Centrepoint Alliance : Appendix 4D and 1H FY22 Financial Report

CENTREPOINT ALLIANCE LIMITED

AND ITS CONTROLLED ENTITIES

only		ABN 72 052 507 507
	Appendix 4D
	Half year ended 31 December 2021
RESULTS FOR ANNOUNCEMENT TO THE MARKET
use
In thousands of Australian dollars		1H 21		2H 22			Variance
Revenues from ordinary activities		$69,954	to	$95,177	Up	36%
Profit before tax and non-controlling interests	$1,244	to	$943	Down	24%
Profit after tax attributable to members	$1,584	to	$501	Down	68%
personal
	Dividends (distributions)				Amount			Franked amount
				per security			per security
	Interim ordinary dividend				0.5 cents			0.5 cents
	Previous corresponding period - Interim ordinary dividend		1.0 cent			1.0 cent
	Previous corresponding period - Special dividend			3.0 cents			3.0 cents
	Record date for determining entitlements to dividend			3 March 2022
	Payment date of interim dividend				18 March 2022
	Dividend Reinvestment Plan
	Plan active
				No
For
	Discount					N/A
	Pricing period					N/A
	Last DRP election date				N/A
		Net tangible assets per share				31 Dec 2021			30 June 2021
					2.58 cents			3.62 cents

Results are extracted from the attached Half Year Financial Report for the six months ended 31 December 2021 which was subject to an independent review.

For explanation and commentary on the results refer to the Directors' Report in the attached Half Year Financial Report.

For personal use only

CENTREPOINT ALLIANCE LIMITED

AND ITS CONTROLLED ENTITIES

ABN 72 052 507 507

HALF-YEAR FINANCIAL REPORT

FOR THE SIX MONTHS ENDED 31 DECEMBER 2021

For personal use only

CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES

Half-Year Financial Report

31 December 2021

Contents

Directors' Report

Auditor's Independence Declaration

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Condensed Consolidated Statement of Financial Position

Condensed Consolidated Statement of Cash Flows

Condensed Consolidated Statement of Changes in Equity

Notes to the Condensed Consolidated Financial Statements

Directors' Declaration

Independent Auditor's Review Report

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CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES

Directors' Report

31 December 2021

For personal use only

The Directors present their report for the half-year ended 31 December 2021.

Directors

The Directors of Centrepoint Alliance Limited (the Company or the Parent Entity) at any time during or since the end of the half-year are:

Alan Fisher (Chair and Non-Executive Director)

Alexander Beard (Non-Executive Director)

Georg Chmiel (Non-Executive Director)

Martin Pretty (Non-Executive Director)

Simon Swanson (Non-Executive Director), (Appointed 1 November 2021)

Company Secretary

Kim Clark

Martyn Carne (Resigned 8 October 2021)

Operating and Financial Review

Principal Activities

Centrepoint Alliance Limited and its controlled entities (the Group) operate in the financial services industry within Australia and provide a range of financial advice and licensee support services (including licensing, systems, compliance, training and technical advice) and investment solutions to financial advisers, accountants and their clients across Australia, plus lending mortgage aggregation services to mortgage brokers.

Operating Review

The Group has made strong progress with the transformation of the business in line with its growth strategy. H1 FY22 was characterised by the transformational acquisition of the ClearView Advice business combined with strong organic growth of licensed advisers, efficient integration of the combined businesses, refinement and strengthening of the leadership team, and disciplined cost management with realisation of material expense synergies from the acquisition, all of which has created a sustainable platform for continued growth.

The Group delivered solid financial performance during the 6-month period whilst planning and seamlessly integrating a transformational acquisition. The financial result has been achieved through sustainable licensee services revenue, a focus on cost containment, high customer service levels and reaping the rewards of an investment in technology to deliver a scalable service platform for advisers.

Approximately 75% of the identified synergies from the ClearView Advice acquisition were labour. The Group worked collaboratively with ClearView Group to devise and agree a fit for purpose organisational design for the combined business. This was refined further during the completion period, and delivered all the anticipated labour synergies at completion date.

The Group's strategy is focused on three key areas to improve the business and drive further growth:

1. Scaling and growing the licensee and lending solutions businesses
2. Transforming the portfolio solutions and asset management business
3. Investing in financial services technology to improve business efficiency and develop new and innovative services

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For personal use only

CENTREPOINT ALLIANCE LIMITED AND ITS CONTROLLED ENTITIES

Directors' Report

31 December 2021

Operating Review (cont.)

Progress against each of these strategic priorities is as follows:

Licensee and Lending Solutions

The Group completed the transformational acquisition of ClearView's Advice business, which consisted of the acquisition of the licensee business, Matrix Planning Solutions Limited ('Matrix') and ClearView Financial Advice Pty Ltd ('CFA') as well as the self-licensed business LaVista Licensee Solutions Pty Ltd ('LaVista'). A total of 270 advisers, comprising 165 licensed and 105 self-licensed advisers, joined the Group taking Centrepoint Alliance's adviser footprint to over 1,200 advisers. The combined business model has been in place from 1 November 2021, when the transaction was approved by Centrepoint Alliance shareholders.

The new organisational structure has enabled the combined businesses to deliver significant expense synergies while maintaining service quality. The Group has capacity to continue to invest in ongoing service improvements. With the operating model and organisational structure complete, the focus for the second half of the financial year will be streamlining and simplifying the core underlying business processes, systems and licensee standards to drive further efficiencies and customer service enhancements.

The Group also made strong progress with organic growth of licensed advisers, acquiring net 25 advisers during H1 FY22. The Group was the only licensee among Australia's top 10 adviser groups to achieve net adviser growth, and finished the 2021 calendar year with 511 licensed advisers.

The successful integration of ClearView Advice, combined with organic growth, has elevated the Group to become Australia's third largest licensee.

Centrepoint Lending Solutions achieved strong recurring revenue in H1 FY22. The business has a network of 80 brokers and a loan book of $3 billion. The Group has identified significant growth potential for the lending business in a market estimated to be worth $494 billion. The business delivered a 48% uplift in lending volumes in H1 FY22 over the prior comparative period, driving a 32% increase in Earnings Before Interest, Tax, Depreciation and Amortisation ('EBITDA').

Portfolio Solutions and Investment Management

The investment management business has been in decline over the last three years as the Group prioritised transforming the licensee business to a sustainable fee for service model, and moving to open architecture for platforms. The legacy funds business has been in outflow and this combined with rising costs of third- party outsourced providers with the smaller sub-scale funds, has impacted profitability. Revenue from the third-party legacy platform arrangements has also been impacted as distribution arrangements have been wound down.

The Group strategy will focus on a turnaround of business performance, and will aim to provide advisers with the highest quality asset management in efficient diversified portfolio structures.

The key focus for the first half of FY22 has been developing the strategy and implementation plans to:

1. Review the legacy funds business
2. Relaunch Ventura Managed Account Portfolios and
3. Launch a range of diversified separately managed accounts

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