Centrepoint Alliance Limited (CAF) Earnings Call Transcript & Summary

Good morning, everyone. My name is Georg Chmiel, and I'm the Chair of Centrepoint Alliance Limited. On behalf of the Board of Directors, it is my pleasure to welcome you all to our Annual General Meeting for 2024. As there is a quorum present, I declare the 2024 Annual General Meeting of Centrepoint Alliance Limited open. Thank you, everyone, for attending today. The technology that you're locked in allows shareholders, proxy holders and guests to virtually attend the meeting. All attendees can watch a live webcast of the meeting. In addition, shareholders and proxy holders have the ability to submit questions and vote. Written questions can be submitted at any time. [Operator Instructions] Please note, that while you can submit questions from now on, I will not address them until the relevant time in the meeting. Please also note that your questions may be moderated or, if we receive multiple questions on one topic, amalgamated together. Finally, due to time constraints, we may run out of time to answer all of your questions. If this happens, we will answer them in due course via e-mail or on our website. [Operator Instructions] If you have any issue using this system, please refer to the online meeting guide available at www.computershare.com.au/virtualmeetingguide or contact Computershare on +61-3-9415-4024. I encourage shareholders to submit questions and/or requests to address the meeting as early as possible. I will ask the Company Secretary, Kim Larkin, to act as moderator for the meeting and to read out any written questions or advice of any shareholders or proxy holders with verbal questions received via the online platform. Finally, due to time constraints, we may run out of time to answer all of your questions. If this happens, we will answer them in due course via e-mail or by posting responses on our website. We will certainly give our best efforts to answer everyone's questions. Voting today will be conducted by way of a poll on all items of business. In order to provide you with enough time to vote, I will shortly open voting for all resolutions. At that time, if you are eligible to vote at this meeting, a new polling icon will appear. Selecting this icon will bring up a list of resolutions and present you with voting options. To cast your vote, simply select one of the options. There is no need to hit a submit or enter button as the vote is automatically recorded. You do, however, have the ability to change your vote up until the time I declare voting closed. I now declare voting open. I would like to introduce to you the directors of the Board: Martin Pretty, Anthony Vogel, Peter Rollason and Linda Fox, as well as our CEO, John Shuttleworth. Attending from the Centrepoint Alliance executive team is our CFO, Brendon Glass; and Company Secretary, Kim Larkin. In addition, we have senior management in attendance as well as the company's auditor of BDO represented by Tim Aman. BDO will be available to take questions on the audit report later in the meeting, if so required. John Shuttleworth and I will now provide a company update prior to commencing the formal business of the meeting. Let me start my address today by saying that I'm truly delighted to report that Centrepoint Alliance is continuing to making significant progress during the financial year/fiscal year '24. At Centrepoint Alliance, we take pride in our commitment to financial advice and to advisers. In our core business, the adviser licensing and service business, we have experienced a substantial uplift in adviser numbers, the highest organic growth in the market, which increased our market share and lifting us to a strong #3 position. At the same time, we have also enhanced our technology platform, providing more depth and quality to our adviser network. Over the past year, we have enhanced our cybersecurity capabilities, expanded our offerings to better serve our financial adviser network, including the launch of the IconiQ platform. At the same time, we have completed the acquisition of Financial Advice Matters, FAM, which serves as a cornerstone of our salaried adviser business. In general, while organic growth is the most important driver of our growth strategy, we are also actively screening the market for strategic acquisitions to enhance our financial and strategic performance. All of this is reflected in our financial performance over the last year and earlier. Centrepoint Alliance today has shown significant improvement in the business with revenue, EBITDA and net profit growth. Our cash reserves remained strong despite continued investment in the platform, the acquisition of the FAM business and dividend payments for our shareholders. These achievements underscore our strong strategic and fiscal management. As a result, the total return to shareholders is reflected in the combined growth of the share price, and dividend yield has also seen a significant uplift over the last financial year. Our management team, under the highly capable leadership of John Shuttleworth, has executed yet another strong year, positioning us for a future marked by growth. To the entire Centrepoint Alliance community and the financial advisers who rely on our services, I extend particular gratitude for your unwavering support. We eagerly anticipate another year of exciting opportunities and achievements. Also, I would like to thank our directors. I would like to thank specifically Simon Swanson for his significant contributions as Director and Chair. Simon stepped down from the position as Chair and Director in January 2024. Earlier this year, also Sandy Beard and Alan Fisher stepped down as part of a Board refresh; also a big thank you to them. These directors have been replaced by new directors. And I welcome these new directors, Anthony Vogel, Peter Rollason and Linda Fox. All 3 complement the Board with necessary experience for the next phase of our business growth. Lastly, to our shareholders, thanks for your ongoing support of our journey. I will now pass on to you, John, for your address.

