (97.1) (90.9) rebates Gross Profit 32.0 32.3 32.3 Management Expenses
Slide 18: One-off adjustments
One-off adjustments For personal use only EBTIDA excluding One-Off's $5.5m • Legacy Claims relate to a historical period (pre- 1/7/10). The provision was increased by $4.7m during the year One-Off's • Restructuring costs represents the costs associated with replacing the CEO, Legacy Claims ($5.4m) t
Slide 19: Group balance sheet
Group balance sheet For personal use only $m 30/06/17 30/06/18 • Simple, clean balance sheet Cash & Term Deposits 31.2 9.5 • Other Assets includes $4.6m in deferred tax assets, down Intangible Assets & Goodwill 2.2 1.7 from $9.1m in FY17 reflecting the $4.5m reduction in tax losses Other Assets 26.5
Slide 20: Cash flow
Cash flow For personal use only FY18 Cash flow Closing cash position of $9.5m 40 $6.8m -$5.5m • $6.8m Cashflow from operations includes core operating cashflow of $6.4m (an increase of 35 $-1.2m 18%), and $0.4m for interest, dividends, $31.2m $-5.3m property/plant/equipment 30 $-1.5m • Investments i
Slide 21: Capital management
Capital management For personal use only Dividends per share (cents per share) Dividends • As at 30 June 2018 there are distributable earnings of $11m 12.00 and franking account reserve of $18m (equivalent to $41m of fully franked dividends) 10.00 • The Company’s dividend policy is for 50-80% of NPA
Slide 22: Strategy outlook
For personal use only Strategy outlook FY2018 Results Presentation & Strategy Update 22
Slide 23: Regulatory and market forces that Centrepoint is actively managing
Regulatory and market forces that Centrepoint is actively managing For personal use only Regulatory/market force Impact Royal Commission into • Royal commission has a high likelihood of impacting us, the extent to which will be unclear until Financial Services it comes to a close in 2019 Professiona
Slide 24: Centrepoint is moving towards a new identity
Centrepoint is moving towards a new identity For personal use only FROM TO Licensee and dealer group Advice and business services Competing with platforms and fund managers Complement to platform innovation players Industry conflict and opaqueness Leading through trust and transparency Reactive foll
Slide 25: Centrepoint's strategy: grow its community of advisers while transitioning to a new service model
Centrepoint’s strategy is to grow its strong community of advisers whilst transitioning to a new service model powered through data and insight For personal use only GROW RECREATE Licensed and self-licensed advice practices OPTIMISE Create the future of advice and Transition current firms to new bus
Slide 26: Over the next 6-12 months, we have a clear set of priorities
Over the next 6-12 months, we have a clear set of priorities H1 FY19 H2 FY19 For personal use only Conduct portfolio review of businesses Introduce new governance and standards framework Implement new organisation structure Launch education transition support model OPTIMISE Build new relat
Slide 27: Questions?
For personal use only Questions? FY2018 Results Presentation & Strategy Update 27
Slide 28: Appendices
For personal use only Appendices FY2018 Results Presentation & Strategy Update 28
Slide 29: Operating segment results
Operating segment results For personal use only Funds Management Licensee and Funds Management and Administration: Corporate Total and Administration Advice Services • Funds Under Management & Administration $m FY17 FY18 % FY17 FY18 % FY17 FY18 % FY17 FY18 % net flows, and favorable market movement
Slide 30: Supporting professional advisers
Supporting professional advisers For personal use only Key Performance Indicator FY16 FY17 FY18 • Ongoing recruitment success with 37 high value, high potential, and partner circle firms Number of New High Quality Firms (Gross) 59 39 37 which equates to 54 new AR’s Number of Advice Firms 493 483 476
Slide 31: Firm segment analysis
Firm segment analysis For personal use only Firms AR's Firms Firms Firms AR's Firms AR's • 37 High Quality Firms recruited (Corp Licence Key Performance Indicator FY17 FY17 Ceased New FY18 FY18 Variance Variance 26 and Self Licence 11) Corp Licence 251 386 (39) 28 240 338 (11) (48) • Overall increas
Slide 32: Funds under management and administration
Funds under management and administration For personal use only Key performance indicator FY16 FY17 FY18 • FUMA reached milestone of $4.1 billion growing by 11% from FY18 Gross Funds Inflows ($m) 237 322 311 • Managed Account FUMA continues to be well supported growing 47% to $505m in FY18 Net Funds
Slide 33: Salaried advice and Lending Solutions
Salaried advice and Lending Solutions For personal use only Salaried Advice Lending Solutions • Focused on extracting value from existing clients and • Providing access to lenders and products and driving adviser performance distribution support for mortgage brokers • Adviser growth and retention st
Slide 34: Accounting partnerships and insurance
Accounting partnerships and insurance For personal use only Accounting partnerships Life insurance partnerships • RFE continues to establish new joint ventures and • Neos Life is a new Australian life insurance business clients focused solely on the advised life insurance market • Centrepoint has pr
Slide 35: Claims Overview
Claims Overview For personal use only FY 18 • Claims Provision balance as at 30 June 2018 is Specific Adviser Legacy claims Non-legacy Total $5.4m comprising $3.9m of Legacy claims* and fees incurred, an Incurred But Not Reported (IBNR) Number $m Number $m Number $m Number $m of $1.3m, and Non Legac
Slide 36: Claims origination, lodgement and paid
Claims origination, lodgement and paid For personal use only Legacy claims received significantly lags advice provided and given Legacy claims paid has been impacted by Special claims and the statute of limitations is expected to decline further resolution of larger litigated claims Claims Originati
Slide 37: Significant, multi-faceted disruption presents challenges and opportunities
Significant, multi-faceted disruption presents challenges and opportunities For personal use only 1 2 3 4 5 6 ‘Boomers and ‘Social licence ‘Game-changing ‘Business ‘Power of the ‘Raising the bar’ HENRYs’ to operate’ technology’ models in flux’ iron fist’ Ageing population with Royal Commission Super
Slide 38: Example of some of Centrepoint's advisers and their needs
Example of some of Centrepoint’s advisers and their needs For personal use only Catherine Murray Mid-thirties Early-fifties >15 years of experience 20 years as a financial adviser Bought business from previous owner Built several financial planning businesses ~250 clients ~260 clients 6 staff incl.
Slide 39: Regulatory and market forces that Centrepoint is actively managing
Regulatory and market forces that Centrepoint is actively managing For personal use only Legislative impact Market impact Royal Commission into • Royal commission into misconduct in the Banking, Superannuation and • Like many others in the Financial Services sector Centrepoint provided Financial Ser
Slide 40: Definitions
Definitions For personal use only Term Definition Basic EPS Basic Earnings per Share is NPAT divided by average number of ordinary shares Includes assets and revenue in respect of self-licensed firms, Salaried Advice, Licensed Practices (flat fee model), Contemporary Business Model Open Administrati
Slide 41: Definitions
Definitions For personal use only Term Definition Gross Profit Revenue received less Direct Costs LICs Listed Investment Companies are a type of investment, incorporated as companies and listed on a stock exchange Managed Accounts Funds invested in Ventura Managed Account Portfolio Solutions (VMAPS)