Centuria Capital

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Centuria Capital Results Briefing FY16

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18 August 2016

www.centuria.com.au

Centuria Capital

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Section 1: Group Overview & Strategy
Section 2: FY16 Operating Highlights
Section 3: FY16 Financial Highlights
Section 4: Property Funds Management Division
Section 5: Investment Bonds Division
Section 6: Outlook
Section 7: Appendices

Centuria Capital

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Group Overview & Strategy

Centuria Capital

Growth in FUM anticipated in FY17

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Business transitioning for next stage of growth

Targeting 25% net total FUM growth in FY17
No major fund expiries in FY17
Expanded distribution channels
Listed REIT market
o HNW/traditional channels
Capital partners (BlackRock/SEB)
Investment Bond FUM stable with option for growth.

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$2,500 2,399
25% 200
$2,000 1,919 280
21%
1,764
1,636 1,591 416
$1,500
323
1,056
922
783
$1,000 553 1,919
$500
708 714 715 720
-
2013 2014 2015 2016 2017
Target
Net New FUM The Zenith FUM 2016 Listed property Unlisted property Investment Bonds
$ million
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Centuria Capital

Centuria Capital Limited

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Experienced specialist fund manager with proven and disciplined growth

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Centuria Capital Limited
(ASX:CNI)
$1,919m
Total Funds under Management (FUM)
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Centuria Investment Bonds FUM
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Centuria Property Funds FUM

$783m $416m Unlisted Property Listed Property (ASX:CMA)

$350m $370m Centuria Life Over Fifty Guardian Investment Bonds Friendly Society Bonds

FUM at 30 June 2016

Centuria Capital

Group strategy

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Centuria platform positioned to build on FUM growth in real estate and investment bonds
Increase recurring income streams via both increased FUM and co-investment
Deliver superior returns to third-party fund investors
Expand and diversify access to distribution channels for third-party capital
Provide strong parent support for CMA, unlisted property and investment bond divisions
Potential corporate restructure designed to allow for efficient co-investments distributions to CNI shareholders.

CNI aims to deliver consistent growth in earnings and distribution per security over the short and long-term and to bring its platform to scale

Centuria Capital

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FY16 Operating Highlights

Centuria Capital

Group operating highlights

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Record profit delivered in FY16

Underlying Net Profit After Tax (NPAT) of $10.4 million up 65% and at upper end of guidance
Funds under management increased 21% from $1.6 billion to $1.9 billion
Significant property acquisitions during the year including ATP ($104m), 50% interest of 203 Pacific Highway ($43m) and 50% of interest in 8 Central Avenue ($109m)
The acquisition of The Zenith ($280m) settled in July 2016
Material performance fee contribution from sale of Macquarie Park and 175 Castlereagh Street
Creation of value for CMA investors, with an increase in NTA of 21cps, an uplift of 11% to $2.18
Significant CNI stake in GMF takeover bid ($39 million) is indicative of Centuria’s ongoing strategy to grow platforms in a disciplined manner
Launch of ‘White Label’ Investment Bond strategy
Senior appointments include Simon Holt, Chief Financial Officer and Michael Blake, Head of Distribution
A very strong year for CNI with a substantial increase in FUM and a business model that provides a sound base to fund near term expansion.

Centuria Capital

Strategy scorecard

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Disciplined commitment to set strategy

Expand and diversify product range	• Continued expansion of Centuria Metropolitan REIT (CMA) to gross assets above $400m • Successful launch of $280m Centuria Zenith Fund partnering with Blackrock • Launched “White Label” Investment Bond offering
Utilise and recycle balance sheet	• Enhanced balance sheet afforded: `o` participation in successful joint bid for ATP site with Mirvac; `o` acquisition of The Zenith (largest acquisition by Centuria); and `o` acquisition of stake in GPT Metro Office Fund (GMF)
Corporate activity	• Stake taken in GMF supporting CMA Takeover Bid. CMA has withdrawn bid and options for GMF security investment currently being reviewed • Expectation of further corporate activity to grow CNI group scale
Delivering attractive returns to Third-Party Investors	• Realised significant total returns `o` 175 Castlereagh Street, Sydney ~30% IRR `o` 80 Waterloo Road/16 Byfield Street, Macquarie Park ~20% IRR
Expansion of Investment Bond business	• Net FUM gain in FY16 • Expectation of net FUM gain in FY17 • Broadened distribution capabilities
Co-invest with clients	• Belmont Road, Mosman development on target for successful completion (100% presold) with settlement due December 2016 • Modest balance sheet co-investments in property markets where CNI is experienced.

