Yellow Brick Road
Holdings FY 2015 Summary & 2016 Outlook
November 11, 2015
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Executive Summary:
Delivery in FY15, Enhancement in FY16, Position For
Growth
Delivered on our commitment to get to operating breakeven in FY15*
Underpinned by strong execution of our strategies through FY15
Distribution scale – near four fold increase in points of presence off the back of acquisitions
Diversification – six product introductions improved spread of income
Margin – scale from acquisitions improved corporate margin 140% yoy
Brand – acquisition marketing generated 40% increase in leads yoy
Some big changes for FY16 investing to reinforce our business model
Major brand investment – doubling of marketing spend to generate leads and brand uplift
Re-platforming web & lead infrastructure – generating significant uplift in digital yield
Invest in wealth product – Guru, Loan Protect (life insurance) & new investment platform
Leaving Yellow Brick Road uniquely positioned for growth
Home loans – strong growth in mortgage book, driving new customer acquisition
Wealth – diversifying revenues and provides broader customer base for stability
Distribution scale & diversity – true national multi-channel reach
RESI mortgage manager capability – brings manufacturing and credit assessment in house
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* Underlying EBITDA excludes acquisition and integration costs and non cash share expenditure. NB Underlying EBITDA
normalised for 12 months ownership of Vow and Resi is circa $1.7m
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Yellow Brick Road delivered our key commitment of
operating breakeven in FY15
Yellow Brick Road delivered on our key commitment to achieve an operating
breakeven performance in FY15:
Underlying Earnings* Before Interest Tax & Depreciation (EBITDA) of $1.3M**
– Represents an improvement of circa $6.4m compared to ($5.2m) in FY14
A net loss after tax (NPAT) of ($2.5m)
– Represents an improvement of $6.3m compared to ($8.8m) in FY14
Underlying EBITDA excludes & NPAT (IFRS) includes some one off effects
– $3.9m acquisition and integration costs
– Non cash share expense of $4.2m
– Offset by a significant tax benefit of $6.8m
* Underlying EBITDA excludes acquisition and integration costs and non cash share expenditure.
** Underlying EBITDA normalised for 12 months ownership of Vow and Resi is circa $1.7m4
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FY15 financial outcome driven by our core strategies
5
0.99
0.700.57 0.29
-0.36-0.58 -1.09
-0.17 1.28
-5.14
6.07
FY 2014 Acquisitions(Vow and Resi)
Growth(Lending)
Scale(Lending)
Growth(Wealth & GI)
Growth(New Branches)
Personnel Costs Administration,Premises &
CommunicationCosts
Marketing Costs Other Costs FY 2015
YBR (GROUP) - Underlying EBITDA* - FY 2014 vs FY 2015 ($mil)
+ 6.42
* Underlying EBITDA excludes acquisition and integration costs and non cash share expenditure.
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Acquired 7- 11x scale in lending and grew organically
on normalised basis by 42% versus FY14
0.3 0.4 0.5 0.7 0.7 0.7
4.3
6.4
H1FY12
H2FY12
H1FY13
H2FY13
H1FY14
H2FY14
H1FY15
H2FY15
MORTGAGE – SETTLEMENTS ($B)
0.6 0.9 1.3 1.8 2.2 2.7
27.6 30.8
H1FY12
H2FY12
H1FY13
H2FY13
H1FY14
H2FY14
H1FY15
H2FY15
MORTGAGE - LOAN BOOK UNDER ADVICE ($B)
Acquired Scale 11x
2.2 2.3 2.6
3.0
4.1
4.8
6.2 6.4
H1 FY12 H1 FY13 H1 FY14 H1 FY15
(Normalised) MORTGAGE – SETTLEMENTS ($B)
Acquired Scale 7 x
FY14 $8.9B
FY15 $12.6B
+42%
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Strong organic growth in wealth yielding an increase of
57% in FUM and 94% in insurance book
182 192 243 293 339 357 32 84
137 134
185
311
H1 FY13 H1 FY14 H1 FY15
TOTAL FUNDS UNDER MANAGEMENT ($M)
FUM - Smarter Money Investments* FUM - Platforms
4.6
7.1
8.3
FY 2013 FY 2014 FY 2015
WEALTH REVENUE ($M)
1.4 2.3
3.7
4.8
6.9
9.3
H1 FY13 H2 FY13 H1 FY14 H2 FY14 H1 FY15 H2 FY15
PERSONALISED LIFE INSURANCE PREMIUMS ($M)
FY14 $4.8B
FY15 $9.3B
+94%
FY14 $427M
FY15 $668M
+57%
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* Smarter Money Investments is 50% joint venture. Chart represents 100% of FUM.
