INVESTSMART GROUP LIMITED — AGM Information 2018

Nov 20, 2018

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21 November 2018

Attention: Company Announcements ASX Limited

By E-Lodgement

ANNUAL GENERAL MEETING OF INVESTSMART GROUP LIMITED (ASX Code: INV), HELD ON 21 NOVEMBER 2018 – COMMENTS BY CHAIRMAN & PRESENTATION BY MANAGING DIRECTOR

Text of the Comments by Mr Paul Clitheroe AM, Chairman

Before we consider the formal business of the Meeting, I would like to make a few comments in relation to the Company.

Our vision for the InvestSMART Group is to help all Australians grow and protect their wealth. People should be able to take control of their financial future and it should not be hard or expensive for them to do so.

We seek to do this by providing innovative tools, research and advice that they can trust and empower them to make better investment decisions.

Since I became Chair the strategy of the company has been to streamline its business units into a single, effective website offering our customers and visitors a range of services and products that allow them to take control of their financial future. This process was substantially completed by late 2017. As announced last year, this allowed us to embark on a major advertising spend. I hope all shareholders of the company, and of course hundreds of thousands of people, have seen or heard InvestSMART on TV, radio, online, in magazines, the QANTAS or Virgin lounges or indeed on the back of a bus.

Our business challenge is to take the very significant volume of visitors and to convert them into a customer. Our smorgasbord of products and services has become quite comprehensive. Our innovative platform allowing people to monitor and track their investments, our traditional subscription research services, a wide variety of useful tools and our own suite of low cost, in-house products give us a range of attractive options.

Ron Hodge, our CEO will shortly give us a detailed presentation, but I would like to mention a few highlights.

• In 2018 we reached our first milestone, $100 million in funds under management

• Successfully listed the InvestSMART Australian Equity Income Fund, which raised over $30 million pre listing

• The majority of our funds reached their third birthday, building up a performance track record

• We launched our campaign demonstrating the impact of fees on consumers investments. This has received significant media coverage. We also acted to become the first manager with a fixed cap on fees

• We bought an option to acquire Term Deposit Shop. With many billions of dollars on our platform in term deposits, we see a significant business opportunity to give people a better

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deal on their term deposit rate, with real simplicity, plus the very high level of security to be expected in a TD

This is not a simple climate for any investment company. Being a leader in the new world of digital advice is complex enough. The Royal Commission and volatile markets have also created uncertainty. However, an online company such as InvestSMART offers its visitors and customers transparency, low cost investment solutions and a range of choices to assist consumers take control of their money. This we argue is the future.

I now have pleasure in asking Ron Hodge to address the meeting.

Presentation by Mr Ron Hodge, Managing Director

A copy of the presentation made by Mr Ron Hodge, Managing Director is enclosed.

Yours faithfully

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Grant Winberg Company Secretary

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Investor Update November 2018

O U R M I S S I O N

To help all Australians grow and protect their wealth.

W H Y ?

Because we believe people should be able to take control of their financial future. And it shouldn’t be hard or expensive to do so.

H O W ?

By providing innovative tools, valuable advice and research that people can trust, empowering them to make better investing decisions.

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2 0 1 8 F I N A N C I A L Y E A R H I G H L I G H T S

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C O R E B U S I N E S S G O A L S F Y 1 8 – F Y 2 0

Grow funds under management 1 2 Maintain historical funds under administration by 3 4 providing investors valuable advice and research.

Maintain historical subscription business

Grow additional revenue streams predominantly through life insurance and term deposits offering

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D E L I V E R I N G O N O U R G O A L S I N F Y 1 8

• Grow FUM

• FUM grew 143% to $114m

• FUM revenue grew 371% over FY18 to $347,667

Revenue Channel Trends

• Maintain Subs

• Purchased Eureka Report in May 2016 at a very attractive price due to retention rates less than 50%

• Disappointing we were unable to turn around retention rates quicker

• Retention rates are now around 80%

• Maintain FUA

• FUA revenue down a little offset by market

• Some clients moving to NIL trail paying products and we expect this trend to continue with Royal Commission

• Launch of our new Professionally Managed Accounts will attract some of this moving FUA.

