2019 Annual results

Delivering on our growth agenda

12 August 2019

Praemium Limited ACN 098 405 826

Disclaimer

The material contained in this document is a presentation of general information about the Praemium Group's activities current as at the date of this presentation (12 August 2019) and is supplementary to the Group's financial results released to the ASX on 12 August 2019 and previous ASX filings as applicable.

It is provided in summary and does not purport to be complete. You should not rely upon it as advice for investment purposes as it does not take into account your investment objectives, financial position or needs. These factors should be considered, with or without professional advice when deciding if an investment is appropriate.

This presentation may contain forward looking statements including statements regarding our intent, belief or current expectations with respect to Praemium's businesses and operations, market conditions, results of operation and financial condition, capital adequacy, specific provisions and risk management practices. Readers are cautioned not to place undue reliance on these forward looking statements. Praemium does not undertake any obligation to publicly release the result of any revisions to these forward looking statements to reflect events or circumstances after the date hereof to reflect the occurrence of unanticipated events. While due care has been used in the preparation of forecast information, actual results may vary in a materially positive or negative manner. Forecasts and hypothetical examples are subject to uncertainty and contingencies outside Praemium's control. Past performance is not a reliable indication of future performance.

To the extent permitted by law, no responsibility for any loss arising in any way (including by way of negligence) from anyone acting or refraining from acting as a result of this material is accepted by the Praemium Group or any of its related bodies corporate.

Praemium is a leading provider of scalable managed accounts technology, portfolio administration and CRM & financial planning tools for the wealth management industry. We help financial advisers, stockbrokers, accountants, investment managers and banks to improve productivity in an increasingly complicated and regulated industry.

Software company founded in 2001 ASX listed in 2006 to launch the UK platform Offices in Australia, the UK, UAE, Armenia, China and Hong Kong Over 1,000 clients, including several financial institutions Covering over $140 billion in assets Our history Our products Managed Accounts platform The leading managed accounts provider serving Australia, UK and international markets Portfolio administration Excellence in performance and tax reporting CRM & financial planning Cloud-based financial planning software Investment management Multi-asset, multicurrency model portfolios

Highlights

Financial results

Business update

Q&A

Key performance indicators

VMA Administration Service (VMAAS) at $6.6 billion FUA UK Pension schemes now exceed 1,000

A major platform upgrade

UMA: Unified Managed Account MIS: Managed Investment Scheme SMA: Separately Managed Account IMA: Individually Managed Account VMA: Virtual Managed Account

Other key developments

Award-winning innovation

Winner

Innovation Category

Institute of Managed Account Professionals Managed Account Awards

Winner

Best Fund Platform

City of London Wealth Management Awards

Winner

Global Investment Platform of the Year Investment Adviser Awards

"The winner has shown persistence over a long period in developing a service that meets the needs of its clients and their clients for a solution which is flexible and able to be used by a range of investors.

In a competitive environment the solution needed to support a wide range of business models and the winner achieves that."

-IMAP judging panel

Investment Trends - Top ranking in 8 categories

Cyber Security
Managed Accounts
Online permissions Platform data technology
Online branding & logos Client segmentation & grouping

Report output Business reporting

Source: Investment Trends – Platform & Benchmarking 2018 Survey

Highlights

Financial results

Business update

Q&A

FY2019 financial results

Group Financial Results	FY18($m)	FY19($m)
Revenue	43.2	45.1
Product commissions(1)	(4.6)	(2.0)
Revenue (net)	38.6	43.1
Cost of operations	(7.3)	(7.3)
Gross margin	31.3	35.8
ofGM%netrevenue	812%	831%
Expenses:
Information Technology(2)	(6.7)	(6.0)
Sales & Marketing	(7.5)	(9.4)
General & Admin	(8.3)	(9.0)
Total expenses	(22.5)	(24.4)
EBITDA (underlying)	8.8	11.4
Share schemes(3)	(1.1)	(2.0)
D&A(4)	(1.0)	(1.9)
EBIT	6.7	7.5
Arbitration & restructure(5)	(1.8)	(1.6)
FX & other(6)	(0.0)	(0.5)
NPBT	4.9	5.4
Tax(7)	(3.5)	(2.9)
NPAT	1.4	2.5

Key financial highlights

(1) Product commissions relate to Smartfunds, with reductions from fund outflows during the year

