Sargon

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1HFY20 Preliminary Results &
Analysis

CONFIDENTIAL

29th January 2020

1 CONFIDENTIAL - NOT FOR DISTRIBUTION

 Important notice
This presentation has been prepared by Sargon Capital Pty Ltd (“Sargon“ or “Company”). It does not purport to contain all the
information that an investor may require in connection with any investment decision relating to the Company. You should not treat
the contents of this presentation, or any information provided in connection with it, as financial advice, financial product advice or
advice relating to legal, taxation or investment matters.

No representation or warranty (whether express or implied) is made by the Company or any of its officers, advisers, agents or
employees as to the accuracy, completeness or reasonableness of the information, statements, opinions or matters (express or
implied) arising out of, contained in or derived from this presentation or provided in connection with it, or any omission from this

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presentation, nor as to the attainability of any estimates, forecasts or projections set out in this presentation.

All currency amounts are in $AUD unless stated otherwise.

This presentation is provided expressly on the basis that you will carry out your own independent inquiries into the matters contained
in the presentation and make your own independent decisions about the affairs, financial position or prospects of the Company. The
Company reserves the right to update, amend or supplement the information at any time in its absolute discretion (without incurring
any obligation to do so).

Neither the Company, nor its related bodies corporate, officers, their advisers, agents and employees accept any responsibility or
liability to you or to any other person or entity arising out of this presentation including pursuant to the general law (whether for
negligence, under statute or otherwise), or under the Australian Securities and Investments Commission Act 2001, Corporations Act
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Nothing in this material should be construed as either an offer to sell or a solicitation of an offer to buy or sell securities. It does not
include all available information and should not be used in isolation as a basis to invest in the Company.

Forward-looking statements
This presentation contains reference to certain intentions, expectations, future plans, strategy and prospects of the Company. Those
intentions, expectations, future plans, strategy and prospects may or may not be achieved. They are based on certain assumptions,
which may not be met or on which views may differ and may be affected by known and unknown risks. The performance and
operations of the Company may be influenced by a number of factors, many of which are outside the control of the Company. No
representation or warranty, express or implied, is made by the Company, or any of its directors, officers, employees, advisers or
agents that any intentions, expectations or plans will be achieved either totally or partially or that any particular rate of return will be
achieved.

Given the risks and uncertainties that may cause the Company's actual future results, performance or achievements to be materially
different from those expected, planned or intended, recipients should not place undue reliance on these intentions, expectations,
future plans, strategy and prospects. The Company does not warrant or represent that the actual results, performance or
achievements will be as expected, planned or intended.
2 CONFIDENTIAL - NOT FOR DISTRIBUTION
 Pro forma Profit & Loss (1HFY20)
• Platform revenue
Platform revenue includes ordinarily
recurring revenues where
contractually, by law or by custom
revenue is highly repeatable and does
not need to normally be ‘re-won’ on a
regular basis. It is still exposed to
market volatility due to it generally
being based on AUM.
• Other revenue
Other revenue includes non-recurring
items such as client establishment,
fund setup and once-off revenues.
3 CONFIDENTIAL - NOT FOR DISTRIBUTION
• Employee expenses
$1.41m of one-off employee expenses
YTD are included due to termination
costs of non-continuing employees.
Employee count was higher in 1HFY20
than expected due to slower
integration phases. See page 8 for
longer term thinking on employee
costs.
• See page 7
• See page 7
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• Professional services expenses
$2.8m of one-off professional services
expenses YTD are included from
acquisition-related integration, legal,
accounting and tax costs.
Professional services expenses are still far
too high across the group and
management is reducing reliance on third
party advisers in 2HFY20.
• General, administration & other
$0.33m of non-continuing leases YTD are
included due to leases in Adelaide (Tidswell),
Sydney (Madison) and Melbourne (Diversa)
which are no longer used.
 Revenue analysis (FY20F)

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Revenue has been
Cumulative revenue YTD & FY20F
generally stable and
trending upward month- 80
on-month (adjusting for
60
market volatility) through
1HFY20 which was focused 40
on integrating 4 acquired 20
businesses in FY19 and
developing our sales and 0
marketing teams to
Forecast

Forecast

Forecast

Forecast

Forecast

Forecast
Statutory

Statutory

Statutory

Statutory

Statutory

Statutory

facilitate organic growth as

the pipeline is expanded
and converted following
Jul-19A Aug-19A Sep-19A Oct-19A Nov-19A Dec-19A Jan-20F Feb-20F Mar-20F Apr-20F May- Jun-20F
critical regulatory reforms
20F
in late FY19. Platform revenue Other revenue

4 CONFIDENTIAL - NOT FOR DISTRIBUTION

 Pipeline analysis (FY20F)
# Clients wins expected per month to end FY20

10

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0
Feb-20F Mar-20F Apr-20F May-20F Jun-20F

