FY12 Results Investor Presentation

Transcription

1 FY12 Results Investor Presentation 30 August 2012 SFG Australia Limited is a company listed on the Australian Securities Exchange; ASX Code: SFW. It was formerly known as Snowball Group Limited.

2 Important Notice & Disclaimer This presentation is for general information purposes only and should be read in conjunction with the Appendix 4E lodged by SFG Australia Limited (SFGA) with the Australian Securities Exchange (ASX) (ASX: SFW) on 30 August SFGA was formerly known as Snowball Group Limited (ASX: SNO). This presentation does not purport to provide recommendations or opinions in relation to specific investments or securities. The merger of Shadforth Financial Group Holdings Limited (Shadforth) and SFGA (then Snowball Group Limited), and the relative size of Shadforth compared to SFGA meant that the merger was treated as a reverse acquisition for accounting purposes. This means that the prior comparative period results in the statutory income statement reported by SFGA is the statutory income statement results of Shadforth only, but the statutory balance sheet reported by SFGA is the statutory balance sheet of the Combined Group in both periods. To provide a more meaningful overview of the Group s performance, the financial performance of SFGA on a Pro forma basis for the prior comparative period is reported in the Appendix 4E lodged with the ASX on 30 August 2012, and this presentation primarily illustrates the Pro forma result of the merged group for the prior comparative period (as if SFGA and Shadforth had been combined for the periods disclosed in this presentation). This presentation has been prepared in good faith and with reasonable care. Neither SFGA 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, SFGA 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 SFGA. 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 2012 unless otherwise stated. Numbers may not add due to rounding. 2

3 Agenda Section Page FY12 Results overview Key highlights 4 Benefits from the merger 5 Market conditions 6 Group overview 7 FY12 Results detailed summary 11 Operational Update & FY13 Strategic Initiatives 20 Summary 29 Appendix 31 FinHQ diagrammatic overview Definitions Reconciliation to Appendix 4E Segment Net Operating Revenue (1H12 & FY11) Historical Financial Performance Revenue drivers 3

4 FY12 Results Key highlights Solid result despite continued tough times Strong first full year trading period of merged entity Successful integration has provided upside to original merger expectations and is substantially operationally complete Group delivered underlying earnings growth in tough operating conditions through the achievement of material merger synergies and completion of tuck-in acquisitions announced today new tuck-in of a small, Perth based general insurance broking business Reported NPAT and EPS affected this year by the Government's reversal of the Rights to Future Income (RTFI) legislation 2 Final, fully franked dividend of 1.00c per share determined, bringing total dividends for the year to 2.00c fully franked Results FY12 FY11 Pro forma Net Operating Revenue 1 $118.3m 2% Operating EBITDA $41.9m 7% Underlying NPAT $28.6m 6% Reported NPAT 2 $11.3m 55% Reported NPAT excl. RTFI 2 $20.6m 70% Underlying EPS 3.93c 3% Reported EPS c 57% Reported EPS excl. RTFI c 65% DPS (fully franked) 2.00c 20% FUA $10.8bn 7% FUAdmin $9.3bn 5% FUM $4.4bn 18% Note: Merger of SFGA and Shadforth effective 26 June Net Operating Revenue differs from Statutory Reporting see Appendix for reconciliation. 2. The Government has selectively & retrospectively reversed the RTFI legislation, which has resulted in a reversal of the RTFI benefits booked by the Company to date in FY12, explained above and in Slides 12 and 19. Reported NPAT excl. RTFI and Reported EPS excl. RTFI illustrate the results excluding the impact of RTFI in both FY11 and FY12. 4

