CENTURIA CAPITAL GROUP — Interim / Quarterly Report 2014

Feb 20, 2014

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Results Announcement for the half year ending 31 December 2013

Centuria Capital Limited Presentation to Investors and Analysts

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Half year summary

• First half year performance in line with expectations

• Underlying NPAT for half year to December 2013 - $2.9m

• Interim dividend of 1.25cps (franked to 100%)

• Unlisted property records $99.6m acquisitions ($247m over calendar year)

• Major offshore mandate secured via Singapore office

• Implementation of tax effective bond strategy underway

• Core business unit strategies well progressed

Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.

31 December 2013 – Half ear financial results in review y

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Underlying Net Profit After Tax (NPAT)
Financial Summary
($m)
6
Underlying NPAT 31 Dec 2013: $2.9m
(31 Dec 2012: $2.9m)
5
2nd Half
Result Underlying EPS: 3.67c
4 2.405 (31 Dec 2012: 3.66c)
$'m 3 3.579 Direct Property Fund Acquisitions: $99.6m
(31 Dec 2012: $23.3m)
1st Half
2 Result Direct Property EBIT: $2.46m
2.932 2.866 (31 Dec 2012: $1.79m)
1
1.282 Centuria Life FUM stable: $711m
0 (30 June 2013: $708m)
FY12 FY13 FY14
Interim dividend - fully franked 1.25cps
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Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.

Underlying Results

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Half Year Ended 31 December	2013	2012	Commentary for major movements
Underlying profit/(loss) before tax by segment	$’000	$’000
- Centuria Property Funds	2,463	1,793	$100 mill acquisitions, revenue up 22% this half
- Centuria Life (excluding Friendly Society Benefit Funds)	3,234	3,804	Note 1
- Reverse Mortgage Book	1,562	1,602
- Insurance	450	458
- Corporate	(2,540)	(2,120)
- Other	1	394	Disposal of non–core legacy investment properties
	5,170	55,931
Finance Costs (Corporate)	(546)	(591)
Total underlying profit/(loss) before tax	4,624	5,340
Underlying tax expense	(1,758)	(2,408)
Underlying NPAT	2,866	2,932
Non-recurring adjustments (after tax)
- Unrealised gain on fair value of reverse mortgage swap	2,256	-	New Fair Value accounting standard - AASB 13
- Centuria Life seed capital investment	(123)	(191)
- Mortgageport deferred consideration	-	101
Reported Statutory NPAT	4,999	2,842

Note 1: Revenue impacted by changing fund mix and downstream management fee increases (being reviewed)

Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.

31 December 2013 – Property Division

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Revenue Sources

Property Division Revenue Sources ($m)

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10
9
Other
8
7 Acquisition fees
6 Leasing fees
5 Property Mgt & Caretaking
4
Management fees
3
Development fees
2
Sales fees
1
-
1HY2012 2HY2012 1HY2013 2HY2013 1HY2014
$'m
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• Revenue up 22% over prior comparative period ‘PCP’

• Acquisition fee revenue in line with expectations

• Annuity stream fund and property management fees ($5.41m) up 7.3% over PCP

• Sales and performance fees ($1.08m) increased by 56% over PCP

Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.

31 December 2013 – Property Division

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Unlisted Property Funds

Unlisted Property Funds Under Management ($bn)

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1.20
1.00 1.03 1.05 1.06
1.00
0.80 0.71
0.60
0.40
0.20
0.00
2010 2011 2012 2013 2014
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• $100m of direct property acquisitions during 1HY14

• Singapore office introduces $32m institutional investor to latest Centuria fund

• Focus on larger assets average fund size $44m (Dec ‘12 - $28.6m)

• Larger transactions facilitated by combining retail and wholesale investors

• These strategies encourage FUM growth and corporate efficiency

Business Profile of Funds

24

37

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Number of Funds
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Number of Buildings

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6 678 ,

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Number of Investors

3.7 years

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Portfolio Weighted Average Lease Expiry (income)

Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.

Pro ert Funds Mana ement Strate p y g gy

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Centuria’s three tiered capital strategy will allow the acquisition of a wider range of assets as well as giving investors more choice of fund type – ultimately securing greater recurring fee income.

Centuria is well progressed towards offering a full platform of investment funds for retail and institutional investors – both listed and unlisted.

Three tier strategy:

1. Unlisted funds

• $150m - $200m of new investment product annually

• Active Centuria core retail client base demonstrated by 8 Central Avenue Fund raising - $32m in 6 weeks

• Specific focus on fast growing SMSF sector

• Enhanced Centuria Group profile attracting many new HNW investors (30% of latest fund raising)

• Development opportunities identified within Centuria portfolio creating additional downstream revenue

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8 Central Avenue, Sydney Centuria 8 Central Avenue Fund

Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.