• Grow Additional Revenue Streams

• Signed option deal with The Term Deposit Shop (TTDS) in June 2018

7,000,000 FY15 FY16 FY17 FY18 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 - Subscription Income Commission Income Commission Income Funds Management - Managed Funds - Insurance Fees

• TTDS has been integrated with InvestSMART and is currently under testing. Full launch expected early in the New Year.

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F I N A N C I A L S F Y 1 8

InvestSMART is debt free and finished the year with a cash balance of $4.5 million.

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S TAY I N G F O C U S E D I N F Y 1 9

Core focus in FY19

• Build TRAFFIC – ensure we optimize our marketing spend

• Build ENGAGEMENT – provide valuable advice and research that people can trust

a

• Build CONVERSIONS – provide members value for money products and services which helps them reach their financial goals

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S E P T E M B E R 2 0 1 8 U P D AT E

• TRAFFIC

• InvestSMART’s marketing is driving unprecedented traffic to our site

• Up Year on Year (YOY) 22%

• ENGAGEMENT

• Engaging content with 15% YOY increase in pageviews to nearly 5m in past 3months

• Average automated emails sent up 36% with an open rate exceeding 50%

• Portfolio manager users up 17% YOY with assets monitored on platform up 26%

• CONVERSION

• Funds under Management grew by over 143% YOY

• o Number of accounts grew YOY 249%

• Average FUM per client decreased by 35% to circa $45k per client as we attract a broader audience with our new brand and above the line marketing.

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I M P R O V I N G I N V E S T O R O U T C O M E S K E Y T O A C H I E V I N G O U R G O A L S

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“If you focus on lowering your fees rather than paying for outperformance that probably won’t materialise, you’ll enjoy a far more prosperous retirement.”

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H O W F E E S C A N D E S T R O Y Y O U R W E A LT H M A J O R F I N D I N G S

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Action Plan
1. Consolidate similar funds and
investments into a single account
2. Get a breakdown of the fees you pay
Check to see if the fees are worth it
3.
Run a portfolio health check via
InvestSMART
4.
Swap high fee products for low fee
alternatives
5.
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The myth of outperformance by active funds:

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The percentage of active funds that underperform industry standard benchmarks over 10 years.

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B E T T E R P E R F O R M A N C E L E A D S T O B E T T E R O U T C O M E S

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Diversified Income Balanced
Core Growth High Growth
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B E T T E R A D V I C E L E A D S T O B E T T E R O U T C O M E S G O A L C A L C U L AT O R S

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L A U N C H E D O U R O W N D I G I TA L W E A LT H P L AT F O R M

Our Professionally Managed accounts (PMA):

• An Australian first - capped fees on our InvestSMART Diversified portfolios:

• 0.55% p.a. MIN $99 MAX $451

• Includes professional portfolio management, 24x7 monitoring, monthly performance reports and end of year tax accounts

• Even though InvestSMART has traditionally been a direct to customer business, more advisers are showing interest in using the platform to run their own portfolios for their clients.

• Our platform caters for all types of investors and advisers, allowing them to outsource investment management or take a more hands-on approach using our valuable advice and research.

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C O N T I N U I N G T O I N V E S T I N O U R B R A N D

InvestSMART continues to invest heavily in its brand

• Marketing costs in FY18 rose 128% to $1.9m

• Marketing and Sales in FY19 will rise to $2.5m focusing specifically on our new Professionally Managed Accounts.

• InvestSMART continues to attract and retain quality personnel with known media profiles to become ambassadors for the InvestSMART brand:

• Paul Clitheroe

• Evan Lucas

• Nathan Bell

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2 0 1 9 E A R N I N G S G U I D A N C E

The following guidance is given for FY2019:

• Funds management income to grow by about 300%

• Historical revenue including Subscription and Commission revenue to fall by circa 8%

• Total Operating Loss of approximately $1m, reflecting increases in marketing, sales and funds management costs.

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