5 Benefits from the merger Integration & upgraded synergies on plan SFGA has achieved $4.4m in synergies in 2H12, totaling $6.3m for FY12, in line with previous expectations 1 Main integration objectives complete on track to achieve upgraded synergies from the merger of $10.5m per annum by end FY13, annualised and gross of integration costs 1H12 synergy upgrade FY11 cost savings $10.5m p.a FY13 synergies to be achieved FY13 full year benefit of FY12 Synergies for FY13 largely relate to full year impact of successful re-negotiation of the Group s portfolio administration supply contracts, property savings already executed and full benefit of rationalisation of duplicate functions Synergies stated at merger 5.0 $m H12 achieved 1 1H12 achieved Total Synergies & Savings Synergies & Savings achievement timetable 1. 1H12 expectation was to achieve a total of $5.6m in savings and synergies in FY12. The Group has achieved $6.3m, 13% ahead of expectations. 5

6 ASX All Ordinaries Index Market conditions Performance of ASX All Ordinaries average FY12 10% compared to FY11 average 5,500 5,000 Example of our clients asset allocation at 30 June 1 : Australian Equities 37% International Equities 19% Cash & Fixed Interest 35% Property & Other Securities 10% The majority of the Group s asset based fees (c. 80% of revenue) are calculated using monthly portfolio balances 4,500 4,000 3,500 ASX All Ordinaries Index daily spot close 1H monthly average 2H monthly average FY monthly average Period end spot close FY12 ASX monthly average 10% on FY11 monthly average MSCI ACWI ex Australia All Cap (re-based to ASX at 1-Jul-11) 2H12 ASX monthly average 1% on 1H12 monthly average FY12 ASX Spot 11% on FY11 1. Using actual asset allocation data for total BT FUAdmin as at 30 June

7 GROUP OVERVIEW

8 Group overview A unique, quality financial advice & wealth management firm Quality, professional, HNW and complementary financial advice business models fee for service Integrated advice implementation services across the client value chain (see FY12 Revenue by service in below chart) Significant scale, footprint and industry presence Experienced management team, with strong transaction execution and integration credentials Aligned interests of management, advisers and staff with shareholders Unique adviser footprint FY12 Key metrics $118.3m $259m $9.3bn $10.8bn FY12 Revenue by state VIC WA QLD NSW TAS SA FY12 Revenue by service Financial Advice Fees Portfolio Administration Fees Insurance, Mortgage Broking Fees Portfolio Management Fees Stockbroking Fees Associates, License & Other Fees $28.6m $4.4bn Underlying Op. NPAT Revenue Market Cap 1 1. As at 20 August FUM FUAdmin FUA 8

9 End-to-end business model Integrated advice & implementation services across the entire client value chain Family office HNW Clients Affluent Clients Dealer groups, practices & advisers Leading Professional Advice Model Private client focus employed advisers & accountants 14 offices nationally Corporate Solutions 7 Relationship Mgrs Affiliate Advice Model 17 practices & 36 advisers nationally B2B Advice Services Model Adviser Services, Platforms & Funds Best Advice : Client, Adviser, Practice & Dealer Services IP & best practice Group Advice Implementation Services & Corporatised Support Services Portfolio Construction & Management Platform Services Insurance Services Stockbroking Corporate Services 1. Includes 4 Accountants from the acquisition of Spencers Accountants and 5 Financial Advisers from the acquisition of Life Financial Services (Ballarat) on 1 June

10 Quality financial advisers Industry leading financial advisers across key metrics Average FUA per adviser 1 : $84m Average age of advisers: 43 years ~70% of Shadforth advisers are Certified Financial Planners highest industry qualification available Shadforth s recent advertisement in Qantas & Virgin inflight magazines: 50 $m - Each bar represents an individual adviser Illustrative FUA per Private Client Adviser in End-to-End Model 1, Jun This data (and the chart data) excludes the recent acquisition of Life Financial Services and is estimated based on the End-to-end model s Servicing Advisers, meaning those who are servicing existing clients. Most Advisers undertake a combination of roles between attracting new clients and servicing existing clients. This data does not include those Advisers who are primarily dedicated to attracting new clients. 10