Property Funds Management Strategy - continued

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2. Asian hub strategy

• Centuria is committed to its Asian hub strategy and established its Singapore office in 2012 and is one of few Australian managers with local representation

• Continue to create bespoke Australian offers for offshore institutional and mid-tier investors – often partnering with Centuria’s retail clients

• During the period SEB Investment Gmbh, the property funds management arm of major Nordic Bank SEB invested $32 m in the Centuria 8 Central Ave Fund alongside Centuria clients

3. Listed Funds

• Centuria's integrated real estate platform provides all necessary support, governance, and management required to establish an AREIT

• Centuria continues its preparation for a launch of an ASX Listed trust. Suitable/appropriate assets are presently being sourced for inclusion in a new vehicle the listing of which will be determined by property and equity market conditions.

• Listed product may also be developed from Centuria's existing syndicates where the assets are suitable and additional capital would enhance investor returns and provide a liquidity event.

Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.

31 December 2013 – Financial Services

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Centuria Life

• APRA approves benefit fund rules for Centuria Private Bond

• First mandated tax effective private bond launch April 2014

• Private Bond structure offers a unique tax effective solution for HNWs and provides flexibility, investor control and estate planning benefits

• Centuria to launch a series of private bonds with private banks/family offices

• Policyholder numbers stable Dec 2013 - 82,806 (June 2013: 82,210)

m $420

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Total FUM of Centuria Life Bonds

m 711m $291 $ (FY12 $708m)

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Total FUM of Over Fifty Guardian Friendly Society Bonds

Total FUM

Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.

31 December 2013 – Financial Services

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Insurance agency

• 22,151 policies as at Dec 13

• Policyholder renewals continue to track at 90.4% for calendar year

• Total premiums $4.1m over half year

• Commissions $553,520 over half year

• Homeowners/householders premiums 61.5% of gross written premium

• Claims frequency remains low at 4.9% for calendar year

Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.

31 December 2013 – Financial Services (continued)

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Reverse Mortgage Book

• Value of book at Dec 13 - $166m (Jun 13: $172m) secured by $626m of residential property (33.7% weighted average LVR)

• Non-recourse warehouse loan at Dec 13 - $126m (Jun 13: $135m)

• Loan facility maturity date extended to Feb 15

• Number of loans at Dec 13: 1,633 (Jun 13: 1,743)

• Average loan balance at Dec 13: $101,383 (Jun 13: $99,058)

• Refer portfolio projections (Appendix 4)

Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.

Corporate Update

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Delivering on Strategy

• First half year performance in line with expectations

• Unlisted property records $99.6m acquisitions

• Record $247m property acquisitions over calendar year

• Major offshore mandate secured via Singapore office

• Implementation of tax effective bond strategy

Strategic Outlook

• Two stage growth strategy

• Stage 1: achieve fair valuation in share price

• Stage 2: utilise expanded balance sheet to fund core divisions and drive expansion

• Three tier property management strategy unfolding – core business

• Working hard to revitalise bond business e.g. Centuria Private Bond Series– core business

• Ongoing focus on core businesses in 2014

• Focus on balance sheet growth

• Need to release capital to support growth of core businesses

Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.

Appendices Statutor Account Reconciliations y

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General comment on statutory accounts reconciliation

• The “Statutory Accounts” show the consolidated corporate entities including the Benefit Funds which Centuria is required to consolidate under AIFRS

• The “Benefit Funds” reflect the stand alone assets of policyholders

• The “Statutory accounts excluding Benefit Funds” reflect the value and performance of Centuria shareholder funds

Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.

Appendix 1: Income Statement for ear ended 31 December 2013 y

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	Statutory Accounts	Benefit Funds	Statutory Accounts excluding Benefit Funds
	$’000	$’000	$’000
Property Division Revenue	7,691	-	7,691
Reverse Mortgage Book interest income	6,745	-	6,745
Centuria Life revenue	5,437	-	5,437
Net revenue from benefit funds	2,116	2,116	-
Insurance agency	583		583
Other income	93	-	93
Total Revenue	22,665	2,116	20,549
Finance costs	(5,290)	-	(5,290)
Employee benefits expense	(5,121)	-	(5,121)
Administrative and other operating expenses	(5,689)	-	(5,689)
Unrealised gain/(loss) arising from fair value movements of derivative financial instruments	3,223	-	3,223
Net profit before tax:	9,788	2,116	7,672
Tax	(4,789)	(2,116)	(2,673)
Reported NPAT	4,999	-	4,999

Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.

