Results Announcement for the full year ending 30 June 2012
Centuria Capital Limited
Presentation to Investors and Analysts
2012 Financial Year Highlights Earnings* • • • •
Underlying FY12 - NPAT $4.9 million (FY11: $6.4 million) Underlying Earnings per share 6.1c (FY11: 8.2c) Statutory FY12 - NPAT $2.0 million (FY11: ($2.9 million)) Statutory Earnings per share 2.5c (FY11: (3.7c))
Dividend / Capital Management • Interim Dividend - 1.25c per share fully franked (FY11: 2.5c franked to 30%) • Final Dividend - allocated $1.6 million (equivalent 2.0c per share) to acquisition of unmarketable parcels. Details to be released by 30 September 2012
Strong Balance Sheet • Corporate gearing remains low at 14.4% (excluding non-recourse debt) • Corporate working capital facility recently extended to December 2013
Rationalisation • Recent strategic structural review has reduced staff headcount by ~15% • Strategic investments in systems, infrastructure and people across the business, particularly in Property Funds Management • Relocation of Melbourne office to smaller, more cost-effective, Centuria owned property * Underlying Earnings comprises Centuria Capital Group and excludes Centuria Life Benefit Funds Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.
Centuria Capital Limited Presentation to Investors and Analysts 1
2012 Financial Year Highlights Business Developments • Property Funds Management business unit established one Fund in FY12 - $58 million acquisition of 441 St Kilda Road • FY13 to date, Property Funds Management business unit has contracted to purchase two significant properties (total ~$78 million) • Property Funds Management business unit performance is a key profit driver in respect of upfront fees and annuity management fee income • Outlook for Property Funds Management business unit promising having regard to YTD performance and strong pipeline of second half acquisition opportunities • Establishment of Singapore office to create Asian platform for Centuria
Centuria Capital Limited Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.
Presentation to Investors and Analysts 2
2012 Key Performance Metrics • Overall Group FUM balance of $1.9 billion despite only one property acquisition • Property underlying earnings impacted by low acquisition performance (since addressed)
Total Funds Under Management ($bn) 2.50
2.00
Residential Mortgages FUM
1.50
Centuria Life FUM
1.00
Centuria Property FUM
0.50
-
2007
2008
2009
2010
2011
2012 Centuria Capital Limited
Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.
Presentation to Investors and Analysts 3
2012 Key Performance Metrics (continued) • Ongoing focus on Capital Management • Continued low level of corporate gearing (excluding non-recourse debt)
Corporate Debt / Equity Ratio
40% 30% 20% 10% 0%
2009
2010
2011
2012
Debt / Equity at 30 June 2009 - 2012 (excluding non recourse debt)
Centuria Capital Limited Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.
Presentation to Investors and Analysts 4
Divisional Revenue (excl. Benefit Funds)
Year Ended 30 June
2012
2011
Total Revenue
$000’s
$000’s
Property Funds Management
11,799
13,015
Friendly Societies
12,628
13,453
Residential Mortgages
16,555
16,294
Property Investments*
3,239
2,937
Insurance
1,307
1,341
Other
1,109
1,075
Total
46,637
48,115
* Heads of Agreement has been signed for the sale of these two legacy assets with a 31 August 2012 settlement date
Centuria Capital Limited Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.
Presentation to Investors and Analysts 5
Underlying Results (excl. Benefit Funds) Year Ended 30 June
2012
2011
$000’s
$000’s
3,577
4,755
7,755*
9,137
- Residential Mortgages
2,661
3,495
- Insurance
1,065
1,037
- Corporate
(6,709)
(8,601)
- Other
(115)
697
Total underlying earnings
8,232
10,520
(3,374)
(4,163)
4,861
6,357
-
9,248
- Impairment of investment in associate
2,887
-
- Provision for doubtful debts (CBGF1)
1,169
-
- Mortgageport write-downs
200
-
- Final convertible notes provision
934
-
- Gain due to a change in estimate of the realisation of the swap
(650)
-
- Net gain on NLT investment property and borrowing write-downs
(406)
-
(1,240)
-
1,967
(2,891)
Underlying earnings by major division - Centuria Property Funds - Centuria Life
Tax expense (excluding non-recurring items) Underlying net profit after tax Non-recurring adjustments - Prior year non-recurring adjustments (including tax effect)
- Tax benefit on 30 June 2012 non-recurring adjustments Reported net profit after tax * Life division underlying earnings suffered one-off impact of more accurate allocation of costs and investments made in the business Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.