11 FY12 RESULTS DETAILED SUMMARY

12 Financial Performance $m FY12 FY11 1 FY11 1 Net Operating Revenue % Net Operating Expenses 2 (76.4) (76.5) (0%) Operating EBITDA % Underlying NPAT % One-off items (4.7) (2.2) 114% Acquisition costs (1.9) (9.2) (79%) Amortisation expense (4.3) (5.3) (18%) Notional funding cost (0.5) (0.6) (17%) Income tax (5.9) 15.8 large Reported NPAT (55%) RTFI reversal 9.3 (13.3) large Reported NPAT excl. RTFI % Reported EPS (c) (57%) Reported EPS excl. RTFI (c) % Underlying EPS (c) % DPS (c) (20%) FY12 Operating EBITDA in line with 1H12 guidance, positively assisted by savings and synergies achieved to date, and acquisitions completed reinvestment spend commenced during the year Underlying NPAT considered a meaningful indicator of the underlying performance and cash generating capability of the Group RTFI legislation has been retrospectively and selectively reversed by the Government. Reported NPAT and EPS include the accounting reversal of previously booked tax benefits relating to RTFI total cash impact is $2.3m, accounted for in the FY12 result (see slide 19 also). Reported NPAT and EPS excl. RTFI illustrates the results excluding the (non-operational) impact of RTFI in both FY11 and FY12 One-off items consist primarily of integration costs, including $2.9m of redundancy expenses and $1.2m relating to the rationalisation of properties, which includes a $0.7m write-off of leasehold improvements on vacated properties. Expect some one-off costs to be incurred in FY13 to complete the integration Acquisitions costs relate to acquisitions in the pipeline, executed, and those investigated but discontinued Amortisation expense change as a result of the finalisation of the merger Purchase Price Allocation process in 2H12 1. Note: FY11 is presented as Pro forma and includes re-classifications between Net Operating Revenue and Expenses in FY11 (which have a net zero impact on Operating EBITDA) outlined in Appendix. 2. Net Operating Revenue and Expenses differ from Statutory Reporting see Appendix for reconciliation. 12

13 FUMA: Clients' funds summary Market conditions continue to be weak spot close ASX All Ordinaries 11% on FY11 Group maintained slight positive FUAdmin net inflows in FY12 Recently launched Strategic Fixed Interest Trust FUM equal to $723m, up 13% from $637m as at 31-Dec-11 Launched upgraded MPS & DPU Service in Jul-12, on Colonial platform Developed the Mosaic Strategic Cash Plus Trust for launch to clients in late 2012 $3.7bn $9.8bn $11.6bn % $4.4bn % $9.3bn % $10.8bn FUM FUAdmin FUA FUM FUAdmin FUA FY11 FY12 End-to-end model Affiliate model B2B Advice Services model 13

14 Segment Net Operating Revenue 87% of the Group s Net Operating Revenue is generated directly or indirectly by the End-to-end model $m End-to-end model Affiliate model B2B Advice Services model FY12 Total % of Net Operating Revenue Financial Advice Fees (relates to FUA) % Insurance, Mortgage Broking Fees % Portfolio Administration Fees (FUAdmin) % Portfolio Management Fees (FUM) % Stockbroking Fees % Accounting, Associates, License & Other Fees % Net Operating Revenue % % of Net Operating Revenue 87% 7% 5% 100% Includes $0.5m of Accounting revenue from Jeena and Spencers Accountants acquisitions during FY12 1H12 and FY11 Segment Net Operating Revenue results have been re-classified to be comparable with the accounting treatment of the FY12 results (and future results) refer Appendix 1. Includes $0.3m of revenue from expense recharges not recognised in FY11 (FY11 treatment netted this revenue off against related expenses, with a net zero impact on Operating EBITDA). 2. Includes $0.3m of revenue from expense recharges not recognised in FY11 (FY11 treatment netted this revenue off against related expenses, with a net zero impact on Operating EBITDA). 14

