HUB24 LIMITED — AGM Information 2014

Nov 26, 2014

==> picture [255 x 22] intentionally omitted <==

Annual General Meeting Managing Director’s Address 27 November 2014

==> picture [721 x 41] intentionally omitted <==

Disclaimer

Summary information

The material that follows is a presentation of general background information about HUB24 Limited’s (‘HUB’) activities. This information given in summary form does not purport to be complete and should be read in conjunction with previous ASX filings, Half Year Report and the audited Annual Report as applicable.

Not investment advice

This presentation is not a prospectus or a product disclosure statement under the Corporations Act 2001 (Cth) and has not been lodged with ASIC. The information provided in this presentation is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice when deciding if an investment is appropriate.

Risk of investment

An investment in HUB shares is subject to investment and other known and unknown risks, some of which are beyond the control of HUB. HUB does not guarantee any particular rate of return or the performance of HUB nor does it guarantee the repayment of capital from HUB or any particular tax treatment.

Forward looking statements

This presentation contains certain forward-looking statements. The words ‘anticipate’, ‘believe’, ‘expect’, ‘project’, forecast’, ‘estimate’, ‘intend’, ‘should’, ‘could’, ‘may’, ‘target’, ‘plan’ and other similar expressions are intended to identify forward-looking statements. Indications of, and guidance on, future earnings and financial position and performance are also forwardlooking statements. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of HUB, that may cause actual results to differ materially from those expressed or implied in such statements. There can be no assurance that actual outcomes will not differ materially from these statements. You should not place reliance on forwardlooking statements and neither HUB nor any of its directors, employees, consultants, contractors, advisers or agents assume any obligation to update such information.

1

==> picture [721 x 41] intentionally omitted <==

• Who we are

• What we do

• Our advantage

• Paragem Acquisition

• Market environment

• FY14 Overview and highlights

• Growth statistics

• Financial Summary

• FY15 Business progress

• Product U date p

• Paragem Update

• Outlook

• Corporate Information

2

==> picture [721 x 41] intentionally omitted <==

Who we are

HUB24 is a financial services company focused on delivering superior investment, superannuation and advice solutions to independentlyminded advisers and their clients

• Market leading Wrap & Managed Account Platform

• $1.15 billion Funds Under Administration (FUA)

• FUA grown 122% in FY14

==> picture [234 x 45] intentionally omitted <==

==> picture [234 x 45] intentionally omitted <==

• Providing solutions for 401 financial advisers

• Market leading boutique advice licensee

• $2.5 billion Funds Under Advice

• 20 high quality practices, 50 advisers, national footprint

3

==> picture [721 x 41] intentionally omitted <==

What we do

We develop, distribute and operate the HUB24 Investment and Superannuation platform

==> picture [270 x 209] intentionally omitted <==

• Our customers are financial advisers, accountants, stockbrokers and institutions

• We allow our larger corporate customers to white label the platform under their own brand

• Very wide investment choice including Managed Portfolios, listed securities, managed funds, term deposits and cash

• Provide financial advice to clients via licensed advisers of the newly acquired Paragem business.

4

==> picture [721 x 41] intentionally omitted <==

Our advantage

Market leading managed portfolio capability

• Enables dealer groups to offer advisers and their clients fully implemented SMAs and model portfolios made up of a range of asset types and classes.

• Dealers can earn ongoing portfolio management fees and provide a more efficient implementation model for their advisers.

• Supports the achievement of efficient fee and tax outcomes for clients.

Independence

• Independently owned platform, not reliant or influenced by in-house products.

• Responsive to dealer group and adviser service needs.

• Paragem open-architecture and clearly differentiated licensee with full product choice, high quality advisers and strong compliance.

Technology

• Proven in house development team that enhances client responsiveness and quick to

• market development releases catering for advisers and their clients and regulatory change.

• Fully online scalable solution delivering operational efficiencies translating into

• sustainable competitive pricing.

5

==> picture [721 x 41] intentionally omitted <==

Paragem Acquisition

Strategic rationale

• Paragem is a leading dealer group that complements the range of services and solutions that HUB24 can offer to investors and advisers.