Centuria Capital

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FY16 Financial Highlights

Centuria Capital

Group operating highlights

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Record profit delivered

Record profit delivered
	FY16	FY15	Increase
Underlying NPAT	$10.4m	$6.3m	65%
Underlying EPS (basic)	13.7c	8.1c	69%
Statutory NPAT	$12.1m	$8.6m	41%
Statutory EPS (basic)	15.8c	11.0c	44%
Dividend per share (fully franked)	5.25c	4.75c	11%

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Underlying Net Profit After Tax
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Delivered profit at the top end of guidance
11% growth in dividend
FY16 underlying NPAT materially above trend growth due to contribution from performance fees
FY17 underlying NPAT to benefit from higher recurring revenues as a result of increased FUM.

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11.0
10.0
9.0
8.0
7.0
6.0
5.0
4.0
FY13 FY14 FY15 FY16 FY17
$ million
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Centuria Capital

Underlying segment results

In line with top end of guidance

Over FY15/16 Centuria realised approximately $550m of property FUM leaving excess capacity in the platform
Throughout FY16 the real estate team were kept at full strength to service portfolio restocking ($1.2bn)
FY16 benefited from
A full year’s contribution from CMA
Settlement of ATP (April ’16)
Performance fees from Macquarie Park and 175 Castlereagh Street
Investment Bonds increased marketing and staff costs to reposition for growth
FY17 to benefit from

o Full year’s contribution from ATP and Zenith (July ‘16)

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	FY16	FY15
	$m	$m
Underlying profit by segment
Property Funds Management	16.9	8.8
Investment Bonds	4.7	5.8
Reverse Mortgages	(0.3)	0.7
Corporate	(4.8)	(4.6)
Underlying profit before interest and tax	16.5	10.7
Corporate finance costs	(0.7)	(0.5)
Underlying profit before tax	15.8	10.2
Underlying tax expense	(5.4)	(3.9)
Underlying net profit after tax	10.4	6.3

Additional targeted FUM.

Centuria Capital

Growth in assets

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Substantial net asset backing supports value equation

Balance Sheet Metrics	As at 30 June 2016	As at 30 June 2015	Increase
Net assets	$127.7m	$118.9m	7.4%
Net assets per share(1)	$1.67	$1.55	7.7%
Net Tangible Assets per share(1)	$0.97	$0.86	12.8%
Share Price	$1.05	$0.94	11.7%

Increase in net asset backing under-pinned by strong operating profit increase and retained earnings
Net Assets per share and NTA per share based on ordinary shares on issue (excluding contingently issuable performance rights).

Centuria Capital

Potential corporate restructure

CNI is considering a corporate restructure to create a new stapled entity, Centuria Capital Group. Benefits would include;
More efficient platform to hold Centuria’s existing and future property fund co-investments
Potential for material increase in combined dividend/distribution given flow through status of fund
No change to underlying business
Brings Centuria’s structure in line with other listed property fund managers
Increases attractiveness of its funds to investors
The proposal would be subject to approval by shareholders by ordinary resolution at an extraordinary general meeting.

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Centuria Stapled
Security holders
Centuria Stapled Centuria
Capital Limited Capital Fund
Property
Fund
Investments
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Centuria Capital

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Property Funds Management Division

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Zenith Centre, Chatswood, NSW
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Centuria Capital

Property Funds Management Division

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Property Funds Management Division
Unlisted Property Funds Listed Property Funds
• • $783 million in FUM $416 million in FUM – ASX Listed CMA
• $280 million of FUM added in July • Specialist metropolitan market investor • 17 years experience through multiple • Owns 10 office and 3 industrial properties property cycles across Sydney, Brisbane, Canberra and
• Adelaide 33 completed funds totalling $1.3 billion •
• Potential for further acquisition activity 12 Unlisted funds under management •
• Experienced management team lead by Experienced management team lead by Nicholas Collishaw and Nicholas Blake.
Jason Huljich.