Appendix 2: Balance Sheet as at 31 December 2013

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	Statutory Accounts	Benefit Funds	Statutory Accounts excluding Benefit Funds
	$’000	$’000	$’000
Assets
Cash and cash equivalents (Note 1)	13,590	-	13,590
Trade and other receivables (Note 2)	12,302	-	12,302
Financial Assets at fair value through profit and loss	271	-	271
Financial assets - Reverse Mortgage Book (Note 3)	173,963	-	173,963
Other assets	1,247	-	1,247
Investment in associates	643	-	643
Plant & equipment	941	-	941
Assets in respect of benefit funds	421,627	421,627	-
Deferred tax assets	5,244	-	5,244
Income tax receivable	3,302	-	3,302
Intangible assets	53,026	-	53,026
Total Assets	686,156	421,627	264,529

Note 1: Major balances include $1m Corporate, $4.3m Reverse Mortgage Book, and $6.5m Centuria Life

Note 2: Major balances include $1m Centuria Diversified Property Fund loan, $1.4m SPV loans, and $4.9m including Seed Capital investment and other receivables Note 3: Reverse Mortgage Book at cost $166m, plus fair value adjustment of $8m

Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.

Appendix 2: Balance Sheet as at 31 December 2013 (continued)

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	Statutory Accounts	Benefit Funds	Statutory Accounts excluding Benefit Funds
	$’000	$’000	$’000
Liabilities
Trade and other payables	11,442	-	11,442
Corporate debt	12,000	-	12,000
Borrowings - Reverse Mortgage Book	125,943	-	125,943
Other liabilities	485	-	485
Derivative financial liabilities - Reverse Mortgage Book	12,321	-	12,321
Liabilities in respect of benefit funds	421,627	421,627	-
Provisions	1,189	-	1,189
Total Liabilities	585,007	421,627	163,380
Net Assets	101,149		101,149
Equity:
Issued Capital (Note 1)	89,164	-	89,164
Reserves	(171)	-	(171)
Profits Reserves	11,389	-	11,389
Retained earnings	767	-	767
Equity attributable to equity holders of the parent	101,149	-	101,149
Total Equity	101,149	-	101,149

Note 1: Increase from 2013 of $0.53m as a result of sale of equity securities in Centuria Employee Share Funds

Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.

Appendix 3: Cash Flow Statement for ear ended 31 December 2013 y

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	Statutory Accounts	Benefit Funds	Statutory Accounts excluding Benefit Funds
	$’000	$’000	$’000
Cash flows from operating activities
Interest received	222	-	222
Management fees received (Note 1)	13,971	-	13,971
Rent, trust distributions and other income received (Note 2)	3,175	-	3,175
Benefit funds payments	(18,449)	(18,449)	-
Payments to suppliers and employees	(13,478)	-	(13,478)
Income tax paid	783	-	783
Net cash flows used in operating activities	(13,776)	(18,449)	4,673
Cash flows from investing activities
Benefit funds receipts	19,838	19,838	-
Payments for plant and equipment	(516)	-	(516)
Net cash flows provided by investing activities	19,322	19,838	(516)

Note 1: Major balances include $5.2m of Centuria Life management fees, and $8.0m of Centuria Property Funds income Note 2 : Major balances include $0.6m insurance income, $0.7m Centuria Property Funds leasing fee

Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.

Appendix 3: Cash Flow Statement for year ended 31 December 2013 (continued)

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	Statutory Accounts	Benefit Funds	Statutory Accounts excluding Benefit Funds
	$’000	$’000	$’000
Cash flows from financing activities
Loans (payment)/receipts	(354)	-	(354)
Benefit funds receipts	-	-	-
Repayment of borrowings – Reverse Mortgage Book	(9,577)	-	(9,577)
Funds received from Reverse Mortgage Book customers	14,351	-	14,351
Share buy back	530	-	530
Interest paid on Reverse Mortgage Book loans	(4,256)	-	(4,256)
Financing costs - Corporate	(546)	-	(546)
Net cash flows used in financing activities	148	-	148
Net increase/(decrease) in cash and cash equivalent	5,694	1,389	4,305
Cash and cash equivalents at the beginning of the period	23,937	14,652	9,285
Cash and cash equivalents at the end of the period	29,631	16,041	13,590

Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.

Appendix 4: Reverse Mortgage Book

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Actual Forecast
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Source: Rice Warner 31 December 2013

• The above projection is subject to variables including run-off rate, interest rates, regular refinancing and projection given as a guide only

Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.

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 21 February 2014.

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.

Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.