15 Operating EBITDA Solid result in tough period opportune time to have bedded down the merger $m 39.2 FY11 Operating EBITDA (4.2) Impacted by lower revenue largely due to markets, and some increase in cost base and reinvestment Organic contribution (ex synergies) Net organic impact $2.1m, 5.4% 2.5 Revenue synergies 6 month impact net full year impact included in synergy expectation Organic Expense savings & synergies Inorganic Inorganic contribution 6.8% 41.9 FY12 Operating EBITDA FY13 will include: normal factors of net new growth in clients & impact of markets full year impact of FY12 acquisitions & synergies achieved benefit of FY13 synergies & integration costs (not included in Op. EBITDA) part year impact of any mergers or acquisitions completed, such as Parkside announced today normal expense base increases FY12 & FY13 reinvestment & spend on developing new capabilities some ongoing & one-off costs associated with the implementation of the regulatory reforms 15

16 Net Operating Revenue Overall revenue impacted by weak conditions, positively assisted by acquisitions Decrease in monthly average FUA balances, primarily due to market movement 2.5 Consistent with market impact on FUAdmin Impact of acquisitions % (0.4) (0.5) (2.5) Assisted by new Fixed Interest Trust, offset by markets and some negative impact from fund reorganisation $m FY11 Net Operating Revenue Financial Advice Fees Portfolio Admin Fees - revenue synergy Organic impact 0.1% Portfolio Admin Fees - other Insurance & Mortgage Broking Fees Organic Portfolio Mgmt Fees Inorganic Inorganic impact 2.1% Stockbroking Financial Portfolio 1 & Others Advice Fees Admin Fees Fees Accounting fees FY12 Net Operating Revenue 1. Note: Includes minor risk fees also associated with acquisitions. Note: FY11 Net Operating Revenue has been re-stated to exclude Mosaic Portfolio Advisers and Stockbroking expense recovery income. See Appendix for reconciliation. 16

17 Net Operating Expenses FY12 achievement of savings & synergies reduced expense base by 5%, offset by some increase in operating base & reinvestment as noted in 1H12 result 0.1% (3.8) Includes operating costs associated with integration ( duplicate leases, expect out in FY13; IT support outsourcing arrangements) and business reinvestment $m Organic impact 2.6% 2.5% FY11 Net Operating Expenses Savings & Synergies Increase in personnel expenses: new hires, CPI increases Occupancy, IT, Mktg, Other Contribution from acquisitions FY12 Net Operating Expenses Organic Inorganic Note: FY11 Net Operating Expenses have been re-stated to exclude expense recovery expense items of Mosaic Portfolio Advisers and Stockbroking. See Appendix for reconciliation. 17

18 Underlying NPAT, EPS & DPS Final dividend determined to be 1.00c per share total FY12 payout ratio of 51% Payout at lower end of guidance of 50 70% of Underlying NPAT takes into account the Group s acquisition strategy (having paid net $7.5m in cash consideration for acquisitions and deferred payments during the year); reversal of the RTFI legislation ($2.3m cash impact); and the proposed capital adequacy regime for Responsible Entities (requiring in excess of $5m in November 2012) Underlying NPAT Underlying EPS 6% 3% DPS (fully franked) % 2.00 $m c c FY11 FY12 FY11 FY12 FY11 FY12 18

19 Cash Flows & Balance Sheet Strong cash flows from operations no net debt $m FY12 Opening cash balance 33.0 Operating cash flows (incl. one-offs, excl. tax) 36.1 Investing activities (incl. acquisitions) (8.9) Financing activities (incl. repayment of bank debt and dividends) (27.6) Tax paid (13.4) FY12 Closing cash balance Balance Sheet, $m FY12 Cash Other Current Assets 16.5 Total Assets Current Liabilities 33.5 Total Liabilities 54.6 Net Assets The reversal of the RTFI legislation will have a total cash flow implication of $2.3m, being cash refunds and offsets received to date, expected to be repaid to the ATO $13.7m of bank debt repaid during the year and $7.5m paid as consideration for acquisitions (net of cash received on acquisition) and deferred payments Group has net cash balance sufficient to cover pending dividend of $7.3m, RTFI reversal, and increased regulatory capital of over $5m in November x Operating EBITDA debt facility available to fund future acquisitions 1. Including $2.4m in cash held on trust for clients. 19

