Managed Accounts Holdings Limited (ASX: MGP) Broker ...€¦ · at 31 December 2013 ... ASIC final view on CP200 is on hold until it can take into consideration the Future of Financial

Managed Accounts Holdings Limited (ASX: MGP) Broker Presentation

MGP Board and Management MGP Board

Extensive experience in start-up businesses within financial services Directors were co-founders of Bridges Financial Services Pty Ltd and IWL

Limited (both start-ups) and sold for in excess of $500M MGP Directors

Don Sharp – Executive Chairman Colin Scully – Non Executive Director Paul Collins – Non Executive Director

MGP Management Team

Experienced executive team with in excess of 5 years employment with MGP David Heather – CEO with over 12 years experience in designing, implementing and distributing managed account solutions Neil Pattinson – Head of Operations and Adviser Services Sanja Jovicic – Head of Information Technology Paul La Macchia – Marketing and Business Development Manager Rachel Li – Head Accountant

What role does MGP play in market? One of the largest MDA Service Providers in Australia with over $900M in FUM as

at 31 December 2013 MGP facilitates Licensees in running discretionary Portfolios for their clients

No requirement to undertake personal advice (an SoA/RoA) for every change or

to the client’s Portfolio and every corporate event

MGP Clients and their role MGP has 21 medium sized high quality licensees using its Service and growing Licensee provides personal advice to clients to invest in the MDA and MGP

appoints Licensees to manage client Portfolios in accordance with an agreed mandate published in an Investment Options Document. Licensee can appoint external Investment Managers

Portfolios consist of listed securities (including ETFs, LICs, hybrids), managed funds, corporate bonds, term deposits, cash through any issuer

Average client balance in MDA Service is over $700K as at 31 December 2013 Licensees or their appointed Investment Manager undertake all dealing utilizing

the institutional grade portfolio management and modeling software Listed Securities – orders placed via broker of choice => electronic confirmation

of orders uploaded to clients’ Portfolios and matched to order Post trade compliance undertaken to ensure Portfolio is in accordance with

mandate (Investment Options Document)

MDA Capital Requirements and ASIC CP200 Investment Administration Services Pty Ltd trading as managedaccounts.com.au

is a wholly owned subsidiary of MGP Holds an AFSL license endorsed to operate Managed Discretionary Accounts

(MDA’s) License requires surplus current assets less current liabilities of $50K increasing

to $150K on 1 July 2014 ASIC CP 200 review recommending an increase up to $5M

ASIC have highlighted over 160 AFSL’s will be effected by the new capital

requirements

Provides significant scope for MGP to be a ‘’consolidator’’ of MDA Operators

MDA Capital Requirements and ASIC CP200 CP200 also recommends revoking ASIC’s no-action letter (aka Limited MDA)

where licensees can operate a quasi-style MDA via a Platform with no MDA license

MGP estimates $billions of dollars relying on the no action letter (Limited MDA) concept

ASIC final view on CP200 is on hold until it can take into consideration the Future

of Financial Advice (FOFA) legislation changes and the outcomes of the Financial Services Industry (FSI) review

ASIC made it clear that it remains committed to considering and implementing

the proposed changes

How does MGP work with Licensees and their clients

Licensee consults with managedaccounts.com.au to formulate a range of Portfolios that suit their client base e.g SMSF, accumulation or pension clients

Portfolios are set out in the Investment Options Document including investment

rules e.g only allow ASX200 securities in Portfolio within a maximum % exposure Licensees must have an Investment Committee (with one independent member)

to oversee the Process and Portfolios Investment rules are compared to the actual client Portfolio to ensure client

Portfolio is in accordance with Investment Options document Investment Committee allowed to change client Portfolios in quick-time without

the need for client approval due to discretionary nature of Service

How does MGP work with Licensees and their clients….continued

Licensees Clients Are advised at initial stage to invest into the Licensees’ MDA Service via a

Statement of Advice (SoA) Client signs off on application form for the MDA and Custody contract with

managedaccounts.com.au Cash and/or assets are transferred into MDA Investment Manager invests in accordance with rules of the model portfolios Client has online access for reporting Data feed capabilities into nominated SMSF or Planning software End of year tax reporting SMSF clients and auditor receive GS007 audit report from auditors of

managedaccounts.com.au

How does MGP work with Licensees and their Clients….continued

Benefits for SMSF’s Typically SMSFs currently have one pool of assets for all its members

Members over 60 are able to commence pensions which are tax free – with

income and capital also tax free. They also enjoy the benefits of franking credits as tax refunds

Members could also continue to work and contribute into the SMSF via an

accumulation account managedaccounts.com.au supports multiple accounts and allows securities to be

traded once and allocated across selected member accounts => encouraging other family members to have accounts which can be invested differently to other members

