ANNUAL GENERAL MEETING - Centrepoint€¦ · Annual General Meeting – 30 October 2018 | 3 $6.4m...

Annual Report 2018 | Directors’ ReportANNUAL GENERAL MEETING30 October 2018

Centrepoint Alliance Limited and its Controlled EntitiesABN 72 052 507 507

Annual General Meeting – 30 October 2018 | 2

SHAREHOLDERS ADDRESS

Chairman’s Address

Good Morning everyone.

My name is Alan Fisher and I am the chairman of Centrepoint Alliance Limited and, on behalf of the Board

of Directors, it is a pleasure to welcome you all to our Annual General Meeting of shareholders for 2018.

I would like to introduce you to the Directors of the Board, Martin Pretty and Georg Chmiel and our CEO

Angus Benbow. I would also like to acknowledge the commitment and effort by Hugh Robertson, who is not

standing for re-election this year and has retired as a Non-Executive Director of the Board effective from 29

October 2018. We are in the process of recruiting a new Non-Executive Director.

In addition, we have senior management in attendance and David Rodgers, partner from Deloitte Touche

Tohmatsu, the Company's auditors.

Present from Computershare, the Company’s share registrars, the meeting officer is Jodie Lester and the

returning officer for the meeting is Ashleigh Spears and they will manage the meeting attendance,

registrations and voting.

Angus Benbow and I will now provide a Company update prior to commencing the formal business of the

meeting.

COMPANY UPDATE - CHAIRMAN

The year has been one of change for Centrepoint Alliance, with the commencement our new CEO, Angus

Benbow, in April 2018. We have also had the challenges that an industry wide Royal Commission brings.

Centrepoint has continued to sustain organic growth, meet customers’ needs and assist financial advisers

and brokers to operate efficient and profitable businesses.

The businesses core operations have delivered steady growth during FY18. We are uniquely positioned as

a leader in Australia’s contemporary financial advice industry and are well placed to realize the benefits from

industry disruption in the wealth management market. Technology is playing an integral role to enhance and

simplify the adviser and client experience.

We remain focused on acquisition opportunities that are strategically aligned and generate shareholder value

and continue to drive improvements across all areas of our business as we strive to enhance the experience

to our advisers and their clients.

FY18 SUMMARY

A summary of the 2018 financial year is a $5.5m EBITDA excluding one off expenditure up 4% from FY17.

($6.4m) in one-off adjustments relating to legacy claims, restructure and Royal Commission related activities.

($6.3m) statutory loss after tax impacted by one off adjustments and a change to the deferred tax asset.


$6.4m Cashflow from operations, an 18% increase, highlighting strength in the underlying business.

Capital management of 8million executive shares to be cancelled* and no final dividend declared.

$4.1b in Funds under Management and Administration, up 11% from FY17.

Ongoing adviser recruitment with 37 High Quality firms Recruited (26 to Corporate License and 11 to Self

Licence).

Stronger adviser and employee engagement. Net Promoter Score above industry average and solid

employment satisfaction.

Neos Life Product launched in June 2018.

Technology Solutions Hub launched to focus technology as a core enabler of our future business model.

I will now pass to our CEO Angus Benbow to provide a further update on the operational areas of the

business and our strategy.

CEO’s Address

COMPANY UPDATE – CEO

Thank you Alan.

Centrepoint is proactively responding to challenges and opportunities

While the industry is experiencing significant change across a number of areas we view this

uncertainty as providing opportunities for Centrepoint.

Disruption in the industry make-up and regulatory changes creates opportunities for businesses that

are able to quickly adapt and respond.

Centrepoint is not a large business, we are a small, able to respond, but have significant existing

scale within the advice market from which to capture benefits and extend our position.

As an example - FASEA and the proposed changes in education standards:

o Significant change for the advice industry

o While the final standards are not finalised, we know at a high level the intent of these changes, so we can start working on how to help now. This reduces the uncertainty for our advisers, helping them focus on serving their clients and running their businesses.