Thanks, Georg. I'd like to take this opportunity to update shareholders on our achievements and business strategy. There are 4 key areas that I'll cover, firstly, how Centrepoint Alliance has performed over the last 3 years, providing perspective on the turnaround of the business, the activities that underpin the turnaround and the sustainable platform that we now have for future growth. Secondly, I'll provide an update on our strategy and progress with our key strategic initiatives as we expand into higher-margin areas of the wealth value chain. Thirdly, I'll provide an update on the game-changing launch of the IconiQ platform as we enter the $1.1 trillion platform market. And finally, I'll provide an update on our business outlook for the remainder of the year. Over the last 3 years, using 2022 as a baseline, we have transformed the business, achieving cumulative EBITDA growth of 168%, which is a 39% compound annual growth rate. Centrepoint Alliance emerged from the Hayne Royal Commission and the significant regulatory reforms that followed, coupled with a challenging business environment, and reconfigured and transformed the business into one of the top-performing licensees in the market. Consider some of the achievements. We have a business with sustainable revenue, having eliminated platform rebates. We have led the market on adviser recruitment. We have moved from #6 to #3 in the market, ranked by size of licensee. Our market share as a licensee has increased from 2.4% to 4.9%. Our market share is much higher when you include the 200 self-licensed firms we service who employ 825 advisers. We acquired ClearView's advice business, which included Matrix and LaVista, which saw 270 advisers transition to Centrepoint. We acquired Financial Advice Matters, creating a salaried advice business with 19 advisers. We leveraged the capability in our lending business and developed a new offer, Lending as a Service, which, as at the 30th of June 2024, had 44 advice firms using the service and offering lending to their clients. We have commenced the turnaround of the asset management business and launched a range of managed accounts, the iQ portfolios. We have developed a new platform with our technology partner, FNZ, which are entering the $1.1 trillion Australian platform market with a feature-rich, competitively priced platform called IconiQ. And importantly, we have achieved this while running a lean operating model with prudent use of capital. Our growth strategy is focused on margin expansion and annuity revenue enabled by our strong distribution network of 1,374 advisers. We refer to our strategic framework as the 5 pillars. Firstly, our licensee business is well positioned to capture more advisers in the market. With market-leading offerings in both license and self-license, we will benefit from the recent M&A activity, which has historically created an environment of increased switching and an opportunity for recruitment. Having acquired and successfully integrated Financial Advice Matters, we're seeking to grow the salaried advice business organically and through further acquisitions. This business currently represents 30% of our earnings, and acquiring the right business at the right price will create significant future earnings growth. The asset management business has been a historical drag on our earnings. Whilst it's taken longer than anticipated to turn the business around, largely due to the time taken to secure distribution on key partner platforms, we're now seeing increased adoption of the portfolios with distribution on HUB24, Macquarie and Xplan. Our lending business posted a turnaround in growth in 2024 as a result of the new Lending as a Service offer. We now provide full service lending solutions for advisers within our network, with 44 firms becoming authorized reps under our product license and using the services of our in-house lending specialists. Finally, the launch of the new IconiQ investment super platform is an incredible opportunity for this business. We have partnered with FNZ, a leader in platform infrastructure who administer over $2 trillion in funds globally for 650 corporate clients across 30 countries. The FNZ partnership provides capability and scale in an efficient cloud-based solution. The IconiQ platform will empower financial advisers to effectively manage their client superannuation and investment portfolios. The intuitive user experience, advanced features and competitive pricing structure will differentiate IconiQ as a leading platform solution. The investment platform went live on the 14th of October 2024. The superannuation platform is complete, and we're in the final stages of testing before the scheduled release in early December 2024. IconiQ's pricing is sharp. There's a base administration fee of 18 basis points. [ Cat win ] balances reached $1 million, including family-related accounts, and there is no minimum or standing fee per account. The super platform has an additional fee of 5.8 basis points to cover superannuation specific costs. Accompanying the launch of the superannuation platform will be the release of the IconiQ separately managed account scheme. This will enable IconiQ to add a broad range of diversified portfolios contracted by fund managers and asset consultants. This is an incredibly exciting time for the business as we have developed key infrastructure for the group that we can build on over the next few years. Finally, some comments on the outlook for FY '25. We remain very positive with the company and well positioned to continue to grow revenue and earnings. CAF continues to recruit advisers and is benefiting from industry consolidation. We're focused on accelerating growth of higher-margin salaried advice businesses through further acquisitions. New initiatives such as managed accounts and Lending as a Service are gaining traction. The new IconiQ investment platform is live with superannuation scheduled for next month. And our underlying EBITDA guidance for FY '25 is unchanged in the range of $10 million to $10.5 million. So with that, thank you for your time, and I'll now hand back to our Chair, Georg Chmiel.

