Centuria Capital Group (ASX:CNI) FY18 results

Greater scale drives 29% AUM, 191% NPAT growth

Strong operating performance, acquisitions and continued servicing of investor demand through expanding distribution channels

Centuria Capital Group (ASX:CNI) today announced full-year financial results to 30 June 2018, demonstrating continued positive momentum.

CNI FY18 results wrap

Centuria Capital Group CEO, John McBain talks to Rachael Jones from Finance News Network on the company’s FY18 performance.

Read the full transcript

Rachael Jones: Hello. I’m Rachael Jones for the Finance News Network. Joining me today from Centuria Capital Group Limited (ASX:CNI) is Group CEO John McBain. John, welcome back.

John McBain: Thank you, Rachael.

Rachael Jones: Now, Centuria Capital is a fund manager with a 20-year track-record. Can you tell me a little bit about the group?

John McBain: Yes, Centuria Capital is an ASX listed fund manager, with $4.9 billion in assets under management (AUM), and our stock code is “CNI”. Over a 20-year period, we have not only produced attractive investor returns in our managed funds, but also — and I’m very proud to say — in Centuria Capital itself.

We’re best known for our listed and unlisted property funds, and these include two real estate investment trusts with over $2 billion in assets under management, a very strong unlisted property funds business with $1.9 billion in assets under management, and also an investment bond business run under the brand “Centuria Life”.

The investment bonds are tax-effective investment vehicles which generally invest outside the property area. They offer unique benefits to a growing client base. Today, this business has nearly 90,000 customers and $900 million in assets under management in its own right.

Rachael Jones: Thanks, John. Now, I understand the group is pleased with the results for the 12 months up until 30 June. What were the highlights?

John McBain: We had a fantastic 2018 financial year. Our operating net profit after tax exceeded $45 million dollars. Our operating earnings per security at 16.3 cents was above guidance. And our distribution was on guidance at 8.2 cents per security, up 9% from 2017.

Total shareholder returns were 23%, and this is the second year that they’ve exceeded 20%.

Rachael Jones: Now, John, what do you consider to be the main drivers of Centuria’s performance?

John McBain: There were three main drivers. We had extremely strong growth in assets under management of 29%. Within this result, we had $1.1 billion in organic property acquisitions and revaluations, up 30% on the previous year, and a 12.5% growth in investment bond assets to $900 million.

In addition, unlisted property performance fees were $25.8 million pre-tax for the period.

And finally, we delivered on our planned growth in recurring revenues, up to $67 million, 75% increased since 2017.

Rachael Jones: Now, can you tell us a little bit more about the business in more detail, starting with the property funds management?

John McBain: Property is a $4 billion division led very capably by Jason Huljich. Jason is a Centuria founder with a 20-year track record, and he’s director of Centuria Capital, and has been since 2007.

Centuria Property is now a nation-wide investment platform, and in 2018 we launched three new major unlisted property funds, established the open-ended, unlisted Centuria Diversified Fund, and we grew our two listed real estate investment trusts, CMA and CIP, to $2.1 billion in assets. Both of these REITs are ASX 300 listed.

We also increased property co-investments to $278 million, with a 19.9% stake in each REIT.

Rachael Jones: And how about the investment bonds management?

John McBain: We’re the fourth-largest player in this sector, and this represents an 11% share of a $7.6 billion Australian market. We’re currently investing heavily in this business. We believe it’s an attractive alternative to superannuation for many Australians now not permitted to contribute further to their superannuation balances.

Rachael Jones: And finally, John, what is the outlook for Centuria for the first half of 2019?

John McBain: We believe the low interest rate environment will be sustained, leaving investors hungry for quality, well-yielding investment opportunities. One of the unique factors underpinning Centuria’s success is our extremely strong and loyal investor base, built over 20 years. We are oversubscribed to a significant extent each time we offer a new fund.

So, at Centuria we’re extremely confident of our ability to continue to deliver new fund opportunities to our clients in 2019 and beyond. This should satisfy their requirement for quality investment funds, but also increase Centuria Capital’s assets under management as a group.

During 2018, Centuria Capital grew its market capitalisation to $430 million, as I previously stated, whilst still providing over 20% in total shareholder returns.

We aim to continue this growth, seeking ASX 300 inclusion as our capital base expands.

From a capital markets perspective, we have a very strong, lowly geared balance sheet, and whilst we never lose focus on organic growth, we have a reputation for taking corporate transaction opportunities where these make sense. This will continue.

Rachael Jones: John McBain, congratulations on your results, and thanks for the update.

John McBain: Thank you, Rachael.


CNI FY18 results video

Centuria Capital Group CEO, John McBain presents the company’s FY18 results.

FY18 Highlights

Operating Earnings and Distributions

  • Operating NPAT1 $45.1m (FY17 $15.5m)
  • Delivered operating EPS2 of 16.3 cps, guidance range 15.8–16.2cps
  • Recurring revenue $67.0m (FY17 $37.8m)
  • FY18 distribution 8.2 cps, 9.3% increase on FY17

Total Returns:

  • CNI total securityholders return 23.3%3 (FY17 24.3%)
  • Co-investments return 13.0%

FY18 AUM Growth

  • AUM increased 29% to $4.9bn
  • Includes property acquisitions $0.8bn, and revaluations $0.3bn
  • Investment Bonds AUM growth 12.5% to $0.9bn

Capital Management

  • Equity raised $98.6m
  • Corporate bonds issuance $25m
  • Strong balance sheet, operating gearing ratio 11.1%4