RE/CT clients onboarded RSE clients onboarded Advisers onboarded

$million AUM added per month from client wins

4,000
3,000
2,000
Commercial matters:
1,000
• Sargon targets RSE and CT/RE clients that can generate
$800,000+ per annum in revenue ($70k per month) and advice 0
clients that can generate $200,000+ per annum in revenue Feb-20F Mar-20F Apr-20F May-20F Jun-20F
($17k per month).
$ revenue added per month from client wins
• These revenues result from a blend of minimum fees, activity
fees, setup, scale (AUM) and other fees. 1.0

• RSE avg. revenue is 6-7 bps p.a. Avg. fund target size is $1bn.
0.5
• CT/RE avg. revenue is 2-3 bps p.a. Avg. fund target size is $2bn.
-
• Advice revenue is approx. $200,000 per practice (a blend of
Feb-20F Mar-20F Apr-20F May-20F Jun-20F
minimum fees and % of practice fees)

• Whilst averages are useful for high-level analysis, clients and

fees vary and it Is helpful to think of Sargon having a bi-modal
distribution of large clients (high AUM, lower bps fees) and
small clients (low AUM, higher bps fees) as well as high-velocity
clients (many product changes & growth initiatives) vs. low-
velocity.
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 Concentration in FY19A
# Client FY19 revenue % total Jun-19 FUM % total
1 Corporate Trust 3.1 8.5% 2,111.7 3.9%
2 Superannuation 2.4 6.7% 789.0 1.4% Client concentration is expected to
3 Corporate Trust 1.5 4.3% 59.6 0.1% diminish significantly over time as
the organic sales effort starts to
4 Superannuation 1.3 3.6% 5,903.3 10.8%
kick-in early 2HFY20.
5 Superannuation 1.2 3.3% 2,844.9 5.2%

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6 Superannuation 1.1 3.1% 84.9 0.2%
7 Superannuation 1.0 2.8% 221.8 0.4%
8 Superannuation 0.7 2.0% 44.2 0.1%
YTD revenue composition by country
9 Superannuation 0.7 1.9% 186.0 0.3%
Australia 97.6%
10 Superannuation 0.5 1.4% 1,261.5 2.3%
Hong Kong 1.9%
11 Superannuation 0.5 1.4% 259.4 0.5% New Zealand 0.5%
12 Superannuation 0.4 1.0% 32.2 0.1%
13 Corporate Trust 0.3 0.9% 3.8 0.0%
14 Corporate Trust 0.3 0.9% 547.6 1.0% YTD revenue composition by segment
15 Corporate Trust 0.3 0.8% 926.6 1.7%
16 Superannuation 0.3 0.8% 22.5 0.0% 5%
17 Corporate Trust 0.3 0.7% 15.5 0.0% 20%
Super & KiwiSaver
18 Corporate Trust 0.2 0.7% 662.9 1.2%
CT + RE
19 Corporate Trust 0.2 0.7% 816.5 1.5%
21% Advice & Robo
20 Superannuation 0.2 0.7% 459.0 0.8% 54%
21 Corporate Trust 0.2 0.6% 813.9 1.5% Other
22 Superannuation 0.2 0.6% 0.0 0.0%
23 Corporate Trust 0.2 0.6% 467.3 0.9%
24 Superannuation 0.2 0.6% 422.0 0.8%
25 Corporate Trust 0.2 0.6% 302.3 0.6%

Subtotal 17.8 31.1% 19,258.5 35.3%

Total Sargon Group 57.2 100.0% 54,541 100.0%

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 Employee analysis (FY20 Normalised)

• Employee expenses

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The difference between this
number and the employee
expenses in the 1HFY20A P&L
on page 3 is loading above
salary + super such as work
cover, payroll tax, etc.

Integration activities Board consolidation

A significant number of transitional staff are employed 15 current NEDs are being reduced to 9 as part of a
by the company(either temporarily retained after board rationalisation process to be announced in early
acquisition, or hired specifically) to assist with licence February 2020.
migration (then cancellation) and business integration.