(2) Information Technology expenses excludes R&D capex of $4.7 million (FY19) and $2.3 million (FY18)

(3) Expense relates to phasing of long term incentives (performance rights) under the Company's employee share scheme

(4) Includes amortisation of intangibles from software R&D (3 years) and Plum and Wensley Mackay acquisitions (5 years)

(5) Refer slide 16 for detailed breakdown

(7) FY19 Aus tax estimate at 27.5% company tax rate

Half-on-half results

Group Financial Results	H1, FY19($m)	H2, FY19($m)	FY19($m)
Revenue	22.9	22.2	45.1
Product commissions	(1.6)	(0.4)	(2.0)
Revenue (net)	21.3	21.8	43.1
Cost of operations	(4.2)	(3.1)	(7.3)
Gross margin	17.1	18.7	35.8
ofGM%netrevenue	801%	856%	831%
Expenses
Information Technology	(2.9)	(3.1)	(6.0)
Sales & Marketing	(4.5)	(4.9)	(9.4)
General & Admin	(4.6)	(4.4)	(9.0)
Total expenses	(12.0)	(12.4)	(24.4)
EBITDA (underlying)	5.1	6.3	11.4
Share schemes	(0.9)	(1.1)	(2.0)
D&A	(0.8)	(1.1)	(1.9)
EBIT	3.4	4.1	7.5
Arbitration & restructure	(1.0)	(0.6)	(1.6)
FX & other	(0.2)	(0.3)	(0.5)
NPBT	2.2	3.2	5.4
Tax	(1.6)	(1.3)	(2.9)
NPAT	0.6	1.9	2.5

Strong 2nd half result

Net revenue up 2%, after product commissions
Delivered gross margins of 85.6%, up from 80.1% in H1
EBITDA margins up to 29%, from 22% in H1

Improved bottom line

Share schemes consistent with prior half
Amortisation includes completed R&D modules
Lower arbitration costs and tax expense
H2 NPAT of $1.9 million, compared to $0.6 million for H1

Continued revenue growth

$m	Aus	Intl	FY19	FY19 %	Aus%	Intl %
Platform	15.3	10.7	26.0	5%	25%	(15%)
Portfolioservices	15.9	-	15.9	5%	5%	-
Planning software	0.2	2.1	2.3	1%	11%	0%
Other	-	0.9	0.9	12%	-	12%
Revenue	31.4	13.7	45.1	5%	14%	(12%)

Australia

Australia platform FUA up 24%, revenue up 25%
Billable VMA portfolios up 4% (excl. institutional)
Significant VMAAS expansion in H2
Portfolio services to include VMAAS uplift of $2 million per annum in FY2020
Further extension of Asgard contract from Nov 2019 through to 2022 – 2025 ($3 million minimum per annum)

International

FUA impacted by declines in global equity markets (FTSE250 down 7%)
Net outflows in Smartfunds
Strong platform uplift in H2, with FUA up 26%
All four quarters were successive records for inflows
WealthCraft seats up 33% in UK and international markets

Sustained earnings growth

Change%	Aus	Intl	Corp	Group
Revenue (net) %	14%	7%	-	12%
Expenses %	8%	5%	14%	7%
EBITDA(underlying)*	21%	3%	(14%)	29%

$m	Aus	Intl	Corp	FY19
Revenue	31.4	13.7	-	45.1
Productcommission	-	(2.0)	-	(2.0)
Expenses	(16.2)	(14.4)	(1.1)	(31.7)
Segment EBITDA	15.2	(2.7)	(1.1)	11.4
EBITDA%	48%			25%

Australia maintaining strong EBITDA margins

Revenue growth of 14%, expenses up 8%
Growth in sales & marketing spend of 48%
21% improvement in EBITDA to $15.2 million
EBITDA margin increase to 48% of revenue, from 45% in prior year

International improved result in challenging conditions

Net revenue growth of 7%, after product commissions
Expenses up 5%, managed in line with revenue impacts
Losses reduced by 3% to $2.7 million

International platform – strong growth

Significant growth in platform FUA... ... to flow into forward earnings

Platform inflows of £469 million, up 57% from prior year Marked acceleration in H2, with record inflows of £285 million Supported by pension offer, with schemes up 141% in FY2019

Despite headwinds this year, UK losses declined 9% (in GBP) 4-year revenue CAGR of 21%, compared to expenses of 7% Drive to inflexion in 2020