We are proactively responding to the uncertainty in the industry and feel that our industry position,

relative scale across the industry, and ability respond quickly places us in an attractive position. We

are excited by the opportunities this presents.

Centrepoint is well positioned and focused

New strategy focuses on core business of supporting advisers

Macro changes in the industry are favourable to Centrepoint’s market positioning

Significant business scale to leverage data and digital opportunities

Solid progress made on executing new strategy


Centrepoint has a favourable position in a changing industry environment

With a 10% decline in advisers at the ‘big six’ in the 12 months to July 2018; and

A 2x increase in licenses granted in 2016 & 17 than in the previous 2 years; driven by self-licensed

practices

Centrepoint solves two categories of problems for financial advisers

Our clients are financial advice businesses, they have two business problems that they need help with:

1. Working as financial advisers 2. Owning a small business

As financial advisers there is significant change occurring across the industry, they need support

with these changes, to ensure they can remain focused on supporting their clients.

As a small business they face the same challenges as all small to medium size businesses across

Australia. We are able to bring scale and expertise to enable them to focus on serving their clients,

which is their core business.

Centrepoint’s future offer will have four key elements:

1. Business Management Services which encompasses business coaching, acquisition and

succession, partnered services, dashboard reporting, HR & Legal support, peer group facilitation

and cashflow tools

2. Licensee Services which comprises of new AFSL setup, governance and compliance, responsible

manager training, Licensee reviews, file audit advice, policy and procedures and AFSL audits

3. Client Growth Services integrating client marketing, client facing advice, tools website, design and

development, client education, lead generation and client segmentation and pricing and

4. Advice Services facilitating adviser education, client communication, technical support, research

services, investment solutions, training/webinar advice and a technology helpdesk.

Centrepoint’s new business model will be oriented around four principles:

1. Solving advisers’ problems through expertise, insight and scale benefits

2. Standalone adviser community, not controlled by a product manufacturer

3. Harnessing data to generate insights and create network effects

4. Underpinned by a service culture of trust, transparency and quality advice

Moving to a new identity

Centrepoint’s strategy is to grow its strong community of advisers whilst transitioning to a new

service model powered through data, technology and insight.

The financial advice industry is facing an increasingly complex and rapidly changing environment - it is

imperative that we adapt to the challenges and opportunities this presents. Our new strategy looks beyond

the short-term to focus on building a new service model that takes advantages of the opportunities we see

playing out as a result of the disruption ahead.


In the 12 Months ahead Centrepoint will focus on transitioning to an advice and business services

organisation where the needs of our advisers are at the heart of everything we do.

In an industry often defined by its opaqueness, we will shift the playing field to an environment of trust and

transparency, and look to set the standard in what it means to be a trusted adviser.

To date, we have examined all aspects of our business, including a comprehensive review of our business

portfolio. It has also resulted in a new organisational structure to better align to the market opportunities.

We have three clear priorities to focus on over in FY19.

Optimise – Centrepoint has a strong core business, with solid cash flows and a strong community of

advisers. We will optimise and improve on what we do. This involves improving our service to existing

advisers and strengthening the core enablers of the business.

Recreate – As we leverage the strength in the core business we will build a new service offer orientated

around advice and business services, underpinned and powered through data.

Grow – Centrepoint continues to be an attractive proposition for like-minded advisers, and we have seen

strong growth in adviser numbers, and we will continue to pursue growth opportunities as we reposition the

business.

Good progress has been made on the parallel pieces of work

Centrepoint's strategy is delivered through a focus on three core areas of work.

These must be delivered in parallel as we balance optimising the scale in our core existing business,

while we reposition our service offering to be more contemporary and powered through a data

ecosystem that better supports our adviser network.

At the same time as recreating our future business model we will continue to pursue growth

opportunities in the advice market, as it goes through significant disruption.