Centuria Capital

Unlisted Property highlights

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Active transaction flow ensures significant increase in FUM triggering substantial investor profits and fees

Successful acquisition of three assets totalling $265 million and the acquisition of the $280 million Zenith Centre in Chatswood on 29 July this year
Partnering with leading fund management institutions Mirvac and BlackRock
Successful completion of 175 Castlereagh Street and Macquarie Park, two funds generating significant investor profits and performance fees
Appointment of senior property fund sales and marketing specialist, Michael Blake, to increase distribution capacity for acquisition pipeline
Unlisted Property is experiencing substantial demand owing to the quality of offers, strength of the Centuria brand and growing distribution channels.

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Zenith Centre, Chatswood, NSW
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m $783

42%

Growth in FUM

Funds under management

Centuria Capital

Unlisted Property highlights

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42% growth in unlisted property funds under management

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Unlisted Property FUM Growth ($ million)
1,000
900
52
8
101
800
104
75
88
700
161
600
783
720
500
546
400
FUM at Acquisitions Revaluations Sale of 175 FUM at Acquisitions Belmont Road Revaluations Sale of FUM at
30 June 2015 Castlereagh St 31 December development Macquarie Park 30 June 2016
2015
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Centuria Capital

Unlisted Property strategy

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Centuria continues to grow its unlisted platform

Expectation of strong demand for Unlisted Property funds due to low interest rate environment
Continued strong investment from
high net worth investors
family offices and
unaligned financial planning groups
Partnering institutional investors with retail demand allows access to larger acquisitions ($100 million plus)
Launch of Centuria Diversified Property Fund, an open-ended fund.

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NICTA building, Australian Technology Park, NSW
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Centuria Capital

Listed Property Funds Management highlights

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CMA delivers predictable and growing earnings to investors

Centuria Metropolitan REIT (ASX: CMA) listed in 2014
Security price of $2.32[(1)] up 16% since listing
CMA utilises Centuria’s capabilities in property management, development and accounting
Significant leasing success generated by Centuria’s integrated business approach delivered value for CMA investors
Acquisition of 50% interest in 203 Pacific Highway, St Leonards with Centuria Unlisted Fund
CMA delivered on its financial forecast distributing 17.0 cents per stapled security for FY16
NTA increased by 21 cents to $2.18 per security.

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9 Help Street, Chatswood, NSW
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Close of business 16 August 2016.

Centuria Capital

Listed Property Funds Management

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Portfolio well positioned to ensure income and capital values continue to grow

Portfolio book value increased 9.3%[(1)] to $398.7 million
Approximately 76% of rental revenue derived from ASX-listed, multinational, national and government tenants

CMA Portfolio Metrics	FY16	FY15
Number of assets	13	12
Book value	$398.7m	$323.1m
WACR	7.86%	8.43%
Occupancy(2),(3)	97.2%	96.7%
FY17 expiries(4)	8.7%	13.6%
WALE(2),(3)	4.4 yrs	4.8 yrs

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Geographic diversification (by value)
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12%
17%
44%
27%
NSW QLD ACT SA
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On a like for like basis, excluding 203 Pacific Highway, St Leonards (50% interest)
Includes seven transactions where terms have been agreed but subject to lease finalisation
By NLA
Inclusive of current vacancies

Centuria Capital

Listed Property strategy

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Active management delivering predictable and growing earnings

Focus on maximising CMA’s investment return by
maximising tenant retention
initiating refurbishment and repositioning strategies
maintaining a disciplined capital structure
acquiring fit for purpose assets to complement existing portfolio
Seek further acquisition transactions similar to the GMF bid.

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203 Pacific Highway, St Leonards NSW
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Centuria Capital

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Investment Bonds Division

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Centuria Capital

Investment Bond Division

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Investment Bond Division
Centuria Life Over Fifty Guardian Friendly Society
• • Manages total FUM of $350m Manages total FUM of $370m
• Unitised Investment Bond Funds • Prepaid Funeral Plans: • Established in 1998 • Strong growth 11% year on year • 7 Investment options • Prepaid funeral plan fund • Tax effective alternatives • Potential for further growth in sector. to superannuation
• Capital Guaranteed Funds • Established in 1981 • Legacy funds.

