INVT GROU : INV - June 2022 Business Update

For personal use only

27 July 2022

Business update - quarter ending 30 June 2022

HIGHLIGHTS

• Cash at bank of $8.08m at 30 June 2022 compared to $3.76m at 31 March 2022. AWI Ventures sold for $3.2m.
• Funds management fees continued to grow in the June quarter, up 5.9% to $743k over the prior quarter (Q3 FY2022)
  o Investor accounts on our PMA platform increased 1.4% to 2,513 over the prior quarter.
  o Funds Under Management (FUM) declined by 9% over the quarter to $470 million at 30 June 2022. The ASX All Ordinaries declined by 13% over the quarter and Intelligent Investor Active Exchange Traded Funds accrued cash distributions for FY22 of 7% of Active ETF FUM at 31 March 2022.

	500	InvestSMART FUM
	400		42% annual growth
		-9% decline over the quarter
FUM ($m)	300
200
	100
	0
	Active Growth	Active Income	Active Ethical	Capped Fee/Passive

For personal use only

• Subscription income from Intelligent Investor and Eureka Report declined 2.1% to $1.31 million in Q4 compared to the prior quarter.
  o Subscribers declined 2.3% to 10,464 compared to the prior quarter.

Digital wealth platform continues to deliver growth

InvestSMART Group Limited (InvestSMART or the Company) (ASX: INV), a leading Australian digital wealth and advice platform providing low-fee investment solutions, is pleased to provide a business update for the June ended quarter, Q4 FY2022.

FINANCIAL RESULTS

	FY2022 Q4	FY2022 Q3
Financial Results - Operating Income Summary*	June quarter	March quarter	%
	$	$
Income
Funds management fees	743,384	701,889	5.9%
Subscriptions	1,312,509	1,340,413	-2.1%
Commissions income - Insurance^	372,991	320,502	16.4%
Other income	3,508	9,234
Total Operating Income	2,432,392	2,372,038	2.5%
Cash at Bank (end of period)	8,080,120	3,758,818

* Quarterly results are prepared by management and are unaudited. Operating income excludes gain on disposal of AWI Ventures.

Total income increased by 2.5% to $2.43 million (Q4 FY2022 v Q3 FY2022). In our two primary businesses, income from funds management fees grew 5.9% to $743,384 in Q4 FY2022 vs $701,889 in the prior period. Subscription income declined 2.1% to $1.31 million in Q4 FY2022 v $1.34 million in Q3 FY2022. Commissions Income from insurance increased by 16.4%. The quarterly increase is seasonal and within management's expectations.

Page 2

DIVISIONAL COMMENTARY

Funds Under Management (FUM)

For personal use only

FUM declined during the quarter to $470 million at the end of June, a 9% decrease on the prior quarter (Q3 FY2022). The overall decrease should be viewed against a backdrop of a market fall of 13% (as measured by the ASX All Ordinaries Index) and cash distributions payable for the Intelligent Investor Active ETF Funds (equal to 7% of the FUM within these funds at 31 March 2022).

The chart below shows growth in FUM across our product suite (see About InvestSMART at the end of this announcement for further details).

	500	InvestSMART FUM
	400		42% annual growth
			-9% decline over the quarter
FUM ($m)	300
200
	100
	0
	Active Growth	Active Income	Active Ethical	Capped Fee/Passive

		Funds management fees			PMA accounts		2,513
				0.743		2,600	2,478
	0.75
			0.702		2,400	2,332
			0.680
	0.70
					2,200
	0.65					1,963		+1.4%
					2,000
	0.60	0.566		+5.9%
millionsAU$		accountsof	1,800	1,572
0.45
	0.55					1,600
	0.50	0.477				1,400
					Number	1,200
	0.40				1,000
	0.35					800
	0.30					600

Jun-21Sep-21Dec-21Mar-22Jun-22	Jun-21	Sep-21	Dec-21	Mar-22	Jun-22
Quarter ended			As at

InvestSMART PMA Platform

The InvestSMART Professionally Managed Accounts (PMA) Platform, launched in November 2018, continues to receive monthly net fund inflows. A PMA account consists of ETF Portfolios on the platform under a capped fee model. The total number of PMA investment accounts increased by 1.4% to 2,513 in the quarter, up from 2,478 at 31 March 2022.

