CENTREPOINT ALLIANCE LIMITED — AGM Information 2020

Nov 12, 2020

13 November 2020

ASX ANNOUNCEMENT – ANNUAL GENERAL MEETING PRESENTATIONS

In accordance with the ASX Listing Rules, the Chairman’s and CEO addresses and presentations to the Annual General Meeting (“AGM”), are appended.

This announcement has been approved for release by the Board of Directors.

For further information please contact:

Kim Clark Company Secretary Ph: 0448 690 364

Chairman’s Update

Over the past 12 months, Centrepoint Alliance, as a leading provider of licensing, advice, business services and technology solutions for Australian financial advisers, has felt the ongoing structural changes within the financial services industry. Like most businesses today, the COVID-19 pandemic has also impacted on our business.

However, we have mitigated the impacts as well as could be expected, given our move away from provider rebates to a fee-based revenue model which is both scalable and recurring. This decision, taken a few years ago by the company, has given us a first-mover advantage during a time of industry disruption. Making this change has also allowed Centrepoint Alliance to grow our reputation for leadership and integrity during a pivotal time.

Adoption of this new payment structure has been well received, as we have retained nearly 83% of existing advice firms over the past year, which is a great result, particularly given the operating environment in the second half of the year. We also welcomed nearly 80 new advisers to our ranks, and that number exceeded our record achieved the previous year by 16%. We increased our licensed adviser base by 6% to 317. This was achieved despite a 13% contraction of advisers in the market during the financial year.

Centrepoint Alliance achieved an 11% increase in gross revenue during FY20 and earned a second half gross profit increase of $1.1million. In parallel, management expenses were reduced by 7%, demonstrating our commitment to creating value for shareholders.

We believe these achievements validate our strategy and underline the success of Centrepoint Alliance as it focuses on its core business of providing much-needed services to financial advisers. We are pleased with these results mid-way through a three-year strategic refresh of our operations. We will continue to look at ways we can optimise our business to provide the services that our clients need, and provide them in a way that generates revenue and achieves the level of performance that our shareholders expect, over the years to come.

To complement our improved business model and optimised performance, we continue to invest in technology to help us extend our offering to financial advisers. This included our acquisition of leading financial planning software solutions provider Enzumo, just prior to the end of the financial year. This was part of the strategic refresh I mentioned earlier and accelerates our ability to deliver a scalable, recurring revenue model. The acquisition of Enzumo has helped Centrepoint Alliance to grow its adviser base, further increase our recurring revenue and add to the value we offer our clients through Enzumo’s capabilities in implementing Xplan, which is an industry-leading software platform for the financial planning and wealth sectors.

Acquiring Enzumo was a natural fit for Centrepoint Alliance, given our shared culture of providing services and support to financial advice firms to allow them to share that knowledge with their clients. Acquiring this business allowed Centrepoint Alliance to more directly meet rising demand for technology support services from both authorised representatives and self-licensed businesses. The

integration of Enzumo is now complete and we have already seen success in going to market with a joint offering for Centrepoint Alliance licensee services and an Enzumo advice technology to a large wholesale licensee client. We look forward to delivering this improved service to our new and existing clients.

We continue to assess partnerships and other acquisition opportunities, as well as looking at ways in which we can deliver stronger financial results and enhanced shareholder value in the years ahead.

We finished FY20 with a strong balance sheet, with a closing cash balance of $12.2million, representing a 54% improvement on the previous year.

Looking ahead to FY21, we will continue to execute our plan to attract high quality financial advice firms and individual advisers to our ranks to help ensure the financial services industry continues to provide the very best service to its many clients. We will also actively explore consolidation opportunities in what is a fragmented industry but one which continues to improve and strengthen.

I will now hand over to our CEO Angus Benbow to provide an operational overview of the year and the company’s outlook for the year ahead.

CEO’s address

Thank you all for your time today.

As Centrepoint Alliance’s CEO, I would like to give an overview of our business and our achievements during the past financial year and also provide some insight into our plans for the year ahead.

As you may be aware, Centrepoint Alliance provides technical, compliance and business management support to financial advisers across Australia. We provide our services to more than 160 self-licensed financial advice businesses as well as about 320 individual advisers who utilise our license, and this totals over 1,000 advisers throughout Australia. These advisers in turn provide advice to thousands of businesses and individuals seeking advice on personal and business-related financial matters.