Since our results announcement in August we have made good progress on all three areas of

strategy, our staff are focused and motivated and we are pleased with the momentum we have

created in such a short period of time, and will provide another update at our half year results.

Some delivery proof points since August

Improving organisation delivery capability - work packages setup and being delivered using new

Agile methodology, enabling us to quickly build, test and refine the new offer

Delivering new scalable solutions more quickly and cost effectively - digital infrastructure build

has commenced leveraging existing technology like Microsoft Azure. Focus is on configuration with

partners rather than coding internally

‘Adviser of the Future’ experience defined – testing and feedback with advisers currently in

progress

Pricing of new service packages has been formulated – testing and feedback with advisers

currently in progress

Increased interest in standalone services from Adviser Community – self-licensed firms looking

to increasingly partner for discrete service packages, especially related to licensee and governance

services


It is an exciting time to be at the helm of an organisation like Centrepoint, with our unique market positioning

and the strength of our community behind us.

That’s not to say that the road ahead won’t have its challenges. We know it will. But I believe this organisation

has an important role to play in shaping the future of financial advice and I’m looking forward to going on this

journey together.

To all our employees, advisers, clients, partners and you our shareholders - thank you for your ongoing

support and hard work.

ORDER OF BUSINESS

Thank you, Angus. Now to the formal business of the Meeting.

There is a quorum present, and I therefore declare the 2018 Annual General Meeting of Centrepoint Alliance

Limited open.

The Notice of Meeting has been circulated to shareholders and copies have been made available to those

attending today, so if there is 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 proxy details for the proposed resolution will be shown on

the screen to enable shareholders to view them as each item is considered. I will address each resolution

and there will be an opportunity for questions or comments during each item of business. Before asking a

question or making a comment, please present your card, state your name and, if relevant, the organisation

you represent.

I note that as Chair I intend to vote undirected proxies held in favour of each resolution.

ANNUAL FINANCIAL & OTHER REPORTS

The first item of business is for shareholders to receive and consider the 2018 Annual Report, which contains

the financial statements of the Company for the year ended 30 June 2018, together with the Directors’

Statement and Report and the Auditor’s Report on those Financial Statements.

The 2018 Annual Report has been published and was circulated to shareholders on 26 September 2018 and

is available on the Company’s website and I trust everyone has had ample opportunity to consider it.

So, are there any questions or comments concerning the 2018 Annual Report?

There being no further questions we will move on to the next item.

ADOPTION OF THE REMUNERATION REPORT

The next item of business is the Adoption of the Remuneration Report for the year ended 30 June 2018.


The motion before the meeting is:

To consider and if thought fit pass the following resolution in accordance with section 250R(2) of the

Corporations Act:

“That the Remuneration Report for the year ended 30 June 2018 be adopted”

The remuneration report is set out on pages 13 to 22 of the Company’s 2018 annual report. The vote on

this resolution is advisory only and does not bind the directors of the Company.

The proxy details are displayed.

As you can see, proxies have been appointed for over 36% of shares on issue and over 86 million shares

86% of proxy votes) have been voted in favour of the resolution. We note that the “Other” votes include the

proxies received from Key Management Personnel of the Company, as listed in the Annual Report, who

are excluded from voting on this resolution.

Are there any questions?

Thank you.

There being no further questions I will now put the motion to a show of hands via your green voting card.

• All shareholders present (including proxies who may vote at their discretion) in favour of the

motion, please raise your hands.

• All shareholders present (including proxies who may vote at their discretion) against the motion,

please raise your hands.

I declare the motion carried.

RE-ELECTION OF GEORG CHMIEL

The next motion before the meeting proposes the re-election 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 58(a)(ii) of the Company's

constitution (Constitution) and, being eligible, be re-elected as a director of the Company.”



(86% of proxy votes) have been voted in favour of the resolution.


There being no further questions, I will now put the motion to a show of hands via your green voting card.