Thank you, John. Kim, are there any questions in respect of this item of business? There being no further questions, we will move on to the next item. The Notice of Meeting has been circulated to shareholders, and copies have been made available to those attending today. So if there's no objection, I shall take the Notice of Meeting as read. The agenda items for our meeting today are shown on the screen. Where a vote is required on a particular item, the valid proxies received in advance of the meeting for the proposed resolution will be shown on the screen to enable shareholders to fill them as each item is considered. These figures may be varied if a shareholder who submitted a proxy is attending the meeting today and has revoked their proxy. I will address each resolution and any questions received in respect of each resolution during each item of business. I note that as a Chair, I intend to vote undirected proxies held in favor of each resolution. The first item of business is for shareholders to receive and consider the 2024 annual report, which contains the financial statements of the company for the year ended 30 June 2024, together with the directors' statement and report and the auditor's report on those financial statements. The 2024 annual report has been published and was circulated to shareholders who requested a copy and is available on the company's website. I trust everyone has had ample opportunity to consider it. No shareholder vote is required in relation to this item of business. This is an appropriate time to raise any questions on these reports or on our business in general to raise them now. This is also the appropriate time to raise any questions you may have of the auditor, which are relevant to the conduct of the audit and the preparation and content of the audit report. Kim, are there any questions in respect to this item of business? There being no further questions, we will move on to the next item. The next item of business is the adoption of the remuneration report for the year ended 30 June 2024. The motion before the meeting is to consider and, if thought fit, pass the resolution in accordance with Sector 250R(2) of the Corporations Act 2001, that the company's remuneration report for the year ended 30 June 2024 be adopted. The remuneration report is contained within the company's 2024 annual report. The vote on this resolution is advisory only and does not bind the directors of the company. The proxy details are displayed. I would highlight that, in accordance with the Corporations Act, no votes may be cast on this resolution by or on behalf of a member of the company's key management personnel or their closely related parties. I will refer to these people collectively as prohibited voters. A prohibited voter may vote directed proxies where they do so for another person who is not themselves a prohibited voter. As Chair, I may also vote undirected proxies for a person that is not a prohibited voter, in accordance with my stated voting intention, to vote all available proxies in favor of this resolution. For the purpose of this resolution, a prohibited voter includes a member of the key management personnel named in the remuneration report. Kim, are there any questions in respect to this item of business? There being no further questions, we will move on to the next item. As resolution 2 is in relation to my reelection, Martin Pretty will assume Chair of the meeting for this resolution.

Thank you, Georg. The next motion before the meeting proposes the reelection of Georg Chmiel as a Director. The motion is to consider and, if thought fit, pass the following resolution as an ordinary resolution, that Georg Chmiel, who retires by rotation in accordance with Rule 19.3 of the company's constitution and, being eligible, be reelected as a Director of the company. The proxy details are displayed. Kim, are there any questions in respect of this item of business? Okay. Thank you, Kim. I will now pass the chair back to Georg Chmiel.

Thank you, Martin. There being no further questions, we will move on to the next item. The next motion before the meeting proposes the election of Linda Fox as a Director. The motion is to consider and, if thought fit, pass the following resolution as an ordinary resolution that Ms. Linda Fox, who having previously been appointed to fill a casual vacancy, retires in accordance with ASX Listing Rules 14.4 and Rule 19.2 of the constitution and having consented to act and being eligible be elected as a Director of the company. The proxy details are displayed. Kim, are there any questions with regards to this item of business? Thank you. There being no further questions, we will move on to the next item. The next motion before the meeting proposes the election of Anthony Vogel as a Director. The motion is to consider and, if thought fit, pass the following resolution as an ordinary resolution, that Mr. Anthony Vogel, who having previously been appointed to fill a casual vacancy, retires in accordance with ASX Listing Rule 14.4 and Rule 19.2 of the constitution and having consented to act and, being eligible, be elected as a Director of the company. The proxy details are displayed. Kim, are there any questions in respect of this item of business?

There are no questions at this time.

There being no further questions, we will move on to the next item. The next motion before the meeting proposes the election of Peter Rollason as a Director. The motion is to consider and, if thought fit, pass the following resolution as an ordinary resolution, that Mr. Peter Rollason, who having previously been appointed to fill a casual vacancy, retires in accordance with ASX Listing Rule 14.4 and Rule 19.2 of the constitution and having consented to act and, being eligible, be elected as a Director of the company. The proxy details are displayed. Kim, are there any questions in respect to this item of business?

Chair, there are no questions at this time.

Thank you. Ladies and gentlemen, please ensure that you have cast your vote on all resolutions. I will now pause to allow you time to finalize those votes. [Voting]

Okay. Voting is now closed. We will publish final voting results with the ASX and on our website. Thank you for your attendance today. That concludes the formal business of the meeting. There being no further business, I now declare the meeting closed.