We see ourselves as well-positioned to take full advantage of strengthening tailwinds for the advice industry. These include ongoing industry dislocations which are prompting a flight to quality licensees, new technology which empowers us to deliver services at scale, new market opportunities emerging and an Australian community in which the demand for financial advice remains strong.

We are proud of our points of difference which add value both for advisers and investors. Our capital flexibility and strong cash balance positions us to take advantage of growth opportunities, and we have grown to attract the largest network of financial advisers outside of IOOF and AMP. We remain focused on providing our adviser community with autonomy and flexibility, along with industry-leading advice and governance support, as well as advice technology support and tools which are increasingly integrated with the recently acquired Enzumo business.

We have been a relative winner compared to our peer group as the impact of the Royal Commission and COVID-19 have blown winds of change through our industry.

During the past 12 months, our services have included more than 60 education webinars and masterclasses, 6,500 coaching interactions, and providing advice on more than 10,000 advice technology enquiries and 4,000 technical or regulatory enquiries.

This level of interaction demonstrates our focus on creating a community for our members and providing them with the support, services, technology solutions and opportunities that allow advisers to deliver the best quality advice to their clients. We provide tools and technologies and offer in-house technical, research and professional standards experts to this community, and this means that our members can provide the very best service to their clients.

Back in the second half of 2018, we set about implementing a new strategy, under the banner of Strategic Refresh, repositioning the business to ensure we could offer a full suite of services to our members. This suite encompasses governance and compliance; advice tools, technologies and services; business management services and support; and client growth templates, guides and

methodologies. This strategy was designed to help us more deeply engage with our member base and grow this community to ensure that we remained a leader in the field.

As part of this strategy, we transitioned to a fee-for-service model that sees advisers pay service fees for accessing our services and support. More than a year on from implementing our new revenue structure, FY20 saw us achieve a large increase in adviser fee revenue, which increased 61% to $10million. The average annual adviser fee also grew substantially to $33,000, up 75% on last year.

We expect these subscription fees to bring revenue that is substantially recurring in nature, given that the advisers in our network have an average tenure of 11 years, underpinning the resilience of our new service model. We will continue to transition existing self-licensed firms to our new fee structure progressively throughout FY21.

In other key results for FY20, Centrepoint Alliance posted gross revenue of $131million, an increase of 11% year on year. This was led by our strong growth in new advisers and an increase in the average gross revenue per advice firm.

Our ability to reduce management expenses by 7% during the year was notable given the uncertain environment created by the COVID-19 pandemic. This was achieved mostly through reducing employment costs and reductions in travel and marketing.

Our cost-to-income ratio reached a three-year low of 78% in 2H20, through disciplined cost and execution management. This is really important in enabling us to achieve sustainable growth in years to come, and we plan to continue this disciplined approach to maintain our cash position.

Due predominantly to an increase of $3.4million in legacy claims in FY20, lodged ahead of the extension to the Australian Financial Complaints Authority’s jurisdiction closing on 30 June 2020, our net loss before tax was $2.2million. However, the AFCA window on legacy claims is now closed and we expect that all legacy claims have now been lodged. We look forward to resolving the $3.0million in legacy claim provisions on our balance sheet as of 30 June 2020.

Despite these challenges, we achieved positive EBITDA of $0.1million in FY20. Removing legacy claims, this would have been $3.7million, so I am encouraged that our strategy has put us on a path for improved performance in years ahead. As mentioned by Alan, we finished the year with a strong cash balance, which will empower us to grow quickly and take advantage of new opportunities in the year ahead.

I am proud of what we have achieved over the past year, given the economic and operating difficulties and uncertainty many businesses have faced.

As we look to the future, we see new opportunities. While our customer base is strong and growing, Australia has a licensed financial market or more than 16,000 advisers with an addressable revenue pool of about $800million in licence fees. We want to leverage our reputation for leadership and offer the very best services by tapping further into this market, allowing us to gain further scale.

In FY21, we plan to attract more advisers to use our services, either as individuals or self-licensed firms. We are continuing to explore opportunities for industry consolidation and further acquisitions to build and enhance our services and customer base. Given what we achieved in the challenging setting of FY20, I feel we are well placed to achieve our targets and I look forward to providing updates on our progress throughout the coming year.