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 Employee analysis
Compensation Distribution (1HFY20) n=173
80

70
Pay distribution
60

50 Due to efficiency gains from

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automation and ongoing
40
rollout of STC to existing
30 clients, Sargon is able to fully
optimise veteran experienced
20
staff for high-value tasks and
10 hire lower-paid, more junior
0 employees to fulfil baseline
Less than $80,000 to $120,000 to $160,000 to $200,000 to $240,000 to More than
system processing functions.
$80,000 $120,000 $160,000 $200,000 $240,000 $280,000 $280,000
Longer-term, Sargon expects
to reduce total headcount in
its existing markets, with
Compensation Distribution (FY20F) n=130 staff comprising:
50
45
• a small group of software
engineers and risk,
40
regulatory & compliance
35
experts;
30 • a sales and business
25 development team located
20 in key financial centers;
15 and
10 • lower-skilled processing
5
performed by a base of
junior support staff.
0
Less than $80,000 to $120,000 to $160,000 to $200,000 to $240,000 to More than
$80,000 $120,000 $160,000 $200,000 $240,000 $280,000 $280,000

8 CONFIDENTIAL - NOT FOR DISTRIBUTION

 Forecast scenarios
Fully-costed fixed cost structure
Sargon’s standing costs across its
6 offices and fully integrated
product & technology team,
governance, risk and compliance
team, legal team, finance and
operations teams means that the
vast majority of revenue growth in
FY20F and sales pipeline drops to
the bottom line. The exception is
Sargon’s advice business that has
an increase in distribution costs for
an increase in revenue.
9 CONFIDENTIAL - NOT FOR DISTRIBUTION
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Revenue growth expected in second half Expenses fixed & flat
FY20 revenue forecast 43% of total year revenue to be Forecast assumes mostly fixed
generated in 1H, with 57% expected in 2H, driven by: expenses over the year due to
the business being fully-costed
• sales and marketing efforts that ramped in late 1HFY20; and technology driven to
• majority of M&A integration now being complete; and support anticipated revenue.
• regulatory reforms being clarified for industry
participants and clients.
Primary risk to 2H revenue forecast is timing of client
purchasing decisions, which can be slow and hard to predict,
particularly in the retirement funds space (i.e. RSE,
KiwiSaver).
 Balance Sheet as at 30th Dec 2019
Balance Sheet 30 Dec 2019 30 June 2019
Current Assets
Cash at bank • Cash at bank
59.6 40.5
Trade & other receivables 12.0 17.0
Cash at bank approx. $40mm higher than

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Total Current Assets 71.5 57.5 expected due to a CT transaction with client funds
Non-Current Assets
held in our accounts at the end of the half. Trade &
Property, plant & equipment 1.4 0.8 other payables up by same amount. Cash includes
Investments - Sequoia 5.3 3.9 restricted cash for regulatory capital purposes.
Intangibles 38.0 37.6
Goodwill on consolidation 88.2 88.2
Total Non-Current Assets 132.9 130.5
Total Assets 204.5 188.0

Current Liabilities • Trade & other payables

Trade & other payables 54.0 22.6
Payments to vendors 36.1 30.7 See above.
Secured Loans 1.6 6.0
• Unsecured Loans
Total Current Liabilities 91.8 59.3
Non-Current Liabilities
Will shortly be converted to equity.
Payments to vendors 4.7 10.1
Unsecured Loans 5.5 0.0
Secured Loans 40.8 51.6 • Secured Loans
Total Non-Current Liabilities 50.9 61.7
Total Liabilities 142.8 121.0
Comprises $30mm loan to Westpac and $10mm
loan to TIM.
Equity
Share Capital 110.0 110.0
Accumulated losses (48.3) (42.9)
Total Equity 61.7 67.0

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 FY19E statutory to pro forma
Revenue bridge (A$ millions)
Statutory adjustments Pro forma adjustments

70 4.9
3.8 0.6 0.7 (0.4)
60 67.2 66.8

50 57.2

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40
FY19 statutory AET Heritage Decimal Diversa FY19 adjusted Disc. Operations - FY19 pro forma
revenue
1
(4 months) (6 months) (6 months) statutory revenue Heritage Personal revenue 1

Trust

EBITDA bridge (A$ millions)

Statutory adjustments Pro forma adjustments
15 5.7 1.4 0.1
10
1.3 12.1
5 5.0 0.6

- 2.8 2.1
(1.9)
(4.4)
(5) (1.0) (1.5)
(10)
FY19 AET Heritage Decimal Diversa FY19 Savings from Disc. Product One-off Diversa Public FY19 pro
statutory (4 months) (6 months) (6 months) adjusted realised and Operations - development transaction company forma
EBITDA statutory implemented Heritage expense costs and other EBITDA
EBITDA synergies Personal
Trust

• Statutory adjustments reflect the full-year impact of
acquisitions during the period.
• Acquisition cost-out synergies predominantly relate to
headcount reduction, occupancy and compliance costs
resulting from duplication of roles, offices and licensing
post-acquisition.
11
• Product development expenses relate to non-capitalised
costs across technology and product development including
Sargon’s unique Small APRA Fund (SAF) product.
• One-off transaction costs are the costs associated with
acquisitions during the period.
• Diversa’s full-year impact has been added, as it was
completed in late June 2019.
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