20 OPERATIONAL UPDATE & FY13 STRATEGIC INITIATIVES

21 SFG Australia group level update Group level integration complete FY12 Achievements Continued to further enhance and corporatise online back office services Well prepared with strategic responses to regulatory reform await detailed regulatory guidance for 1 July 2013 main implementation date (see slide 27) Proactive approach to sourcing quality, strategic, value accretive partners consistent with acquisition strategy acquired tuck-ins Jeena, LFS Financial Services (Ballarat) and Spencers Accountants Continue M&A and complementary acquisition strategy announced today tuckin acquisition of general insurance broker, Parkside Insurance Brokers, based in Perth FY13 Initiatives Oversee implementation of the regulatory reform responses once detail / guidance known Disciplined investment in IT continuing in FY13 progressive migration to Cloud based technology, in conjunction with adviser software tools upgrade, web platform upgrade, and incorporation and launch of FinHQ 21

22 Shadforth & Outlook End-to-end Model FY12 Achievements Completed front office integration (some benefits still to come in FY13) Refined and re-targeted business models to focus on core client bases Shadforth: High net worth clients Outlook: Corporate solutions and scaled advice clients Developed enhanced segmented service propositions (and re-segmented clients) Completed the local integration of the tuck-in acquisitions FY13 Initiatives Launch of enhanced products and services to advisers and clients in 1H13, including the MPS and DPU Service (see slide 26), FinHQ (see slide 24), new Mosaic Strategic Cash Plus Trust and enhanced Mosaic active funds (see slide 25) Beginning migration of clients to more contemporary offers this will progressively deliver benefits to clients and revenue uplift to Shadforth over the next two years Scaled advice and corporate super opportunity Outlook to implement tactical initiatives once regulatory reforms and guidance known 22

23 Cortex, Western Pacific & Actuate Affiliate Model B2B Services Model FY12 Achievements Continuing to implement Cortex Project Best Advice FY12 enhancements: Extended online investment research, technical, tax and strategy support to Shadforth, Outlook and Western Pacific Aligned approved product list approach and investment philosophies Consistent brand family introduced and commenced marketing enhancement Designed and launched end-to-end framework for MPS and DPU solutions Actuate: Extended financial advice business partnership with QTMB FY13 Initiatives Cortex: Continue to enhance existing adviser support services, including further adviser software releases; rollout of Automated Advice Precedent Library to all business models; supporting the client migration; and provision of technical, economic and investment content for Group wide marketing initiatives, including social media Western Pacific: Rejuvenation of this potentially significant quality advice community continues Actuate: Embarking on more expansive independent B2B offer expect formal launch 2H13 23

24 FinHQ & platform strategy Portfolio Administration FY12 Achievements Introducing FinHQ : web-based portal for consolidated client reporting, sourcing data and leveraging technology from SFGA s existing main platforms. Serves as vehicle for future integration and development of the Group s platform strategy (see slide 32) Renewed key platform contracts post merger and achieved margin uplift (identified as revenue synergy) contracts are FoFA compliant (assuming current interpretation) Appointed Colonial / Symetry Endeavour as administration provider for enhanced Group portfolio services (MPS, DPU) FY13 Initiatives Rollout of upgraded MPS and DPU services to all advice businesses (see slide 26) Over FY13 FY15, FinHQ will progressively become a consolidated view of a client s portfolio and effectively an online marketplace for other financial products and services FinHQ Phase 1 launch of consolidated client reporting in Sep-12; Phase 2 launch of online, direct broking scheduled for Oct-12 (broking execution supported by UBS) Re-branding existing main platforms to FinHQ by Nov-12 24

25 Mosaic Portfolio Advisers Portfolio Construction & Management FY12 Achievements Combined and improved governance and portfolio management approaches Strengthened in-house administration capability and scalability of RE function. Became RE of the four low cost, highly diversified, quant based Strategic Trusts in Nov-11 FY12 FUM in Australian Equity: $1.3bn; International Equity: $0.7bn; Global Property: $0.3bn; and Fixed Interest: $0.7bn, which was launched in 2011 Added Mosaic funds to all of the Group s main platforms Further developed MPS and DPU portfolio construction for upgraded launch FY13 Initiatives Consolidating the custody and funds administration function to one service provider in 1H13 Launching the Mosaic Strategic Cash Plus Trust to clients in late 2012, using Westpac and Commonwealth Bank cash account products Refining and rationalising fund offering (including relinquishing RE ship of some small scale funds), in line with the needs of SFGA s advice businesses some overall reduction in revenue margins from change in business mix expected 25