Centuria Capital Limited Presentation to Investors and Analysts 6
Centuria Property Funds Key Achievements FY12 • Purchase of 441 St Kilda Road, Melbourne for $58.0 million (Centuria’s largest individual purchase since inception) FY13 • Acquisition pipeline to exceed FY12 performance ($78 million contracted for first half) with good ongoing prospects for second half
441 St Kilda Road, Melbourne, Victoria
• Positioned Centuria as a market leader in the unlisted funds sector and gaining strong traction with many of the national financial planning groups • Integration of new funds management and accounting system to service future scale in the business with fewer staff Portfolio by Sector
Portfolio by State
Office
67.39%
New South Wales
63.04%
Industrial
10.87%
Victoria
13.04%
Retail Bulky Goods
13.04%
Queensland
10.87%
Speciality Use
2.17%
South Australia
6.52%
Mixed Use
2.17%
Australian Capital Territory
4.35%
Retail
4.25%
Northern Territory
2.17%
Centuria Capital Limited Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.
Presentation to Investors and Analysts 7
Centuria Property Funds (continued) Key Achievements (continued) • Significant unrecorded future potential performance and sales fees (exceeds $10 million) • Continued corporate acquisition activity in FY12 with four bids totalling $2.9 billion FUM made
Business Profile
29
93
%
3,853
Number of Funds
Portfolio Occupancy
Number of Investors
46
3.7
17.10
Number of Buildings
years
Portfolio Weighted Average Lease Expiry (income)
%
Completed funds with a value of over $300 million with an average total return to Investors of 17.10% per annum Centuria Capital Limited
Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.
Presentation to Investors and Analysts 8
Centuria Life (including Guardian) • Centuria Life continues to generate strong and stable cash earnings to the Centuria Group • $712 million FUM as at 30 June 2012 (net reduction from FY11 3.26%) • Guaranteed Bonds continue to deliver consistent net returns in a challenging year, where RBA cash rate fell by 1.25% • Reduction in net outflows • Increased flows into Guardian funeral bonds • Continued focus on new product initiatives
$465 m $247 m 80,312 Total FUM of Centuria Life Bonds
Total FUM of Over Fifty Guardian Friendly Society Bonds
Total number of Policies
Centuria Capital Limited Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.
Presentation to Investors and Analysts 9
Insurance • Continued consistent contributor to Centuria Group earnings – 2012 EBIT $1.065 million (FY11: $1.037m) • Divisional profit marginally increased • 25,108 policyholders as at 30 June 2012 • Maintained high customer retention over time Continued Strong Customer Retention Rate 92% 90% 88% Over Fifty Insurance Home
86%
Over Fifty Insurance Motor
84% 82% 80% 78% 2006
2007
2008
2009
2010
2011
2012 Source: Allianz
• Growth being seen through internet sales • Marketing efforts and dollars spent concentrated on strong performing regions resulting in improvement in key performance indicators and profit contribution
Centuria Capital Limited
Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.
