Transcription of Interview Given by HUB24 Managing Director, Andrew Alcock
HUB24 is a superannuation and investment platform. We actually do ASIC administration and reporting for clients or investors. They’re financial advisers, accountants and stockbrokers. We operate in a marketplace that has about $600 billion on wrap accounts or platforms, traditionally are looked after by the major banks and other institutions. We have 0.5 per cent market share in that marketplace, in a market that’s going to grow four-fold over the next 15 years. And we’re actually transforming and disrupting that space, and taking market share from those players.
We’re very pleased with the results. We promised the market that we would actually break even at a cash flow level, from around about March 2016. During the half end of 31/12/15, we actually achieved that in November and December. So we achieved that ahead of plan. We also had 114 per cent increase in our revenue, over the previous half in our platform business segment. So that’s a delighting result for us, because we really are seeing the scale benefits that come from our business model, arising and delivering value for shareholders.
We’re seeing record net inflows happening, because we’re coming of age. We’re no longer the world’s best-kept secret in wealth management. We’re delivering great outcomes for clients and their advisers, efficiencies for financial advisers and tax benefits and transparency benefits for clients. We’re doing it with great service and exceptional product features, and the best leading edge technology. That’s really driving those flows for our business.
IOOF Holdings Limited
(ASX:IFL) submitted a proposal to HUB24, and it really was an unsolicited proposal. We assessed that and we actually decided to reject that opportunity. We believe that our company will provide far greater growth and results to shareholders, moving ahead than was reflected in the offer. So that’s been validated by the price of our share price in the market stake, compared to what was in the proposal. And we’re just committed to focusing on our strategy.
It’s really interesting that we’re getting two revenue streams, or two sources of revenue, if you like. A few years ago, the bulk of our revenue around about 70 per cent, was coming through from white label products. That is products that a distribution partner may use their own brand on. Whereas now we’ve got about 50 per cent of flows, also going into the HUB24 branded product. What that means for us and both of those streams are very important, what that means is that financial advisers, are getting their own licence. We’re seeing a shift towards independence. And we’re seeing some flows come to us from independent financial advisers, in their own business with their own licence.
We’re very hopeful by year end, HUB24 will have well exceeded a $3 billion target of funds under administration. We’ll be racing towards profitability. As we said, we’ve reached our cash flow breakeven. And we hope to have integrated a very large client opportunity that we announced to the market, in October last year. We’re working well with that. And looking forward to talking to the market and our shareholders about some exciting new initiatives that will help us extend our leadership, in what is a very strong space for us.
Ends