LONG-TERM INCENTIVE SCHEME – SELECTIVE REDUCTION OF CAPITAL

The next motion before the meeting proposes the selective reduction of capital and to cancel shares held

by Centrepoint Alliance Services Pty Ltd as trustee for the Centrepoint Alliance Employee Share Plan

Trust.

The motion is:

To consider and if thought fit pass the following resolution as a special resolution:

”That, in accordance with Section 256C(2) of the Corporations Act and for all other purposes,

approval is given for the Company to make a selective reduction of capital and cancel a total of

8,050,000 shares held by Centrepoint Alliance Services Pty Ltd as trustee for the Centrepoint

Alliance Employee Share Plan Trust in connection with the Company’s long-term incentive plan for

nil consideration and on the terms and conditions and for the purpose set out in the Explanatory

Statement accompanying this Notice.”



(98% of proxy votes) have been voted in favour of the resolution.


There being no further questions, I will now put the motion to a show of hands via your green voting card.






CLOSE MEETING

Ladies and gentlemen, 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.

We now welcome you to join us for light refreshments. Thank you.

ANNUAL GENERAL MEETING

1

30 October 2018

BOARD MEMBERS

Alan Fisher | Chairperson

Martin Pretty | Non-executive Director

Georg Chmiel | Non-executive Director

SENIOR EXECUTIVES

Angus Benbow | Chief Executive Officer

John Cowan | Chief Financial Officer

Marty Carne | Chief Legal Officer and Company Secretary

Soula Cargakis | Group Executive Advice

Natalie Ellisdon| Chief Technology and Marketing Officer

2018 Annual General Meeting 2

Company Update

3

Alan Fisher (Chairman)

FY18 Summary

$5.5m EBITDAexcluding one off expenditure up 4% from FY17

Capital management8m executive shares to be cancelled*; no final dividend declared

($6.3m) statutory loss after tax impacted by one off adjustments and a change to the deferred tax asset

Ongoing adviser recruitment37 High Quality firmsRecruited (26 to Corporate License and 11 to Self Licence)

Stronger adviser and employee engagementNPS above industry average and solid employment satisfaction

Neos Life Product LaunchJune 2018

Launched TechnologySolutions Hub to focus technology as a core enabler of our future business model

($6.4m) in one-off adjustmentsrelating to legacy claims, restructure and Royal Commission related activities

$4.1b in fundsunder Management and Administration up 11% from FY17

$6.4m Cashflowfrom operation, an 18% increase, highlighting strength in the underlying business

*Survey, May 2018; Employee engagement scores – internal Employee Engagement Survey, May 2018

42018 Annual General Meeting

Company Update

5

Angus Benbow (Chief Executive Officer)

Centrepoint is proactively responding to industry opportunity and uncertainty


Regulatory/market force Impact

Royal Commission into Financial Services

• Royal commission has a high likelihood of impacting us, the extent to which will be unclear until it comes to a close in 2019

Professionalising Advice (FASEA)

• FASEA has imposed increased education requirements for new and existing financial advisers which will affect some of our adviser network

Australian Financial Complaints Authority (AFCA)

• AFCA is a new EDR scheme established to deal with complaints from consumers in relation to products and services provided by financial firms, to commence from 1 November 2018 and will provide greater consumer protection. Centrepoint has experienced a diminishing number of Legacy Claims (i.e. claims relating to 2010 & prior)

ASIC • Increased surveillance and regulatory activity; annual supervisory costs will be recovered through adviser fees

Life insurance industry changes

• Life Insurance reforms commenced 1 January 2018 overall reducing life insurance advice remuneration.