Page 3

Intelligent Investor ASX listed ETFs

For personal use only

Total funds under management (FUM) across Intelligent Investor funds (under a variable fee model) decreased 11% to $232 million from $261 million at 31 March 2022. The ASX All Ordinaries declined by 13% over the quarter and Intelligent Investor Active Exchange Traded Funds will pay cash distributions of 7% of Active ETF FUM at 31 March 2022.

Active ETF Funds received positive net inflows during the quarter driven by completion of a secondary offering in the Intelligent Investor Australian Equity Growth Fund (ASX: IIGF) raising $11m.

Subscriptions

Subscription income from fee paying subscribers to our Intelligent Investor and Eureka Report content-driven products declined 2.1% on the prior quarter to $1.31 million.

Total subscribers declined 1.4% to 10,464 compared to the prior quarter of 10,710. Subscription income has increased by 8% in FY2022 over the prior year. The increase is due to an increase in prices for our subscription products from 1 July 2021 (see Beat the price rise article).

Subscription Income

Subscribers

	1.4			1.340		11,000	10,811	10,850	10,860	10,710
			1.317
		1.309	1.311		10,500				10,464
	1.3	1.250
millionsAU$				accountsof
			-2.1%	10,000				-2.3%
	1.2
						9,500
	1.1				Number	9,000
	1.0					8,500

Jun-21	Sep-21	Dec-21	Mar-22Jun-22	Jun-21	Sep-21	Dec-21Mar-22Jun-22
		Quarter ended			As at

Commissions Income - Insurance

Commissions Income - Insurance increased by 16.4% compared to Q4 FY2022. The increase is seasonal and within management's expectations. Compared to the prior comparative period (June 2021 quarter) commissions decreased by 6.5%. Attrition within the Insurance Commissions book is expected to continue.

PRODUCTS AND SERVICES

InvestSMART launched Fundlater in September 2021 (click this link for the announcement). Fundlater and Bootcamp are designed to appeal to a younger demographic. Fundlater helps first time investors invest in a $10,000 diversified portfolio of exchanged traded funds. The investor deposits $4,000 and is provided with a $6,000 loan.

The EurekaAsset-BackedLoan Fund (EABL) was launched in April 2022. EABL provides investors with access to income by investing in loans provided to Fundlater clients. The objective of EABL is to provide income for investors backed by quality assets. It is envisaged that over time EABL will grow to invest in assets that are outside, but similar to, Fundlater loans.

A secondary offer was completed for the Intelligent Investor Australian Equity Growth Fund (ASX: IIGF) one of three ETFs operated under InvestSMART's Intelligent Investor brand. The offer raised $11 million.

Page 4

FUND PERFORMANCE

For personal use only

InvestSMART PMA Platform

The latest quarterly report and performance of each of InvestSMART's nine investment portfolios can be viewed here. Click 'learn more' to view each portfolio.

Intelligent Investor ASX listed ETFs

1. Intelligent Investor Australian Equity Income Fund - ASX: INIF
2. • Latest quarterly reporthere
3. Intelligent Investor Ethical Share Fund - ASX: INES
4. • Latest quarterly reporthere
5. Intelligent Investor Australian Equity Growth Fund - ASX: IIGF
6. • Latest quarterly reporthere

CORPORATE

Sale of AWI Ventures

InvestSMART disposed of its entire holding in AWI Ventures in May 2022 for a cash consideration of $3.2 million. The disposal concludes InvestSMART's process of disposing of ventures entities where liquidity events arise. View ASX announcements on 11 May 2022 and 13 May 2022 to learn more.

Interview with InvestSMART CEO

Alan Kohler, Editor of the Eureka Report, interviewed InvestSMART CEO, Ron Hodge, on 4 May 2022. The interview can be accessed at www.eurekareport.com.au/investment-news/investsmart-plans-eureka-fund-to-back-fundlater-growth/151240.

Full year results

The audited Financial Report for the year ended 30 June 2022 is expected to be released on 25 August 2022.

OUTLOOK

InvestSMART Managing Director, Ron Hodge, said "Over the last few years we have changed our business model considerably and it was pleasing to see funds management fees continuing to grow in the last quarter. On the flip side it was disappointing but not surprising with current market conditions to see our FUM growth over the past quarter has slowed."

This document has been authorised for release by order of the Board.

For further information or comment, please contact Paul Clitheroe, Chairman, or Ron Hodge, Managing Director and CEO, at InvestSMART Group on 02 8305 6000.

Page 5