Centuria Capital

Investment Bond Division

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4[th] largest friendly society/insurance bond issuer in Australia

10.2% market share of $7 billion total market[(1)]
Stabilised the business creates a platform for sustainable growth
Full year inflows $67.0 million
Forecasting FY17 FUM growth for non-legacy book
Main four unitised Bonds ranked 1st or 2nd in Morningstar peer rankings
Centuria Life product suite rated “Investment Grade” by Lonsec.

= $350m+ $370m $720m

$350m $370m $720m + =	$350m $370m $720m + =	$350m $370m $720m + =
Total FUM of Centuria Life Investment Bonds Total FUM of Over Fifty Guardian Friendly Society Bonds Total FUM
	30 June 2016	30 June 2015
Total FUM increased	$720m	$715m
Total policyholders increased	85.1k	83.8k
Inflows increased	$67.0m	$46.8m
Redemptions	$95.8m	$70.9m

Plan for Life Bond Report March 2016

Centuria Capital

Investment Bond Division

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The investment bond provider of choice to non-aligned financial advisers

Centuria Investment Bonds now on over 15 Approved Product Lists representing over 20% of the non-aligned financial adviser market[(1)]
Developed a white-labelled Investment Bond offering for Providence Wealth and rationalised the legacy product range closing 4 funds in the period.

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Fund	Total Return 1 Yr	Total Return 3 Yr	Total Return 5 Yr	Morningstar Ranking(2)	Morningstar Ranking(2)	Morningstar Rating
Centuria High Growth	4.00%	7.80%	8.92%	High Growth Bond	1/23	****
Centuria Australian Shares	9.77%	9.82%	9.86%	Australian Shares Bond	1/38	*
Centuria Growth Bond	7.92%	8.47%	7.78%	Growth & Balanced Bonds	1/88	****
Centuria Balanced	4.75%	6.36%	7.25%	Growth & Balanced Bonds	2/88	****

After tax returns demonstrated in the table

The Changing Face of Financial Service Distribution, IFA
Performance rankings from the universe of investment/insurance providers as at 31 July 2016

Centuria Capital

Investment Bond strategy

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Positioning Investment Bonds as an investment alternative to superannuation

With ongoing regulatory uncertainty around superannuation, Investment Bonds are well placed as tax-effective savings vehicles for accumulation of wealth and income outside of superannuation
Focus is to build long-term, sustainable relationships in the retail advice market and to position the Investment Bond Division as the investment bond provider of choice for third-party distributers and selected aligned financial advisers
Continue white-labelling opportunities where appropriate
Implementing Retention Strategy for Capital Guarantee Book
Investment Bonds sales strategies include
certainty with estate planning
maximising government entitlements in aged care, and;
saving for education
tax-effective retirement savings.

Centuria Capital

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Outlook

Centuria Capital

Outlook

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Centuria is well positioned to grow recurring earnings and scale up

Low interest rate environment to continue – ideal for Centuria Property Fund products
Uncertain superannuation legislation – encouraging for the Investment Bond business
CMA listed business to continue strong growth
Unlisted Property business to continue traditional single-asset funds and launch new open-ended fund
Diversification of equity sources to continue eg SEB and BlackRock wholesale/retail hybrid funds
Increased focus on growing recurring revenues
Potential corporate restructure to enable co-investments distributions to flow directly to shareholders
Strong focus on platform acquisitions where they will meaningfully enhance scale and shareholder wealth
CNI aims to deliver consistent growth in earnings and dividend per share over the short and long-term.

Centuria Capital

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Appendices

Centuria Capital

Reconciliation of statutory NPAT to underlying NPAT

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	2016 $ million	2015 $ million
Underlying net profit after tax (1)	10.4	6.3
Non-underlying adjustments:
Unrealised gain on fair value of derivatives	5.5	1.2
Centuria Life seed capital valuation movement	(2.8)	(1.8)
Accounting gains on sales of non-core assets	-	5.2
Unrealised profit on non-core investment (net of costs)	1.0	-
Tax impact of above non-recurring adjustments	(2.0)	(2.3)
Statutory net profit after tax	12.1	8.6

Underlying profit is a financial measure which is not prescribed by Australian Accounting Standards (“AAS”) and represents profit under AAS adjusted for specific non-cash and significant items.