Business models in a state of flux

• Structural and pricing changes amongst the ‘big six’, and the rise of self-licensed models driving a renewed re-setting of the wealth industry landscape

2018 Annual General Meeting 7

Centrepoint is focusing on its core businessThere is a great opportunity for Centrepoint’s new positioning in the marketInvestments are being made in data and technologyThere is a clear roadmap that is currently executing

Centrepoint is well positioned and focused

• New strategy focuses on core business of supporting advisers

• Macro changes in the industry are favourable to Centrepoint’s

market positioning

• Significant business scale to leverage data and digital opportunities

• Solid progress made on executing new strategy

Centrepoint has a favourable position in a changing industry environment


Product manufacturer owned# of advisers

Other# of advisers

Note: AAP network includes advisers of self-licensed practices to whom Centrepoint offers some servicesSources: Adviser numbers – analysis of ASIC financial adviser register, data as of 1 July 2018 excluding Dover Financial advisers and Wyndham Vacation Clubs; Centrepoint data

10% decline in advisers at the ‘big six’ in the 12 months to July 2018

>2x increase in licenses granted in 2016 & 17 than in the previous 2 years; driven by self-licensed practices

We have a simple business model that solves the business problems of financial advisers


Note: SMEs refer to businesses with 199 or less employees and includes sole traders (as per ABS definition) Sources: SMEs in Financial and Insurance Services – ABS 8165.0 Counts of Australian Businesses, including Entries and Exits (June 2017); Adviser, licensee, average adviser numbers – analysis of ASIC financial adviser register, data as of 1 July 2018 excluding Dover Financial Advisers and Wyndham Vacation Clubs; Client numbers - Business Health Insights Survey June 2017

A typical SME• employs less than

20 staff

• engages > 15 vendors

• works with 9 regulators

• finds cashflow management to be the biggest of many pain points

~200k SMEs in financial and insurance services

~34k of which have less than 20 staff

Running a smallto medium sized

business

A typical advice firm• employs on average

8 advisers with each adviser servicing ~250 clients

• engages > 15 vendors

• works with 6 regulators

• needs training, technical and compliance support

2,911 licensees

24,606 advisers

Operating as a financial adviser

Centrepoint’s future offer has four key elements


LICENSEESERVICES

NEW AFSL SETUP

GOVERNANCE AND COMPLIANCE

RESPONSIBLE MANAGER TRAINING

LICENSEE REVIEWS

FILE AUDITS

ADVICE POLICY & PROCEDURE

AFSL AUDITS

ADVISER EDUCATION

CLIENT COMMUNICATION

TECHNICAL SUPPORT

RESEARCH SERVICES

INVESTMENT SOLUTIONS

TRAINING/WEBINARS

ADVICE TECHNOLOGY

ADVICE HELPDESK

ADVICESERVICES

BUSINESS COACHING

ACQUISITION AND SUCCESSION

PARTNERED SERVICES

DASHBOARD REPORTING

HR SUPPORT

LEGAL SUPPORT

PEER GROUP FACILITATION

CASHFLOW TOOLS

CLIENT MARKETING

CLIENT FACING ADVICE TOOLS

WEBSITE DESIGN AND DEVELOPMENT

CLIENT EDUCATION

LEAD GENERATION

CLIENT SEGMENTATION AND PRICING

BUSINESS MANAGEMENTSERVICES

CLIENT GROWTHSERVICES

Centrepoint’s new business model is oriented around four principles

1. Solving advisers’ problems through expertise, insight and scale benefits

2. Standalone adviser community, not controlled by a product manufacturer

3. Harnessing data to generate insights and create network effects

4. Underpinned by a service culture of trust, transparency and quality advice


OPTIMISE

Centrepoint’s strategy is to grow its strong community of advisers whilst transitioning to a new service model powered through data and insight


Realign organisation to core advice business

Improve service to existing adviser community

Strengthen core enablers for industry disruption ahead

Create the future of advice and business services

Targeted packages for attractive advice segments

Harness data to build insights for the adviser community

Licensed and self-licensed advice practices

Transition current firms to new advice packages and bundles

Explore growth opportunities

RECREATEGROW

Conduct portfolio review of businesses

Implement new organisation structure

Build new relationship Service Model

Review adviser governance and standards

Design new Centrepoint Service Offering

Create new advice life-stage segments

Introduce new pricing packages and bundles

Create long-term data ecosystem strategy

Identify targeted segments for growth

Aligned (licensed) adviser community

Self-licensed business partnerships

Good progress thus far in H1 on the three parallel pieces of work that our strategy must balance