Presentation to Investors and Analysts 10
Residential Mortgages • Value of residential reverse mortgage book at 30 June 2012 - $182 million (30 June 2011: $192m) • Non-recourse loan at 30 June 2012 - $152 million (30 June 2011: $165m) • Loan facility maturity date extended to 30 September 2013 • Significant embedded shareholder equity in the portfolio increasing in 2012 - $33m (2011 : $27m)
Embedded Value - At 30 June 2012 12% p.a. Redemption Rate assumed $’m 200 180
• No portfolio loan losses sustained on the portfolio since inception
160 140
Projected debt-free book value $100 million
120 100 80 60 40 20
Over Mortgage Book
ANZ Loan Book
2060
2058
2056
2054
2052
2050
2048
2046
2044
2042
2040
2038
2034
2032
2030
2028
2026
2024
2022
2020
2018
2016
2014
0 2012
• Loan statistics at 30 June 2012 - Security value: $806m (30 June 2011: $933m) - Non-recourse loan to valuation ratio: 19% (30 June 2011: 18%) - Number of loans: 1,979 (30 June 2011: 2,256) - Average loan balance: $92,132 (30 June 2011: $85,151)
Source: Rice Warner, 30 June 2012
* The above projection is subject to many variables including run-off rate, regular refinancing, and projection given is as a guide only
Centuria Capital Limited Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.
Presentation to Investors and Analysts 11
12-month Outlook (excluding benefit funds) Centuria businesses are increasingly well positioned to benefit from future growth • Ongoing volatility in financial markets has created weaker asset prices and further accretive acquisition opportunities Strength in diversity • Core strength in combination of life division annuity style income stream and Property Fund Management income with significant growth potential
Strategic focus • Last legacy issue to be finalised with the pending sale of two investment properties at Moonah Links and Torquay Sands (no further write-downs) Balance sheet positioned for growth • Low corporate gearing expected to remain • Financing stability Property specialist • Strong start to FY13 with 2 properties contracted and significant ongoing acquisition pipeline • Significant expertise in property investment in a market with fewer competitors • New office opened in Singapore to establish Centuria’s Asian platform Financial Services • Expand distribution of existing products Centuria Capital Limited Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.
Presentation to Investors and Analysts 12
Appendices
Statutory Account Reconciliations
General comment on statutory account reconciliation The “Statutory Accounts” show the consolidated corporate entities including the Benefit Funds which Centuria is required under AIFRS to consolidate. The “Benefit Funds” reflect value of stand alone policyholder funds. The “Corporate Accounts” reflect the value and performance of Centuria shareholder funds. Numbers in the following reconciliations may differ slightly from the Annual Report however this is due to rounding of numbers.
Centuria Capital Limited Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.
Presentation to Investors and Analysts 13
Appendix 1:
Income Statement for year ended 30 June 2012
Statutory Accounts
$m
Benefit Funds
Corporate
$m
$m
Revenue
32
-
32
Revenue from Centuria Life
13
-
13
Net revenue from Benefit Funds
-
-
-
Other income
1
-
1
Total revenue
46
-
46
Finance costs
16
-
16
9
-
9
10
-
10
Centuria Life expenses
5
-
5
Share of loss of associates
2
-
2
Impairment of investments in associates
-
-
-
Revaluation of investment property assets
-
-
-
Net profit before tax
4
-
4
Tax
2
-
2
Reported net profit after tax
2
-
2
Employee benefits expense Administrative and other expenses
Centuria Capital Limited Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.
Presentation to Investors and Analysts 14
Appendix 2:
Balance Sheet as at 30 June 2012 Statutory Accounts
$m
Benefit Funds
Corporate
$m
$m
Assets Cash and equivalents
16
-
16
Trade and other receivables
11
-
11
Non-current assets held for sale
15
-
15
-
-
-
20
-
20
182
-
182
Investment property
-
-
-
Investment in associates – equity method
1
-
1
Plant & equipment
1
-
1
Deferred tax assets
10
-
10
Intangible assets
53
-
53
465
465
-
2
-
2
776
465
311
Financial assets at fair value Other financial assets Reverse Mortgage Loans
Assets in respect of benefit funds Other assets Total Assets
Centuria Capital Limited Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.