Data feeds into SMSF accounting systems is available

Provision of Audit Certificate GS007 also which SMSF auditors could rely upon

Provision of end of year tax reporting

Benefits for SMSF’s…continued

Could reduce accounting cost for an SMSF with value of $1M from typically $4k to potentially a few hundred dollars for accounting and audit

Saving will more than pay for MGP administration fee of 0.25% capped at $2.5m

then 0.05% thereafter

Further savings in GST apply due to binding ATO ruling providing reduction of 50% to GST

MGP Growing Client base MGP has 21 medium sized high quality licensees using its Service and this is

growing Sit in two camps:

Licensees that have successfully transitioned existing clients from Platform

arrangements and other Administration Services (internal/external) into the MDA Service. As a result, some of these licensees now becoming acquisitive as a result of the MDA benefits

Licensees that are in the transition process and moving monies into the

MDA Service

Continue to use the MDA Service as core value proposition of the business for new clients (ie MDA Service is the solution presented to the investor)

MGP Growing Client base Recently implemented new deals with licensees are now in process of transitioning

existing client base to the MDA

Redgum Wealth => in excess of $200M Affinity Wealth => in excess of $180M GPS Wealth => in excess of $650M

Will surpass the $1B FUA easily

Breakdown of planner by number of planners: 17,500 in Australia (Source: Investment Trends)

Bank/branch : 12% Own AFSL: 14% (our Tier 1 Target market) Independent Groups: 31% Aligned: 43%

With total Planning FUA in Australia currently at $519bn (Source: Rainmaker) addressable

market is ~$72.7bn for MGP

Financials Dividend yield of 4% unfranked – payable quarterly commencing after September

2014 quarter

Healthy balance sheet with over $8.4M in Cash (assuming maximum subscription) Forecast NPBT of $1.067M YE June 2015 with June 2015 annualized of $1.670M

All IT costs written off (expensed in excess of $4.7M since 2008)

Majority of fee income debited monthly to clients’ Accounts

Licensees paid monthly once funds received from clients

Working Capital – only need one month of operating costs. Increased FUA

requires little further working capital

Financials….continued

No planned capital raising required as cash held will exceed the proposed $5M required by ASIC’s CP200 (timing unknown)

FUA fee of 0.25% up to $2.5m then 0.05% plus transaction fee of 0.09% Other income nearly covers direct costs of HSBC custody, SS&C etc

No back end IT development costs as this is outsourced to North American

provider SS&C (NASDAQ listed) who have 6900 financial services organisations (including managedaccounts.com.au), with over $26 trillion in assets being managed

Offer and Indicative Timetable

Disclaimer

Managed Accounts Holdings Limited Disclaimer An electronic form of the Prospectus in relation to Managed Accounts Holdings Limited (Managed Accounts) is available from the managedaccounts.com.au site (Prospectus). This Prospectus is dated 21 March 2014, and a copy of this Prospectus was lodged with the Australian Securities and Investments Commission (ASIC) on that day. The terms and conditions of accessing the electronic Prospectus are set out below. Neither ASIC nor ASX takes any responsibility for the contents of this Prospectus. By law, the Prospectus is subject to an exposure period. The exposure period is intended to enable the Prospectus to be examined by market participants prior to the raising of funds. No applications will accepted by Managed Accounts during the exposure period. Applications for shares in Managed Accounts can only be made after the exposure period expires and on the form of application accompanying a paper version of the Prospectus. Until the exposure period expires, Managed Accounts will not aspect any applications for shares. When the offer period opens, application for shares in Managed Accounts will only be accepted if it is made on the application form issued with the Prospectus and in accordance guidelines in the Prospectus. No securities will be allotted or issued on the basis of this Prospectus later than 13 months after the date of the Prospectus. Please note that paper copies of the Prospectus are available free of charge by calling Novus Capital Limited on 02 9375 0104. The information on this page is not part of the Prospectus. Prospective investors should read the full text of this Prospectus, as the information contained in individual sections is not intended to and does not provide a comprehensive review of the business and the financial affairs of Managed Accounts or the shares offered under this Prospectus. Managed Accounts is not liable for any loss incurred from relying on this site, including from data corruption on download. This Prospectus is available to persons receiving it within Australia. The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and does not constitute an offer in any place in which, or to any person to whom, it would not be lawful to make such an offer. Persons who come into possession of this Prospectus should seek advice on and observe any restrictions on accepting an offer or distributing the Prospectus. Any failure to comply with restrictions may constitute a violation of applicable securities laws. This Prospectus is in Adobe Acrobat format, and the download time may vary as a result of modem speed and Internet congestion. The length of the document is 80 pages. Should the document finish downloading to your browser, and not be this length, you should refresh the browser window using the Reload or Refresh feature, and reload the document. If you are experiencing problems downloading the Prospectus, please call Novus Capital Limited on 02 9375 0104