23 August 2018 FY2018 Results Presentation and Strategy Update
DISCLAIMER 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 presentation does not provide recommendations or opinions in relation to specific investments or securities. This presentation has been prepared in good faith and with reasonable care. Neither CAF nor any other person makes any representation or warranty, express or implied, as to the accuracy, reliability, reasonableness or completeness of the contents of this presentation (including any projections, forecasts, estimates, prospects and returns, and any omissions from this presentation. To the maximum extent permitted by law, CAF and its respective officers, employees and advisers disclaim and exclude all liability for any loss or damage (whether or not foreseeable) suffered or incurred by any person acting on any information (including any projections, forecasts, estimates, prospects and returns) provided in, or omitted from, this presentation or any other written or oral information provided by or on behalf of CAF. It is not intended that this presentation be relied upon and the information in this presentation does not take into account your financial objectives, situations or needs. Investors should consult with their own legal, tax, business and/or financial advisers in connection with any investment decision. All numbers are as at 30 June 2018 unless otherwise stated. Numbers may not add up due to rounding. FY2018 Results Presentation & Strategy Update 2
FY18 Summary $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 impacted by one off expenditure up relating to legacy 18% increase, 8m executive 4% from FY17 claims, restructure and adjustments and a highlighting strength shares to be change to the Royal Commission in the underlying cancelled*; no final deferred tax asset related activities business dividend declared $4.1b in funds Ongoing adviser Stronger adviser Neos Life Launched under Management recruitment and employee Product Launch Technology and Administration up 37 High Quality firms engagement June 2018 Solutions Hub to 11% from FY17 Recruited (26 to NPS above industry focus technology Corporate License and average and as a core enabler 11 to Self Licence) solid employment of our future satisfaction business model *Subject to shareholder approval Sources: NPS data – Core Data Survey, May 2018; Employee engagement scores – internal Employee Engagement Survey, May 2018 FY2018 Results Presentation & Strategy Update 3
Strategy update FY2018 Results Presentation & Strategy Update 4
My priorities since joining as CEO in April Stakeholder Completed Completed Against a Initiated backdrop engagement portfolio organisational Strategic including review of all re-structure of the Royal Refresh advisers, business to simplify Commission program to shareholders, units, w ith operations and the review all our people, strategic and align significant operating units industry industry options to future and market partners and assessed strategy uncertainty and positioning regulators disruption unfolding FY2018 Results Presentation & Strategy Update 5
Significant, multi-faceted disruption presents challenges and opportunities (Baby) Boomers: those born between 1946 and 1965 HENRYs: High Earners Not Rich Yet FY2018 Results Presentation & Strategy Update 6
Other areas of the wealth value chain have experienced significant change, where to for the traditional dealer group? • FOFA reforms, enshrining of best interest duty • Historical product revenue and commission incentive structures removed with some grandfathered Advice • FASEA launched – significant uplift in education standards • Emerging fin-tech and robo-advice new entrants • Margin pressure across Asset Management • Rise of passive investment thematic / active boutiques Product • New investment structures: ETFs, MDAs, SMAs, LICs • Insourcing of investment capability within larger Industry Superannuation Funds • Consolidation and scale winning • Technology innovation with new entrants and existing players making large capital investments Platform • Significant margin pressure and unwinding of historical badge arrangements • Large SMSF market remains • Traditional role of the dealer group as an aggregator for aligned distribution increasingly less relevant Dealer • Significant consolidation and now disaggregation of licenses and move to self-licensing group • Industry structural changes, with limited evolution of actual dealer group business models FY2018 Results Presentation & Strategy Update 7
There remains a large and attractive market for the right network of advisers >2x 1/3 increase in licenses 3 granted in 2016 & 17 than in the previous 2 years; million driven by self-licensed Generation transition: practices up to 1/3 of advisers could exit the industry 10 % Australians intend to turn w ithin 5 yrs, driven by to a financial adviser for demographics and new advice w ithin 2 years professional standards requirements decline in advisers at the Underlying need for financial advice remains ‘big six’ in the 12 months This transition will require to July 2018 support Advisers are moving away from the ‘big six’ Note: Big six refers to the four major banks and AMP and IOOF Sources: Estimation of demand for financial advice – Investment Trends 2017 Financial Advice Report; Adviser movements - analysis of ASIC financial adviser register, data as of 1 July 2017 and 1 July 2018; Increase in licensees – analysis of ASIC licensee register, data as of 16 August 2018; Adviser exits – ABC News interview of industry expert; 26 June 2018 FY2018 Results Presentation & Strategy Update 8
Centrepoint is well positioned in a changing industry environment 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; driven by self-licensed practices Note: AAP network includes advisers of self-licensed practices to whom Centrepoint offers some services Sources: Adviser numbers – analysis of ASIC financial adviser register, data as of 1 July 2018 excluding Dover Financial advisers and Wyndham Vacation Clubs; Centrepoint data FY2018 Results Presentation & Strategy Update 9
Centrepoint’s advice network FY2018 Results Presentation & Strategy Update 10
Centrepoint solves two categories of problems for financial advisers 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 • engages > 15 vendors Running a small Operating as a • finds cashflow management to medium sized • works with 6 regulators financial adviser to be the biggest of many business pain points • needs training, technical and compliance support ~200k SMEs in financial and 2,911 licensees insurance services 24,606 advisers ~34k of which have less than 20 staff Note: SMEs refer to businesses with 199 or less employees and includes sole traders (as per ABS definition) Sources: SMEs in Financial and Insurance Services – ABS 8165.0 Counts of Australian Businesses, including Entries and Exits (June 2017); Adviser, licensee, average adviser numbers – analysis of ASIC financial adviser register, data as of 1 July 2018 excluding Dover Financial Advisers and Wyndham Vacation Clubs; Client numbers - Business Health Insights Survey June 2017 FY2018 Results Presentation & Strategy Update 11
Centrepoint services clients’ needs as financial advisers and business owners HR/legal New AFSL support setup Responsible Business Governance manager Cashflow coaching & tools training Compliance Business Licensee Licensee Acquisition management reviews and services succession services File audits Peer group Running a small facilitation Operating as a to medium sized financial adviser business Website Advice design and technology development Client Advice growth services services Client Client segment- Technical Training/ marketing support ation and webinars pricing Lead Client-facing Research Adviser generation advice tools services education FY2018 Results Presentation & Strategy Update 12
Centrepoint’s future offer will have 4 key elements LICENSEE BUSINESS MANAGEMENT SERVICES SERVICES ADVICE CLIENT GROWTH SERVICES SERVICES FY2018 Results Presentation & Strategy Update 13
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