I thank you for your time today and your interest in Centrepoint Alliance.

END

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ANNUAL GENERAL MEETING ASX: CAF

13 November 2020

BOARD MEMBERS

Alan Fisher | Chairman

Martin Pretty | Non-executive Director

Georg Chmiel | Non-executive Director

CUTIVES

Angus Benbow | Chief Executive Officer

Brendon Glass | Chief Financial Officer

Marty Carne | Chief Legal Officer and Company Secretary

Alexander Beard | Non-executive Director

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COMPANY UPDATE Alan Fisher, Chairman

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Our purpose is to enable the Australian community’s trust in financial advice, because good advice promotes wellbeing

11% $131.0m on FY19

Gross revenue

12% $3.7m on FY19 EBITDA (Excl. legacy claims)

7% 54% $25.6m on FY19 $12.2m on FY19 Expenses Cash (at 30 Jun 20)

FY20 Centrepoint Alliance Annual Results

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Core business

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New opportunities

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Revenue extensions

Leading provider of licensing, advice and business services, and advice technology solutions to Australian financial advisers

317 quality advisers, with 79 new in FY20, up 6% net on FY19

Licensed financial adviser market of +16,000

Subscription fee per adviser, with average current tenure of 11 years

Largest scale service provider for self-licensed advice firms

159 self-licensed firms (over 500 advisers)

1,900 self-licensed firms addressable market, with 5 yr CAGR market growth of 7.2% since 2015

New dealer-to-dealer wholesale licensee service offering launched to market

Leading advice technology firm Enzumo acquired and integrated

Exploring ‘reg-tech’ opportunities of build, buy or partner

Continuing to review portfolio of businesses

Aggressively pursuing core and extension inorganic opportunities

Enhance Centrepoint Lending Solutions offer

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Source: FY20 Centrepoint Alliance Annual Results

COMPANY OVERVIEW Angus Benbow, CEO

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CENTREPOINT ALLIANCE IS WELL POSITIONED TO TAKE FULL ADVANTAGE OF STRENGTHENING TAILWINDS FOR THE ADVICE INDUSTRY

Tailwinds strengthening

Strongest ever pipeline of new adviser opportunities, given continued market disruption

Advisers who have joined and are onboarding since 1 July 20 average revenue remains consistent with new adviser joining post-Transformation (Oct 18) - ~$350k annual revenue per AR

High engagement and satisfaction of existing Centrepoint Alliance adviser community reinforces ‘flight to quality ’ underway for advisers moving licensees

IOOF acquisition of MLC

HUB24 recent strategic stake and alignment with Easton Investments

Ongoing disruption at AMP

A further wholesale licensee contract won, valued at ~$650k annualised, through integrated contract with Enzumo technology and Centrepoint Alliance licensee services

Strong cash balance positions Centrepoint Alliance well to take advantage of consolidation opportunities

All Centrepoint Alliance service and solutions teams migrated to Salesforce to enable scalability

Centrepoint Connect, adviser services hub/platform, reconfigured for white label sites, enhancing wholesale offer

‘Reg Tech’ review underway, with 30% efficiency achieved and Centrepoint AI to be further leveraged

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AT A TIME OF INDUSTRY CONSOLIDATION CENTREPOINT ALLIANCE’S COMPETITIVE DIFFERENTIATORS ARE STRONG AND VALUED BY ADVISERS

CAF Corporate Differentiators

Value Proposition to Financial Advisers

• ASX listed company with capital flexibility and strong cash position able to take advantage of growth opportunities in ongoing disrupted market

• 1 Adviser community focused

  • Providing advice business autonomy and flexibility with scale and quality support

• Advice service and solutions platform leveraging technology for scale enhancements to advisers – providing consistent recurring fee-based revenue (subscription like)

• Largest network of financial advisers outside of IOOF and AMP (inclusive of licensed and self-licensed firms)

• 2 Compliance and governance

  • Industry leading advice and governance capability, with ‘Reg Tech’ extension being explored

• 3 Strength, scale and quality in advice services and solutions

• Clearly articulated strategy, focused on financial adviser market, with two years of successful execution against strategic commitments

• First non-product owned licensee to move to ‘fee-for-service’ revenue model, now in second year. Well positioned for end of conflicted remuneration, to take effect 1 Jan 2021 (less than three months away)

