SunRice Ms Tenneti: Next speaker for the day is Michael Heine, the joint Managing Director of Netwealth Group Limited. If you could welcome Michael, thanks. Mr Heine: Good morning all. I think that's working, which is good news. I'm going to be speaking to you maybe as potential clients today, as well as investors, so I hope you find the presentation of interest today. I'm the joint Managing Director. I founded the company in 1999 and fortunately bred very well and my son is my joint Managing Director, through ability rather than breeding, probably better than his father, which is always a problem. It's actually a good thing. A couple of key things. Firstly, what does Netwealth do? We're a platform provider which doesn't give you a lot of information, but we're a technology based company providing investment and superannuation services. The services are available to individuals directly onto our platform, but the vast majority of our business in fact comes through financial advisers who use our platform to manage their clients. The platform provides services for superannuation as an alternative to, say, an industry super fund or a self-managed super fund and the superannuation fund allows investors to select their own investments, so very much like a self-managed super fund but we're APRA regulated and we do all the hard work, you don't have to do the work at all. We obviously have accumulation and pension, life insurance and regular contributions, et cetera. The same product exists but outside of super called the investment wrap, where funds that are either outside of the super spectrum or, alternatively, if you have a self- managed super fund, it's a very good product for you to manage. These products allow you to buy and sell assets that you want to buy and sell, when you want to buy and sell, to receive the income into the fund, to reinvest them, to have cash, to have term deposits, domestic and international equities, bonds; a very large variety of assets and very importantly in recent years, managed accounts is one of the products that we offer. The company was listed on the Australian Stock Exchange on 20 November 2017. The issued price at that time was $3.70, the price when I had a look a moment ago was in excess of $8.70, so we've done a reasonably good job in that period. Indeed market capitalisation of the company exceeds $2 billion. Very important to us is we are the best technology in the market and I'll come to who our competitors are shortly, but you might have heard of them, there's four banks for example. So technology is really important and independent research for four years in a row has named us as the best technology. Service is really important; you can't have one of these without each of the components operating very effectively. So we've been the best in the industry for service satisfaction for seven years in a row. Some of the key business highlights for you, funds under administration, that is client money that has been put on the platform, whether in the investment wrap or the superannuation, at the end of March this year, total in excess of $21 billion and is continuing to grow. The growth of funds under administration in the year to date in that nine months was $2.8 billion. Last year it was over $4 billion and we're forecasting that we'll exceed the $4 billion for this financial year as well. Funds under management, $3.5 billion. Funds under management, in our case, are different to funds under administration. When the money comes into the platform, we call that funds under administration. Then we can down invest it into, as I said, a wide range of assets. If they're down invested into assets that are offered and manufactured by Netwealth, we call those funds under management, so we have a range of managed funds, cash products and also, importantly, as I said, the managed account, which is a very efficient way of managing money actively these days. Two thousand plus advisers using the platform, as I said, number one ranked platform for technology, very important, number one for overall client satisfaction seventh year in a row and our brand has taken a significant uplift since our listing and for some time we were known as the best kept secret, but the listing certainly assisted us to increase that and there are other reasons as well as the Hayne Royal Commission and the banks divesting themselves out of wealth management, suddenly everybody has become aware of the independent players and not just those that are bank owned. This chart on the left hand side is important, it just highlights what I was saying about technology and client satisfaction. On one axis is the functionality, on the horizontal axis is functionality and on the vertical axis is client satisfaction. Ideally one wants to be in the top right hand corner and that is exactly where Netwealth is. With our competitors falling well short of both technology and satisfaction. That's an important thing; we continue to invest heavily in technology, functionality, useability, ease of use in our products for our clients. The financial highlights for the half year to December, $48 million of revenue; $24.8 million of EBITDA; and just like our previous speaker, we expense all of our R&D, we don’t capitalise that, so EBITDA basically converts fully into cash, which you can see down there at $25 million, so a little bit higher than EBITDA in this period, but generally it would all equate 100% to the EBITDA. The margin of 51.5% is very attractive in pretty much any industry and scalability is important to us. So as we continue to grow, our revenue should be increasing at a greater rate than our expenses and that gives us a comfort to continue to invest heavily and to provide the services to our clients. The net profit after tax is $16.3 million for that half year. This shows significant growth of our market and also of the independent providers, but the one I'd point you to here on this chart is the right hand graph, which shows the gain in our market share. The market is about $860 billion within our direct competitor market. We have the $21 billion as I mentioned before, but from 15 December we grew from 1.1% of the market and we now sit at 2.3% of the market. One of the attractions of this is that we're growing very rapidly, but more importantly, there is close to 98% of the market that we can still hope to capture a large part of. This graph shows what's happening in the industry. The banks used to dominate it, the banks, AMP and IOOF dominated this industry because they controlled the distribution and the advisers were really only allowed to use the in-house products. That's all changing dramatically and the line that goes up very steeply is ourselves and one or two of our smaller competitors' share of the market and the dark blue line that goes down shows where the banks and AMP and IOOF used to be and they had the majority share by far and that's declined very significantly and we'll touch on that a bit more. This shows who our competitors are and where the flows are going and this is really quite a fascinating chart. So the biggest player in the market is the BT Westpac Group with 18%, followed by AMP, followed by CBA. On the right hand chart, you'll see the net flows as a percentage, the growth of each of the players of the total growth in the market. So looking at BT for example, you'll see that they're actually in outflow of $1.2 billion for that 12-month period. Netwealth, on the other hand, was the fastest growing funds under management as a percentage and as dollars. So the big ones, AMP, second bottom one there, outflow in red, MLC, the biggest outflows. So even though they were the biggest with the largest amount of funds under administration, they are now haemorrhaging badly. Why are the haemorrhaging? A lack of focus, a lack of investment, a lack of service, all the things that are critical to the clients is where they've just got lazy because they dominated the market and now are paying the price for it. Platform revenue, revenue is continuing to grow at 28% compound annual growth rate. On the right hand chart is an interesting number. A lot of the analysts will focus on the basis points, so there is pricing competition, there's pricing pressure and basis points is very important. But because we cap our fees at $1 million or $2 million depending on what arrangement we have with a particular group, a $2 million account looks like it's half the basis points of a $1 million account, but what's important to us is the revenue per account, which is the top line on the right hand side is going up annually and that's because we've got larger accounts and we're earning fees on brokerage and other ancillary fees. So the growth in revenue per account is important to us, more so than the actual basis points.