H1 FY19

OPTIMISE

RECREATE

GROW

Introduce new governance and standards framework

Launch education transition support model

Harness internal data for efficiency gains

Launch new Centrepoint Service Offering

Develop ‘transition’ package for advisers moving to the new model

First stage of data ecosystem built with new Adviser Portal

New package take-up in aligned advice practises

Grow packages and unbundled offering in self-licensed advice community

H2 FY19

- Completed since 23 August 18 results - On track for delivery

Some delivery proof points since August


• Improving organisation delivery capability - work packages setup and being delivered using new Agile methodology, enabling us to quickly build, test and refine the new offer

• Delivering new scalable solutions more quickly and cost effectively - digital infrastructure build has commenced leveraging existing technology like Microsoft Azure. Focus is on configuration with partners rather than coding internally

• ‘Adviser of the Future’ experience defined – testing and feedback with advisers currently in progress

• Pricing of new service packages has been formulated – testing and feedback with advisers currently in progress

• Increased interest in standalone services from Adviser Community – self-licensed firms looking to increasingly partner for discrete service packages, especially related to licensee and governance services

Summary and Outlook


• Centrepoint will launch new business model in 3Q19 with transition expected to be complete in FY21

• FY19 will invest in data, technology and marketing to successfully start the transition

• Centrepoint will be positioned as a pre-eminent partner for Advisers providing services not owned or controlled by a product manufacturer


16

30 October 2018

Annual financial and other reports

Adoption of remuneration report

Re-election of Georg Chmiel

Long-Term Incentive Scheme –Selective reduction of Capital

1 2 3 4

Order of BusinessAGM







1 2 3 4


Vote type Voted % % of All

For 57,004,621 86.29 36.32

Against 8,476,430 12.84 5.40

Open Usable 574,081 0.87 0.37

Abstain 70,758 N/A 0.05

TOTAL 66,055,132 100.00 42.09

“ That the Remuneration Report for the year ended 30 June 2018 be adopted ”

Resolution

Adoption ofREMUNERATIONREPORT

ProxiesTo consider and if thought fit, pass the following resolution in accordance with section 250R(2) of the Corporations Act:







1 2 3 4



For 57,322,454 86.66 36.53

Against 8,252,855 12.47 5.26

Open Usable 574,081 0.87 0.37

Abstain 51,500 N/A 0.03

TOTAL 66,149,390 100.00 42.16

“That Georg Chmiel, who retires by rotation in accordance with Rule 58(a)(ii) of the Company's constitution (Constitution) and, being eligible, be re-elected as a director of the Company.”

Resolution

Re-election ofGEORG CHMIEL

ProxiesTo consider and if thought fit, pass the following resolution as an ordinary resolution:







1 2 3 4



For 65,178,523 98.49 41.53

Against 442,085 0.67 0.28

Open Usable 557,019 0.84 0.35

Abstain 23,263 N/A 0.01

TOTAL 66,177,627 100.00 42.16

“That, in accordance with Section 256C(2) of the Corporations Act and for all other purposes, approval is given for the Company to make a selective reduction of capital and cancel a total of 8,050,000 shares held by Centrepoint Alliance Services Pty Ltd as trustee for the Centrepoint Alliance Employee Share Plan Trust in connection with the Company’s long-term incentive plan for nil consideration and on the terms and conditions and for the purpose set out in the Explanatory Statement accompanying this Notice.”

Resolution

Long-Term Incentive Scheme -SELECTIVE REDUCTION OF CAPITAL

ProxiesTo consider and if thought fit, pass the following resolution as a special resolution:



25

30 October 2018

ANNUAL GENERAL MEETING - Centrepoint€¦ · Annual General Meeting – 30 October 2018 | 3 $6.4m...

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