Centuria Capital

Realising Value - Unlisted Property Fund Asset Sale

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80 Waterloo Rd & 16 Byfield St, North Ryde Macquarie Park

Purchase date	2001	& 2002
Acquisition price		$25.3m
Sale price	$101.0m
Capital gain		310.0%
IRR (post fees)		~20.0%
Performance/Sale fee		$9.6m
•Announced conditional sale of Macquarie Park properties for $101		million
•The properties were purchased in 2001 and 2002 for $25.3 million
•Performance/sale fees of $9.6 million will be generated

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Centuria Capital

Building Unlisted Property Fund Pipeline

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Australian Technology Park, Eveleigh

Purchase price	$104.0m
Valuation	$108.8m
Equity raised	$61.8m
Offer closed oversubscribed	February 2016
Forecast 2016 distribution yield (annualised)	8.7%
Performance/Sale fee	$9.6m

Successful co-tenderer with Mirvac Group for acquisition of assets within the Australian Technology Park (ATP), Eveleigh.
$104 million purchase due to settle in March 2016.
The CBA commitment of 93,000sqm and the pre-sale to Mirvac, AMP and Sunsuper has re-rated the precinct to Institutional Grade

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Centuria’s foresight will generate significant Investor returns

Centuria Capital

Disclaimer

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This document has been issued by Centuria Capital Limited ABN 22 095 454 336 and contains general information about Centuria Capital Limited and its related bodies corporate (“Centuria”) which is current as at 18 August 2016.

The information in this document is in summary form and does not purport to be complete. Due to the impact of rounding, the totals shown for charts, graphs or tables in this document may not equate to the sum of the individual components of the relevant chart, graph or table. Accordingly, it should be read in conjunction with all other information concerning Centuria filed with the Australian Securities Exchange.

The document has been prepared from information believed to be accurate, however, no representation or warranty is made as to the accuracy or adequacy of any information contained in the document.

To the extent permitted by law, Centuria, its related bodies corporate and their respective directors, officers and employees, exclude liability for any loss or damage resulting from the issue or use of, or reliance on, anything contained in or omitted from this document.

This document is not a recommendation or personal advice in relation to Centuria or any product or service offered by Centuria and does not take into account the investment objectives, financial situation or needs of any particular person. Past performance is not indicative of future performance.

To the extent this document contains prospective financial information, that information has been based on current expectations about future events and is, however, subject to risks, uncertainties and assumptions that could cause actual results to differ materially from expectations. CA-CNI-03/05/16-00266

Centuria Capital

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AI assistant

CENTURIA CAPITAL GROUP — Annual Report 2016

64677_rns_2016-08-17_45739dd4-fdf8-4a77-9528-39e4db8fbe59.pdf

Centuria Capital Results Briefing FY16

18 August 2016

Contents

Group Overview & Strategy

Growth in FUM anticipated in FY17

Business transitioning for next stage of growth

Centuria Capital Limited

Experienced specialist fund manager with proven and disciplined growth

Group strategy

FY16 Operating Highlights

Group operating highlights

Record profit delivered in FY16

Strategy scorecard

Disciplined commitment to set strategy

FY16 Financial Highlights

Group operating highlights

Record profit delivered

Underlying segment results

In line with top end of guidance

Growth in assets

Substantial net asset backing supports value equation

Potential corporate restructure

Property Funds Management Division

Property Funds Management Division

Unlisted Property highlights

Unlisted Property highlights

42% growth in unlisted property funds under management

Unlisted Property strategy

Listed Property Funds Management highlights

CMA delivers predictable and growing earnings to investors

Listed Property Funds Management

Portfolio well positioned to ensure income and capital values continue to grow

Listed Property strategy

Investment Bonds Division

Investment Bond Division

Investment Bond Division

4[th] largest friendly society/insurance bond issuer in Australia

Investment Bond Division

The investment bond provider of choice to non-aligned financial advisers

After tax returns demonstrated in the table

Investment Bond strategy

Positioning Investment Bonds as an investment alternative to superannuation

Outlook

Outlook

Centuria is well positioned to grow recurring earnings and scale up

Appendices

Reconciliation of statutory NPAT to underlying NPAT

Realising Value - Unlisted Property Fund Asset Sale

80 Waterloo Rd & 16 Byfield St, North Ryde Macquarie Park

Building Unlisted Property Fund Pipeline

Australian Technology Park, Eveleigh

Disclaimer

More from CENTURIA CAPITAL GROUP

CENTURIA CAPITAL GROUP Annual Report 2016