*Graphs refer to the International segment's UK business unit (excluding Asia) CAGR: Compound Annual Growth Rate 15

Cashflow and balance sheet

Cashflow ($m)	FY18	FY19
Operating cashflow	8.8	10.0
R&D incentive	0.6	0.8
Tax paid	(2.7)	(3.0)
One-off costs	(1.3)	(1.6)
Net operating cashflow	5.4	6.2

Intangible capex	(2.3)	(4.7)
Equipment capex	(0.5)	(0.5)
Investments	-	0.9
Net investing cashflow	(2.8)	(4.3)
Net cash movement	2.6	1.9

Opening cash	9.0	12.1
Unrealised FX	0.5	(0.3)
Closing cash	12.1	13.7

Cashflow

Operating cashflow up 15% on FY2018
Tax instalments paid on Australian company profits
Intangible capex of $4.7 million from platform expansion
Investment proceeds from sale of shares in listed entity

Balance Sheet ($m)	FY18	FY19
Cash	12.1	13.7
Receivables	7.3	7.6
Intangibles	6.5	9.9
Other assets	4.4	4.2
Assets	30.3	35.4
Tax liabilities	1.5	1.7
Other liabilities	8.5	10.1
Liabilities	10.0	11.8
Net Assets	20.3	23.6

One-off Costs ($m)	FY18	FY19
Acquisition costs	-	0.4
Restructure costs	0.5	0.8
Arbitration costs	0.9	0.4
General Meeting	0.4	-
Total expense	1.8	1.6

Balance sheet

Strong balance sheet to support growth
Group regulatory cash requirement of $5 million
No debt
Franking credits of $6.1 million

Highlights

Financial results

Business update

Q&A

Industry tailwinds

Australia

Specialist platforms market share predicted to grow from 5% to 12% in 5 years1

UK

Over-concentration of platform tech from 2-3 providers could lead to an innovation stalemate

International

Increased regulatory requirements forcing advisers to adapt from a front-loadedcommissions model to a fee-for-service model

1 UBS Global Research, Australian Diversified Financials, May 2019

Upgrade to a full-service platform

Praemium's Integrated Managed Accounts platform adds IMA functionality to its SMA capability. In Australia, the upgrade represents a 40-fold increase in available market from the $21bn SMA market to the overall $858bn platform market.1

Praemium is now a one-stop-shop with an expanded menu of single assets for IMA

In February 2019 Praemium released its innovative Integrated Managed Accounts platform.

The fully integrated platform provides wealth managers the ability to construct the full breadth of managed accounts solutions for their clients via a seamless digital platform
The integrated platform includes:
- Custodial Separately Managed Accounts (SMA) and Individually Managed Accounts (IMA), plus
- Non-custodial Virtual Managed Accounts (VMA) to underpin MDAs, IDPS and similar structures, and
- Unified Managed Accounts (UMAs) that enable a consolidated view of custody and non-custody investment assets.

Supported by a major re-brand, new website and the 'Welcome to the Upgrade' marketing campaign

1Strategic Insight (Plan for Life), March 2019 & Institute of Managed Accounts Professionals, Dec 2018

VMAAS – a complete administration service

Providing full administration, including:

Mail processing
Account reconciliation
Corporate action elections and processing
Billing and fee generation
Quarterly reporting
Annual tax statements
Optional year-end SMSF accounting, audit and lodgment

Built on Praemium's unique portfolio capabilities:

Automatically reconstructs all portfolios' tax position after ATO rulings
Complex corporate actions with history from 1985, CGT optimisation and tax reporting
Performance benchmarking supported by an unmatched range of market indices
Handles the most complex investments including international and stapled securities
Automates AMIT rules for managed funds
Broad investment range: all ASX-listed and 5,000 int'l equities, 700 local and int'l bonds, funds, options, fixed interest

ATO to gather 20 billion digital transactions in the year ahead1 , accurate annual tax reports will be a critical

Service launched in December 2017 Strong uptake in 2H FY2019

International, now growing strongly

UK/Int'l is well placed with Praemium's proprietary technology

*"*Re-platforming has without doubt been the most disruptive activity in the platform space in recent years. When adviser platforms have tried to shift their underlying technology from one provider to another, it has caused havoc for the advisers, paraplanners and administrators who are simply trying to service their clients."