26 MPS & DPU Services Innovative, robust solutions that give clients & advisers more options to simplify & implement disciplined portfolio management CLIENT Individual financial goals, objectives & outcomes ADVISER STRATEGY Cash flow, tax, strategic asset allocation & risk advice; ongoing review IMPLEMENTATION Portfolio construction, ongoing review & management Wrap Platform TRADITIONAL METHOD A LA CARTE Typically ad hoc review of a client s portfolio done by the adviser CONTEMPORARY SOLUTIONS PROFESSIONAL PORTFOLIO MANAGEMENT TOOLS For clients: tailored, timely, transparent, efficient, sophisticated and robust portfolios fee-based For advisers: contemporary, efficient, cost effective, productivity enhancing For SFGA: contemporary, scalable, robust and effective client and adviser solutions Managed Portfolio Service Managed Discretionary Account Service A client gives permission for their adviser and Mosaic Portfolio Services (the Operator of the Service) to build and actively manage their portfolio, within parameters set by their adviser Portfolio can include managed funds, direct securities and other investments, and provides the client with portfolio see-through Dynamic Portfolio Update Service Managed Account Service, with client discretion A client s adviser and Mosaic Portfolio Services (the Operator of the Service) builds and actively manages their portfolio, providing recommended changes periodically, which the client can choose whether to accept or not Similar portfolio construction and management, where the client retains control 26

27 Well positioned on reforms Substantial legislation has now been passed await Regulatory & Guidance Statements Act in the client s best interests Renewal or Opt-in & Fee Disclosure Statements Conflicted remuneration structures We do this now; impact of some one-off implementation costs, then small increased compliance administration spend Scaled Advice Strong client relationships and grandfathering provide strong protection against a theoretical threat Corporate Superannuation, Group Insurance & Insurance inside super Prepared need to see ASIC s guidance on FY14 & beyond to determine if any future adjustments. Ready to apply to be trustee / operator of platforms if required Very recently released draft policy statement is perplexing. Wait and see approach to what is a large opportunity for SFGA Business model adjustments likely when exact changes are known, especially detail of MySuper 27

28 Share register escrow released Register now effectively free from escrow less than 0.01% of the register is currently escrowed, pursuant to the Employee Share Plan Current market capitalisation equal to $259m, assuming a share price of 35.5c 1 First tranche of escrowed shares relating to the merger (172.9m in total) were released on 14 July 2012, in line with escrow terms Given the trading experience of the Company s shares since the merger, the Board determined to release the remaining tranche of escrowed shares early (172.9m in total); to be executed at close of trading today (30 August 2012) Large number of SFGA shareholders are employees, and the dealing in these shares is governed by the Company s Securities Trading Policy (lodged with ASX) trading window following this announcement to be open from 31 August 2012 to 8 January Register Composition 2 15% 11% 17% 26% 25% Breakdown of internal & external holders 2 (Internal holders being employees of the Company) 55% 6%0% Shadforth Advisers 45% HNW / Retail Board & Management Institutional Employees WPFG Advisers B2B Relationship Shares held by external holders Shares held by Employees and subject to the Securities Trading Policy 1. As at 20 August Composed from Top 500 Shareholders, which account for 99.3% of total shares outstanding as at 7 August Consistent with the Company s Securities Trading Policy, and remains at the discretion of the Company. 28