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Q1 FY16 delivered 42% increase in settlements– off
huge 71% increase in YBR settlements
1,777
2,3062,077
2,737 2,875 3,074 3,0753,381
4,088
Q1 FY14 Q2 FY14 Q3 FY14 Q4 FY14 Q1 FY15 Q2 FY15 Q3 FY15 Q4 FY15 Q1 FY16
(Normalised) MORTGAGE (GROUP) – SETTLEMENTS ($B)
346395
338405 399
542498
628681
Q1 FY14 Q2 FY14 Q3 FY14 Q4 FY14 Q1 FY15 Q2 FY15 Q3 FY15 Q4 FY15 Q1 FY16
MORTGAGE (YBR) – SETTLEMENTS ($B)
2.0 2.2 2.4 2.7
25.4 27.8 28.1
30.8 31.7
Q1 FY14 Q2 FY14 Q3 FY14 Q4 FY14 Q1 FY15 Q2 FY15 Q3 FY15 Q4 FY15 Q1 FY16
MORTGAGE (GROUP) - LOAN BOOK ($B)
+42% +71%
19.8 20.5 21.1 22.2
25.4 27.6 28.1
30.8 31.7
Q1 FY14 Q2 FY14 Q3 FY14 Q4 FY14 Q1 FY15 Q2 FY15 Q3 FY15 Q4 FY15 Q1 FY16
(Normalised) MORTGAGE (GROUP) - LOAN BOOK ($B)
+25%
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478
592 626 657694
738790
Q2 FY14 Q3 FY14 Q1 FY15 Q2 FY15 Q3 FY15 Q4 FY15 Q1 FY16
POP Agreements in Place*
1.4
2.33.0
3.74.3
4.8
6.6 6.8
8.2
9.3 9.4
Q22013
Q42013
Q12014
Q22014
Q32014
Q42014
Q12015
Q22015
Q32015
Q42015
Q12016
PUM* (GROUP) ($M)
And a strong 42% increase in both FUM & PUM while
network growth continued apace
321 381
409 427 477
524 594
668 676
Q1 FY14Q2 FY14Q3 FY14Q4 FY14Q1 FY15Q2 FY15Q3 FY15Q4 FY15Q1 FY16
FUM* (GROUP) ($M)
+42%
+26%
+42%
* PUM = Premium Under Management; FUM = Funds Under Management; POP = Points of Purchase
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Doubling of advertising investment to drive brand
equity, awareness and leads
2.5 x Brand Exposure
Significant increase in television investment and presence across FY16
$5M of media support in FY16 at best in market rates, gives 10 months coverage
Celebrity Apprentice content to value of $17M in H1 16 – leveraged across Q2
To drive a significant increase in brand strength and double brand leverage
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Old Manual Manual check
Manual load
Excl. branch enquiry
2 hour delay / 80%
New STP Auto allocate
Auto load
Incl branch enquiries
Instant delivery / 100%
Re-platforming YBR web & lead infrastructure,
increasing conversion of visitors to leads & leads to
applications
New website in Kentico ecommerce platform
New SEO informed design & content – pilot driving multiples of former lead flow
Tracks consumer behaviour across digital channels web, email, mobile
Integrated insights on propensity to act
Informs & automates targeting/ timing and messaging
Automation and control of back-office lead platform
Straight through processing of leads – more timely response & reduced cost
New tracking and reporting of customer branch enquiries ~ 20% of leads
4.4X
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YBR marketing investment paying dividends with new
prospect introductions up threefold in the year to date
Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15
GrowthInvestment
3 x leads(avg. month)
FY14/ FY15 +185%
Lending Pipeline Up 43%
Monthly Lead Flow To YBR branches
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5. Wealth Product
Enhancement
A wealth offering tailored for our
mortgage client base
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Guru is at the vanguard of ROBO advice targeting the
“other 80%” and off to a flying start.
Prepositions Advice for 80% of Population Without a Plan
Market is concentrated on population in pre-retiree and retiree phase
Guru targets mass market – middle class families YBR serves with home loans
Addresses concerns about accessibility, outcomes, cost and control
Empowers them to act by showing enormous benefits of a few tangible actions
National Launch in Celebrity Apprentice
Over 300 leads from first night
Early feedback ~80% proceeding to meeting >20% proceeding with advice/loan
Heavy support through Q3 “New year plan” drive
Like a seminar (without product placement)
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YBR will enter the mortgage life insurance market
with a breakthrough branded product in second
quarter FY16
Mortgage life insurance is a life product offered in mortgage sales process
Enhances our ability to convert mortgage clients to wealth
Current offerings have limited margin and risks to client experience
YBR has agreed terms with a major global provider & will launch Q2
Product designed to YBR’s needs and branding offering Up-front underwriting for better client experience
Competitive affordable pricing for our target market
A direct relationship with insurer which improves margins to YBR18
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Re-platformed investment offering to accelerate uptake
of wealth across branches & improve margin
Reduces admin. burden for branches providing wealth advice by 400 hours or $40k
p.a.
One platform to cover 95% of needs vs. 3 at present
Automates & centralises tasks currently managed in branch
Saves ~ 4 hrs p.a. / client or 400 hours p.a. for 100 clients
Ramps up YBR returns from wealth
Accelerate uptake of wealth - 1/3 branches embedded, this will address next 1/3
Added margins from SMAs
Centralised portfolio management reduces risk
Client access and analytical tools will increase engagement
My YBR Account covers investment, super and insurances Low cost, high performance SMAs for the “other 80%”
My YBR Account Cash, invest, super, ins
Two series of SMAs
Guru integration
Simple to complex
Smarter Money series
Active asset allocation
Centrally managed
No SOA for rebalancing
Sophisticated res. tools
My YBR SMAs
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Direct to consumer investment offering under
development
& personal lending acquisitions in due dilligence
Building direct consumer proposition in wealth
New My YBR Account platform back end is direct ready
Guru plugs into My YBR Account
“Money Manager” cash flow tool to launch Q3
Working on buy and adapt option for consumer front end
Personal lending acquisition opportunities in due diligence
Additional business line for network & direct potential
Securitisation funding capability will support
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YBR has a securitisation platform two years in
the making & will go to market when
conditions right
Much of required capability & structure built in FY14 and FY15
RESI capabilities including credit and customer service teams in place
Legal structures and appropriate funding entity in place
Leading providers appointed for mortgage servicing, trustee & legal counsel
Servicing platform customisation & reporting in final stages of development
Launch now targeted for 3rd quarter FY2016
We have paused this activity for a quarter given recent market volatility
In negotiation with 4 funding partners
Pending appropriate conditions considering Q3 launch21
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