Presentation to Investors and Analysts 15
Appendix 2:
Balance Sheet as at 30 June 2012 (continued) Statutory Accounts $m
Benefit Funds $m
Corporate $m
Liabilities Trade and other payables
6
-
6
Corporate debt
13
-
13
Borrowings – recourse to investment property only
16
-
16
152
-
152
28
-
28
Policyholders funds
465
465
-
Income tax payable
6
-
6
686
465
221
90
-
90
Issued capital
90
-
90
Reserves
(1)
-
(1)
1
-
1
Equity attributable to equity holders of the parent
90
-
90
Total Equity
90
-
90
Borrowings - Reverse Mortgages Other liabilities
Total Liabilities Net Assets Equity
Retained earnings
Centuria Capital Limited Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.
Presentation to Investors and Analysts 16
Appendix 3:
Cash Flow Statement for year ended 30 June 2012 Statutory Accounts
Benefit Funds
Corporate
$m
$m
$m
Interest received
1
-
1
Dividends received
-
-
-
20
-
20
8
-
8
Benefit Funds
(34)
(34)
-
Payments to suppliers and employees
(24)
-
(24)
(2)
-
(2)
(31)
(34)
3
Interest earned on mortgage loans net of mortgage receipt/ draw-downs
(7)
-
(7)
Benefit Funds
51
51
-
Payment for plant and equipment
-
-
-
Proceeds from investment in other financial assets
4
-
4
Payment for acquisition of intangible assets
1
-
1
49
51
(2)
Cash flows from operating activities
Management fees received Rent, trust and other income received
Income tax received Net cash flows used in operating activities Cash flows from investing activities
Net cash flows provided by investing activities
Centuria Capital Limited Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.
Presentation to Investors and Analysts 17
Appendix 3:
Cash Flow Statement for year ended 30 June 2012 (continued) Statutory Accounts
Benefit Funds
Corporate
$m
$m
$m
Convertible Loans
(6)
-
(6)
Loans from related entities
(1)
-
(1)
Benefit Funds
1
1
-
Proceeds from borrowings – Reverse Mortgages
3
-
3
Funds provided to Reverse Mortgage customers
(3)
-
(3)
Funds collected from Reverse Mortgage customers
26
-
26
(13)
-
(13)
(6)
-
(6)
5
-
5
(3)
-
(3)
Net cash flows used in financing activities
3
1
2
Net increase in cash and cash equivalents
21
18
3
Cash and cash equivalents at the beginning of the period
31
19
12
Cash and cash equivalents at the end of the period
52
37
15
Cash flows from financing activities
Repayment of borrowings Finance costs Proceeds from borrowings Dividends and distributions paid
Centuria Capital Limited Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.
Presentation to Investors and Analysts 18
Disclaimer
This document has been issued by Centuria Capital Limited ABN 22 095 454 336 and contains general information about Centuria Capital Limited and its related bodies corporate (“Centuria�) which is current as at 24 August 2012. The information in this document is in summary form and does not purport to be complete. Due to the impact of rounding, the totals shown for charts, graphs or tables in this document may not equate to the sum of the individual components of the relevant chart, graph or table. Accordingly, it should be read in conjunction with all other information concerning Centuria filed with the Australian Securities Exchange.
on, anything contained in or omitted from this document. This document is not a recommendation or personal advice in relation to Centuria or any product or service offered by Centuria and does not take into account the investment objectives, financial situation or needs of any particular person. Past performance is not indicative of future performance. To the extent this document contains prospective financial information, that information has been based on current expectations about future events and is, however, subject to risks, uncertainties and assumptions that could cause actual results to differ materially from expectations.
The document has been prepared from information believed to be accurate, however, no representation or warranty is made as to the accuracy or adequacy of any information contained in the document. To the extent permitted by law, Centuria, its related bodies corporate and their respective directors, officers and employees, exclude liability for any loss or damage resulting from the issue or use of, or reliance Centuria Capital Limited Information in this presentation is general information only. Before you make any decision in relation to your investment, we recommend that you obtain financial advice from a licensed financial adviser.
Presentation to Investors and Analysts 19