CONECO FINANCIAL
AGM PRESENTATION, TUESDAY OCTOBER 23
CONECO FINANCIAL
CHAIRMAN’S MESSAGE FROM STUART JAMES
As a boutique ASX-listed property finance and advisory firm, we plan to grow our business and bring it to profitability through a number of key initiatives:
Growing our distribution capabilities Expanding our product offerings Building recurring revenue
Expanding our geographical presence
As a mortgage broker, we do not hold any loans on our balance sheet; we have not seen any impact from the US sub-prime market events on our business other than pricing for non-bank products increasing relative to that of the banks; in some cases, the uncertainty about rates and lenders has created a demand for the mortgage broking services we provide.
We look forward to industry regulation, which we believe will help consumers, the economy, and mortgage brokers alike. We believe the Australian property market will continue to grow, albeit at smaller pace, and that we are uniquely positioned to take advantage of this growth by presenting ourselves as a credible alternative between the large banks with limited product offering / poor service, and small mortgage brokers who typically lack staying power.
This year’s achievements include:
{ Set up the new business infrastructure to broker residential and commercial mortgages { Acquired accreditation from over 25 lenders
CONECO FINANCIAL - OVERVIEW MD PRESENTATION BY MIKE GHENTA
{ Boutique, full service financing & advisory firm
{ Property finance is a large part of our business
{ Distribution channel for bank & non-bank lending products z Via direct accreditation
z Via access to wholesale funds
{ We do not book loans on our balance sheet
{ Service corporate & retail clients
{ Revenue sources: brokerage & application fees, upfront & trail
commissions
{ Staff of 12
{ Offices in Melbourne (HQ) and Sydney
CONECO ORGANISATIONAL CHART
Coneco Board of Directors
MD & CEO Mike Ghenta
GM of Sales
Mario Stepancic GM of OperationsWarwick Kingsley
Office manager Rosa Misale NSW State Manager
Christine McVeigh BDM
VIC State Manager TBD
BDMs
CFO
INDUSTRY OVERVIEW… PLENTY OF CHALLENGES
{ New player in competitive market / start-up business
{ Highly fragmented industry (~13,000 mortgage brokers)
{ Upfront & trail commissions are under pressure from lenders
{ Lenders getting back into distribution
{ Heavy discounting by mortgage brokers
{ Transactional rather than relationship-based
{ Consolidation going on in the aggregation space
{ Long settlement times (~60 days)
{ Mortgage brokers do not have a stellar reputation, which is why..
{ National industry regulation is likely to come soon
{ Risk of softening market due to rate increases / increase in cost of
…AS WELL AS OPPORTUNITIES
To fill the void between banks & mortgage brokers:
Banks: limited product choice (proprietary products only), mediocre
service, poach clients, not relationship-based
Mortgage brokers: struggling financially -> long term viability concerns,
poor reputation, lack national servicing capabilities, business not scalable
We have successfully signed up new referrers by positioning Coneco as the better alternative to banks and mortgage brokers and playing up our ASX and board credentials
To benefit from industry regulation, which will cause some brokers to exit the business and make the requirements more stringent for new entrants, to the benefit of consumers.
To offer our clients the full service lending capabilities that they need / are asking for
WHAT WE ARE FOCUSING ON
Growing our commercial business lines, including
{ land, development & construction projects
{ invoice / debtor/ inventory financing
{ lease and asset finance
{ rental bonds
{ business broking
Expanding into 3rd party distribution via wholesale products Offering real estate advisory services
{ selling land & home packages for our builder/developer clients
(and then providing the financing)
{ providing property management services
{ buyers advocacy
Increasing the number of our referral partners
{ financial planners, accountants, real estate agents. stockbroking
firms
BUSINESS LINES
Financing
-Mortgage Broking -Mortgage Management -Leasing & asset finance
Real Estate Advisory
-Real estate sales
-Investment property management -Buyers advocacy
RETAIL
-Mortgage Broking -Mortgage Management -Leasing & asset finance -Inventory finance -business acquisitions
Business Broking
CORPORATE & COMMERCIAL
Agent for non-bank lenders
FINANCIAL SUMMARY
{ We expect to breakeven in CY 2008
{ Expect revenue growth to come off of existing cost base