• Bringing the benefits of our business, to advisers

• 4 Client focused

• Uncompromising commitment to clients and quality, committed to future of advice free of conflict

• 5 Business growth specialists

• Partnering with intelligence and investing in technology to support advice firms

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Risk focused adviser licensee

STRONGLY POSITIONED AS A LEADING SCALABLE SERVICE PROVIDER TO RECREATGROW LICENSED AND SELF-LICENSED ADVISERS

CAF compared to ASX listed peers

CAF compared to private scalable licensees

Licensee ARs* (Advisers)	Licensee ARs* (Advisers)	Limited ARs (Brokers, Accountants, Insurance Advisers)	Self-Licensed
Centrepoint1	317		159 firms (500+ advisers)
Count Plus2	260		n/a
Sequoia3	405		New offer
Easton4	250	420	Undisclosed
WT Financial Group5	68
Australian Unity6	176		n/a

Licensee (Peer categories consistent with FY20 results) Total AR 1 July 2018*	Licensee (Peer categories consistent with FY20 results) Total AR 1 July 2018*	Total AR 1 July 2019	New ARs 1 July 2018 to 30 June 2020	Total AR 30 June 2020	Risk focused adviser licensee
Peer A	468	498	257 1	513 1
Centrepoint	345	315	162 3	317 2
Peer C	163	188	158 4	240 3
Peer E	148	161	153	225 4
Peer F	97	98	165 2	202
Peer G	126	161	153	187
Peer J	110	163	140	175
Peer K	32	47	145	120
Peer L	31	54	103	104

Sources:

1)FY20 Centrepoint Alliance full year results (20 August 20) 2) CountPlus 2020 Full year results presentation(28 August 2020) 3) SEQ FY20 Annual results presentation 20 August 2020 4) Easton ASX announcement on Hub24 investment and Paragem acquisition correction (29 Oct 2020) 5) Wealth Today AR numbers from ASIC Financial Advisers Dataset as of 13/08/2020 6) Australian Unity FY20 Investor presentation 9 September 2020

Note: * Peer group based on similar large and mid-tier Financial Advice Licensees, and excludes the Big 6 (4 main banks, AMP, IOOF), stockbrokers and purely accountant focused firms)

Sources: Peer A,C,E,F,G,J,K and L are all sourced from ASIC Financial Advisers Dataset as of 13/08/2020. Centrepoint data sourced from Centrepoint Alliance full year results (20 August 20)

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WE DEPLOY OUR SCALE ADVANTAGE ACROSS MULTIPLE MARKET SEGMENTS – WHERE WE HAVE ESTABLISHED SUCCESSFUL OFFERINGS

Market Licensee Self-licensed Wholesale Licensee segments Core business Extension New offer Definition Large licensee for individual advice Service provider for small self-licensed Licensee and tailored wholesale practices firms services and solutions for larger firms Advisers – 5,036 Market size[1] Advisers – 16,886 Licensees – 76 Firms – 1,896 Revenue model Annual subscription fee per adviser Annual subscription fee per service Bespoke annual fees priced for risk (CAF specific) (1[st] AR $45k, subsequent $25k per AR) module (~$20k per adviser)

Average tenure 11 years 8 years New market offering (CAF specific)

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Sources: 1 ASIC Financial Advisers Dataset as of 02/07/2020; Centrepoint Alliance analysis. 2 Centrepoint Alliance internal service metrics (FY20).

SOLID PROGRESS IN EXECUTING THREE-YEAR STRATEGIC REFRESH, LAUNCHED AUGUST 2019, DESPITE INDUSTRY DISRUPTION AND COVID-19

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FOCUS
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RECREATE
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GROW
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Core focus on providing services to advisers during a turbulent 12 months (FY20 select examples):

• 63 education webinars and masterclasses held

• Over 6,500 coaching interactions

• Over 4,000 technical / regulatory enquiries supported

• Over 10,000 advice technology enquiries supported

Adviser satisfaction score of 83% “How satisfied are you dealing with Centrepoint Alliance overall?”