• Provides a ‘landing pad’ for independently minded financial advisers that are currently licensed by ‘big 5’ institutionally-owned dealer groups, but are looking for an independent, open architecture model.

• Provides an alternative licensing solution for self-licensed financial advisers looking for an independent, open architecture model.

• Diversify HUB24’s revenue streams by participating more broadly in the financial services sector and also provide future strategic opportunities.

• Assist HUB24 work closely with Adviser Firms for the purposes of generating product innovation and better market intelligence.

• Support further growth of FUA. Paragem advisers seeking managed account solution and HUB24 is the market leader.

• Together, HUB24 and Paragem can optimise growth to build a leading 'independent dealer' group through the offer of a market leading integrated wrap platform and managed account portfolio solutions.

6

==> picture [721 x 41] intentionally omitted <==

Market environment

Investment and superannuation growth

• The personal investments market was $2,275bn as at 30 June 2013 and is expected to grow at 7.8% p.a. (4.8% in real terms) over the next 15 years*.

 The value of superannuation assets was $1,616bn as at 30 June 2013 and is expected to grow at 5.2% in real terms over the next 15 years.* Progressive rise in employer superannuation (SG) to 12% will further fuel net flows to platforms.

 Wrap platforms, including separately managed accounts (SMA) and model portfolio products will be the fastest growing segment of the personal investment market with market share growing from 2.0% to 7.5% over the 15 to 30 June years 2028.*

PROJECTED SUPERANNUATION ASSETS, 2012-33** $ millions

Post- retirement assets Pre- retirement assets

==> picture [321 x 142] intentionally omitted <==

• Rice Warner – Media Release February 2014 – Personal Investments Market Projections Report 2014 ** Deloitte Actuaries & Consultants, 2013

7

==> picture [721 x 41] intentionally omitted <==

==> picture [656 x 406] intentionally omitted <==

----- Start of picture text -----

Overview
… is delivering rapid … and strengthening
Our focus … organic growth … financial results
Superior client $m Rapid revenue growth
57
outcomes
Leading platform Strong support from
33
features shareholders
Excellent adviser 19 Gross profits from
engagement/service March 2014
5
Unique in-house Demonstrating strong
technology FY12 FY13 FY14 FY15 scale benefits
(to date)
----- End of picture text -----*

• Average monthly net inflow excluding market movement

8

==> picture [721 x 41] intentionally omitted <==

FY14 Highlights

==> picture [657 x 401] intentionally omitted <==

9

==> picture [721 x 41] intentionally omitted <==

Growth statistics

FY14 :	2014	% increase
		on PCP*
FUA**	854m	122%
Net inflows	394m	72%
Gross inflows	494m	67%
FY15 :	Q1FY15	%	%
		increase on PCP*	increase on Prior Qtr
FUA**	1,031m	95%	21%
Net inflows Gross inflows	171m 198m	60% 65%	45% 19%

FUA BALANCE

==> picture [299 x 270] intentionally omitted <==

----- Start of picture text -----

$ millions
1,300
1,200
1,100
1,000
900
800
700
600
500
400
300
200
100
‐
Sept '11 Dec '11 Mar '12 June '12 Sept '12 Dec '12 Mar '13 June '13 Sept '13 Dec '13 Mar '14 Jun '14 Sept '14
----- End of picture text -----

*Annual from 30 June 2013

10

** FUA includes market movement.

==> picture [721 x 41] intentionally omitted <==

Growth statistics

• Average FUA per adviser increased by 71% during FY14.

• New advisers using the HUB platform during FY14 increased by 109 and by 38 during Q1FY15.

• Many advisers are relatively new with expected upside in both new accounts and average FUA.

• Establishing new advisers relationships will support continuing FUA growth.