29 SUMMARY

30 Summary Leading advice group High quality, client focused financial advice group key differentiators: from all larger players: quality of advisers and deep client relationships from all smaller players: scale and capability across the value chain Delivering earnings growth Operating EBITDA of $41.9m up 7% and Underlying NPAT of $28.6m up 6%, driven by achievement of synergies and acquisitions completed Upgraded synergies on track: $10.5m annualised in FY13, gross of integration costs Investing in our people & business Well prepared for reforms awaiting detailed guidance to implement optimal solutions Responding to changing client needs, reinvesting in our client offers and experience Experienced management team in place to drive growth through the cycle Acquisition capacity Cash capacity: net non-leveraged balance sheet and strong operating cash flows debt facility in place at 1x Operating EBITDA Industry presence, quality, national management team key to attracting right partners 30

31 APPENDIX

32 ADVISERS CLIENTS CONSOLIDATED PLATFORM DATA WRAPPER OPEN ARCHITECTURE On-line, best-of-breed platform offering Platforms provide clients with custody, registry, tax, cash flow & other record keeping, reporting & transaction services; primarily leveraging existing scaled supplier s technology Phase 1 launch Sep-12 Consolidated Reporting Tool ADMINISTRATION PROVIDER FY12 FUAdmin BT Wrap $5.5bn FUAdmin Asgard $2.0bn FUAdmin ADVISER OPTIONS A la carte (Adviser selected from APL) A la carte PORTFOLIOS INVESTMENTS Wide range of funds, banking products & insurance on APL Wide range of direct securities on APL Single-sector funds A la carte Multi-sector funds Colonial $1.8bn FUAdmin 1 Managed Portfolio Service Dynamic Portfolio Update Mosaic constructed & managed portfolios Client Relationship Management Tool Praemium $335m FUA Phase 2 Oct-12 UBS launch Future Services Virtual Wrap of direct securities Direct, online broking back office Direct securities Direct shares SFGA earns a fee for packaging or construction services provided. 1. Includes $693m of FUAdmin which relates to advice groups not licensed by SFGA. 32

33 Definitions Term pcp FUA FUAdmin FUM FUMA Net Operating Revenue Net Operating Expenses Operating EBITDA NPAT QTMB Underlying NPAT or UNPAT RTFI Definition Prior corresponding period Funds under Advice: funds balances upon which the Group derives a share of the advice fee Funds under Administration (FUAdmin): funds balances upon which the Group derives a share of the administration margin Funds under Management: funds balances upon which the Group derives a share of the management margin The collective term for Funds under Advice, Administration and Management Net Operating Revenue comprises Operating Revenue less cost of goods sold type expense items to derive Net Operating Revenue to the Group. The Appendix 4D reports Operating Revenue As above, excludes cost of goods sold type expense items Earnings before interest, tax, depreciation and amortisation, before one-off and non-operating items Net Profit After Tax Queensland s Mutual Bank Underlying Net Profit After Tax. Underlying NPAT excludes amortisation and one-off, non-operational items. SFGA considers this to be a meaningful indicator of the underlying performance and cash generating capability of the Group Rights to Future Income legislation 33

34 Reconciliation to Appendix 4E FY11 $m Operating Revenue per Appendix 4E (Gross) Less portfolio administration fee 7.5 Less Mosaic expense recoveries 4.0 Less Stockbroking expense recovery 0.1 Net Operating Revenue (per presentation) FY12 $m Operating Revenue per Appendix 4E (Gross) Less portfolio administration fee Less Mosaic expense recoveries 7.6 Less Stockbroking expense recovery 0.3 Net Operating Revenue (per presentation) Operating Expenses per Appendix 4E (Gross) (88.1) Plus portfolio administration fee 7.5 Plus Mosaic expense recoveries 4.0 Plus Stockbroking expense recovery 0.1 Net Operating Expenses (per presentation) (76.5) Operating Expenses per Appendix 4E (Gross) (90.6) Plus portfolio administration fee Plus Mosaic expense recoveries 7.6 Plus Stockbroking expense recovery 0.3 Net Operating Expenses (per presentation) (76.4) 1. Including Share of Associates Net Profit. 2. Reduction in fees paid to providers reflecting increased Portfolio Administration margin achieved in FY12. 34