Average adviser tenure of 11 years 24% increase in staff’s overall job satisfaction since August 2019

Successful new adviser fee model:

• FY19 average Authorised Representative (AR) fee of $19k increased 89% to $36k from 1 July 20, offsetting legacy rebate revenue decline

• 61% increase in adviser fee revenue to $10m

• 83% of existing advice firms retained from end FY19 to FY20

Change in adviser mix to more sustainable business:

• Departing adviser avg revenue $159k

• Retained and new advisers avg revenue $318k

30% improvement in adviser audit process efficiency

Launch of advice technology solutions – Centrepoint Connect & Centrepoint AI

79 new advisers joined licence, 49 new firms

317 licensed advisers, up 6% against a market that has contracted 13% in the past 12 months

12 new self-licensed firms

Gross revenue increased by 11% to $131.0m

Net cash flow from operations of $4.0m, closing cash position of $12.2m, up 54% on 30 June 2019

Leading advice technology firm Enzumo acquired from ChantWest

Sources: Centrepoint Alliance internal service metrics; FY20 financial analysis; Centrepoint Alliance satisfaction measures from Centrepoint Alliance Adviser Survey July 2020 independently conducted by Woolcott Research; Independently conducted staff survey by Woolcott Research conducted August 2020.

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UNDERLYING METRICS HIGHLIGHT THE IMPROVED QUALITY AND SUSTAINABILITY OF THE CENTREPOINT ALLIANCE BUSINESS

Successful implementation of new ‘fee-for-service’ model

AR fee revenue up 71% since start of Transformation

Average revenue per Adviser 27% higher since start of Transformation

Advisers who joined since Oct 2018 have an average revenue of $350k

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$36k
$10.0m
$19k $5.8m
FY19 1 July 20 annualised FY18 FY20
run rate
(FY21 Projected)
Total annual AR fee revenue
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Average annual AR fees

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$350k
$318k
$250k
Pre-Transformation Post Transformation
(pre-Oct 2018) (post Oct 2018)
Average Adviser annual revenue
(Advisers as at 30 June 2020)
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Sources: FY20 Centrepoint Alliance Annual Results (20 Aug 20), Centrepoint Analysis

TRANSFORMATION HAS SEEN A SIGNIFICANT REDUCTION IN HEADCOUNT AND COSTS THROUGH DELIVERY OF A SCALABLE SERVICES PLATFORM

Reduction in FTE with a reallocation to valued Advice Services

Investment in technology to build scalable advice services and solutions platform

Strong satisfaction levels in the areas that adviser’s value most from their Licensee[1,2]

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120 113.7
95.4
100
80
60
40
20
0
FY18 FY20
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Resources rebalanced to key service teams including:

• Research

• Education

• Business Consultants

• Technology / Data

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Live
service
dashboard Compliance
82%
and SLA Support
Satisfaction
tracking
Technical
87%
Services
Satisfaction
Self serve
Adviser
Portal
Adviser
72%
Technology
Satisfaction
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Sources: 1 Top factors from CoreData – Annual Adviser Survey – Question: Which of the following factors, if delivered exceptionally by another licensee, would make you consider switching to that licensee (or handing back your own AFSL)? 2 Centrepoint Alliance satisfaction measures from Centrepoint Alliance Adviser Survey July 2020 independently conducted by Woolcott Research. Satisfaction measured as greater than or equal to 7 / 10.

TOP 5 STRATEGIC PRIORITIES FOR FY21

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FOCUS
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RECREATE
RECREATE
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GROW
GROW
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• Drive accelerated organic growth in licensed and self-licensed advice markets

• Complete third and final year of Strategic Refresh transformation, having positioned Centrepoint Alliance as the leading non-product owned advice licensee in Australia

• Continue to review our portfolio of businesses

• Leverage strong cash position and capital management initiatives to realise full potential of the business

• Continue to aggressively pursue industry consolidation and inorganic opportunities

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CONTACT DETAILS

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Angus Benbow

Chief Executive Officer Centrepoint Alliance

E: angus.benbow@cpal.com.au T: +61 2 8987 3016

Brendon Glass Chief Financial Officer Centrepoint Alliance

E: brendon.glass@cpal.com.au T: +61 2 8987 3037

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Tim Dohrmann

Investor Enquiries NWR Communications E: tim@nwrcommunications.com.au M : +61 0468 420 846

Suzanne Dwyer Media Enquiries Honner E: suzanne@honner.com.au T: +61 2 8248 3741 | M: +61 0402 990 029

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ANNUAL GENERAL MEETING 13 November 2020