==> picture [305 x 304] intentionally omitted <==

----- Start of picture text -----

INFLOWS - QUARTERLY
$ millions
#
250 450
400
200
350
300
150
250
200
100
150
100
50
50
0 -
Net Inflows (LHS) Gross Inflows (LHS) Advisers (RHS)
June '12 Sept '12 Dec '12 Mar '13 June '13 Sept '13 Dec '13 Mar '14 Jun '14 Sept '14
----- End of picture text -----

	FY14 :	2014	%
			increase on
			PCP*
	Active advisers	345	46%
	Managed Portfolios (#)	188	19%
	Managed Portfolios ($)	357m	170%
	FY15 :	Q1FY15	%	%
			increase on	increase on
			PCP*	Prior Qtr
	Active advisers	383	37%	11%
	Managed Portfolios (#) Managed Portfolios ($)	204 448m	28% 142%	9% 26%

*Annual from 30 June 2013

11

Net & Gross flows exclude market movement

==> picture [721 x 41] intentionally omitted <==

Growth statistics

• FY15 has seen a large increase in new account inflows into HUB24’s Retail Offer with an increase of 11 active licensees since July 2013.

• Strong growth in white label inflows in FY14 are now paralleled with Retail inflows in FY15.

2014 Trend of inflows from new accounts to the HUB24 Platform

$

==> picture [344 x 197] intentionally omitted <==

----- Start of picture text -----

120,000,000
100,000,000
80,000,000
60,000,000
40,000,000
20,000,000
0
Mar '14 Jun '14 Sept '14
White labels HUB Retail
----- End of picture text -----

12

==> picture [721 x 41] intentionally omitted <==

Scale efficiencies and margin expansion

GROSS PROFIT EMERGES WITH INCREASING SCALE

==> picture [526 x 286] intentionally omitted <==

----- Start of picture text -----

$ per month Gross profits achieved
March 2014
500,000 from this point forward
450,000 Revenue
400,000
Total direct expenses
350,000 (including FTE costs)
300,000
250,000
200,000
Direct FTE costs
150,000
100,000
50,000
0
1H 2H 1Q
FY14 FY14 FY15
----- End of picture text -----

Scale benefits emerging for HUB over the 2 year reporting periods to 30 June 2014:

1. Seven times FUA increase.

2. More than 14 times revenue increase while direct costs (platform & FTE) to service that those revenues has increased only 1.4 times – supporting our scalable business model.

3. FTE to support FUA has incurred a marginal increase only.

1QFY15 Figures are based upon internal management accounts, excludes Paragem and are unaudited.

13

==> picture [721 x 41] intentionally omitted <==

Financial summary

Continuing rapid increase in FUA is translating into revenue, gross profit and EBITDA improvements.

• Investment increase reflects strengthening headcount across executive team, development, sales and product.

• Investments made in the executive team in FY14:

• have resourced the business for growth;

• aim to accelerate growth further over FY15/16;

• Explore further acquisition opportunities;

• target efficiencies in supporting this growth and improving gross profit, EBITDA and NPAT margins.

		Year	Year ended		Qtr ended 30	Qtr ended 30
		ended 30	30 June	%	Sept 2013***	Sept 2014***	%
	Key financial results	June 2013	2014	change			change
	FUA (million)	$384	$854	122.4%	$528	$1,031	95.3%
	Revenue	1,228,366	3,209,190	161.3%	644,511	1,296,643	101.2%
	Platform direct costs*	(2,597,463)	(3,461,416)	33.3%	(845,254)	(1,070,703)	26.7%
	Gross profit	(1,369,097)	(252,226)	81.6%	(200,743)	225,940	212.6%
	EBITDA pre-investment	(4,678,536)	(3,976,878)	15.0%
	EBITDA post-investment**	(6,520,239)	(7,663,800)	(17.5%)
	NPAT (incl discontinued	(9,782,971)	(8,423,012)	13.9%
	operations)

• Includes custody, trustee, super administration, data, research and staff that support the existing FUA on the platform.

• ** Includes headcount resources that are dedicated to bringing new FUA onto the platform – sales, transition, new development functions.

*** Figures per internal management accounts, excludes Paragem, not subject to audit.

14

==> picture [721 x 41] intentionally omitted <==

FY13 to FY14 Revenue movements by category

Increase in revenue margin from 48 bps to 52 bps of average FUA driven by maintaining client portfolio fees and increased transaction activity from platform trading, insurance and managed funds.