35 Segment Net Operating Revenue The below reclassifications have no impact on reported Operating EBITDA in each period (as there is a corresponding impact on Net Operating Expenses or movement between fee types) Reclassified 1H12 Results $m End-to-end adviser model Affiliate adviser model B2B Advice Services model Financial Advice Fees Insurance, Mortgage Broking Fees Total Change from reported results Portfolio Administration Fees (1.3) Portfolio Management Fees Stockbroking Fees Accounting, Associates, License & Other Fees Net Operating Revenue Reclassified FY11 Results (to be directly comparable with FY12 Results reported in this presentation) $m End-to-end adviser model Affiliate adviser model B2B Advice Services model Financial Advice Fees Insurance, Mortgage Broking Fees Portfolio Administration Fee Total Change from reported results Portfolio Management Fees (1.4) Stockbroking Fees (0.1) Accounting, Associates, License & Other Fees Net Operating Revenue (1.5) 1. There has been some re-classification between models post a management review. 35

36 Historical Financial Performance $m FY12 Net Operating Revenue FY11 Pro forma FY11 Pro forma Financial Advice Fees % Insurance & Mortgage Broking Fees % Portfolio Administration Fees % Portfolio Management Fees % Stockbroking Fees % Accounting, Associates, License and Other fees % Total Net Operating Revenue (incl. Associates) % Net Operating Expenses Personnel expenses (54.4) (55.8) (2.4%) Occupancy expenses (6.1) (5.6) 9.6% Advertising & marketing expenses (1.0) (1.0) (1.7%) Professional fees (4.8) (4.6) 4.6% Travel & entertainment expenses (1.2) (1.4) (14.9%) IT & communications expenses (3.3) (2.6) 24.6% Other expenses (5.6) (5.6) 1.6% Total Net Operating Expenses (76.4) (76.5) (0.1%) Operating EBITDA % 36

37 Revenue drivers Advice fees Financial Advice Revenue FY12: $60.1m One-off Financial Advice Fees <10% >90% Ongoing Financial Advice Fees One-off Fees (End-to-end model 100% retained) One-off Fees Affiliate model (20% 1 retained) Ongoing Fees 100% retained by group Ongoing Fees 20% 1 margin retained by SFGA End-to-end model $9.2bn Core Clients >88% of FUA Corporate Super <12% of FUA Affiliate adviser model $1.2bn of FUA F U A Statement of Advice Fees Other Plan Fees Net flows Market impact Outflows Inflows Asset Allocation New clients Existing clients Equities Property Securities License Fees (% of revenue) FY12: $0.23m Financial advice revenue of B2B partner B2B Services model $0.4bn of FUA $10.8bn of FUA Fixed Interest Cash 1. Subject to incentive arrangements agreed with Western Pacific, where growth in revenue above a certain benchmark attracts a 10% dealer margin on revenue growth, maintaining the 20% dealer margin on the benchmark revenue. 37

38 Revenue drivers FUAdmin & FUM Portfolio Administration Fees Portfolio Management Fees End -to-end adviser model earn 100% of share of margin Mosaic End-to-end adviser model Portfolio Admin Fees FY12: $33.8m $6.6bn Affiliate adviser model earn 100% of share of margin $0.9bn B2B Services model share income earned F U A D M I N Net flows Market impact Portfolio Mgmt Fees FY12: $5.7m Strategic Trusts $3.0bn Multi- & Single-sector funds $0.6bn Other funds $0.7bn $3.7bn Affiliate adviser model $0.6bn B2B Services model $0.1bn F U M Net flows Market impact Portfolio construction Asset allocation $1.8bn $4.4bn of FUM $9.3bn of FUAdmin 38

39 SFG Australia Limited Contact details: Tony Fenning Managing Director Level 18, 50 Bridge Street Sydney NSW 2000 Telephone: Tony.Fenning@sfgaustralia.com.au Ashleigh Nelson Investor Relations Level 18, 50 Bridge Street Sydney NSW 2000 Telephone: Ashleigh.Nelson@sfgaustralia.com.au