==> picture [611 x 311] intentionally omitted <==

----- Start of picture text -----

$ millions
3
2
1
0
FY13 Portfolio fees Platform Insurance Cash Managed Other FY14
trading Funds
----- End of picture text -----

15

==> picture [721 x 41] intentionally omitted <==

FY13 to FY14 Direct Platform expenses movement by category

Direct platform expense increases predominantly due to transactional services – trading, custody, trustee. HUB is achieving scale efficiencies across these suppliers.

$ millions

==> picture [569 x 228] intentionally omitted <==

----- Start of picture text -----

4
3
2
FY13 Custody, trustee, trading Share based payments Employment costs FY14
----- End of picture text -----

16

==> picture [721 x 41] intentionally omitted <==

FY15 Business progress

==> picture [47 x 35] intentionally omitted <==

==> picture [47 x 35] intentionally omitted <==

FUA growth of 21% for 1QFY15 to

$1,031m

Launched in June 2012

Super

Growth in active advisers to

383

( Now $1,150m )

Now represents more than $500m in FUA.

Representing an increase of 38 for 1QFY15

Increase in new client account inflows of

40%

==> picture [50 x 35] intentionally omitted <==

Managed Portfolios offered

204

==> picture [85 x 43] intentionally omitted <==

Paragem acquisition competed in September.

From HUB’s retail offer during 1QFY15

With FUA of 43% now represented by this emerging asset class

FY15 Product update

Recent Completions Work in progress

• New Mobile Device friendly user interface –compatible with all mobile device types and sizes

• External Broker Trading functionality

• Non-Custody Reporting service, including Tax Reporting

• International equities and foreign currency options within Managed Portfolios

• Additional online self service capabilities for advisers and investors

• Additional Insurers & Term Deposit providers

• Integration of Zurich Insurance

• Additional Managed Portfolio options

==> picture [275 x 190] intentionally omitted <==

18

==> picture [721 x 41] intentionally omitted <==

Paragem update

• Paragem is a leading dealer group that complements the range of services and solutions that HUB24 can offer to investors and advisers.

• Activity to date has focussed upon integration & transition activities.

• Paragem’s recruitment strategy of new practices continues with strong interest in pipeline.

• Initial inflows from Paragem are in line with expectations and are above typical experience for new licensees and white labels.

• Paragem understanding of adviser practices enhancing HUB’s capability in engagement, product development and investment selection.

19

==> picture [721 x 41] intentionally omitted <==

Outlook

1.1 FUA growth trend expected to continue and accelerate

• Maximise existing adviser and dealer relationships

• Ongoing business development including white labels for dealer groups, stockbrokers and accountants

• Promote our unique managed portfolio capability as a FOFA compliant solution for advisers

• Leverage our strong foundations to pursue larger / more significant opportunities.

2 2. Continuing investment to maintain and enhance position as leading independent platform

• Increase current product range and expand capabilities

• Enhance adviser and client experience.

3 3. Grow Paragem licensee by recruiting quality practices and providing exceptional advice and platform solutions.

• 4 4. Enhance product capability to target high net worth individuals and SMSF clients.

• 5

• 5. Efficiently develop and grow our high calibre talented team to support our future success.

• 6.6 Actively reviewing acquisition opportunities and strategic alliances.

20

==> picture [721 x 41] intentionally omitted <==

Corporate information

Capital structure at 25 November ‘14 Shares on issue 47.06m Shareprice $0.94 Market capitalisation $44.23m Substantial shareholders ThorneyHoldings Ltd 18.95% Acorn Capital Ltd 10.07% Ian Litster 7.6%	Balance sheet as at 30 June ‘14
	Current assets $14.61m
	Non-current assets $ 7.07m
	Total assets $21.68m
	Current liabilities $ 2.05m
	Non-current liabilities $ 0.19m
	Total liabilities $ 2.24m
	Net assets $ 19.44m
	Equity $ 19.44m

21