CF1 (ASX) Ann: Memorandum of Understanding with NAB Financial Planning

Originally posted by Cheeky_Messiah ↑

This is an outstanding announcement that you should all be celebrating with gusto.
Provided, that is, you are still holding.

Now, let's dive into having a look at what's progressed over the last couple of days.
Sentry looking to sign on for a full rollout and NAB on the trial list.

Right now we are at ~ 7c with a MC of ~$60 mill

In my opinion, this hasn't taken into account the Sentry or the NAB deals.
Don't substitute a share price for what the value of this stock is.
Traders always know the price of a stock but never a value.
Poor dears.

So NAB is saying that they have 200 practices and around 400 planners. Sentry about the same.
Right now we haven't got the tools to calculate what this is worth without too many assumptions.

Instead, I've looked at the books of NAB's Wealth Management business from their 2016 Annual report.
Easy enough to find on Google.

For that year, the Wealth Management (WM) business made $356M of NAB's $6483M cash profit.
This is 5.5% attributed to the overall cash profit by WM.

Overall Operating Expenditure from the bank was quoted at $7438M.
As an exercise if we take the 5.5% portion from this that should theoretically line up with the cash profits, then the WM group had operating expenses of $410M.

This is the figure that Intiger will be drinking from, so to speak.

Breaking the office into expense ratios, I feel it's fair to assign a third of this figure to back office expenses that we will directly affect. If you'd like to do your own calculations, you can change this ratio accordingly.

This gives a figure of ~$137 M that Intiger will be affecting directly with our services.

Now, we state that by using Intiger, we will save NAB 40%.
This says to me that we will charge 60% of the current back office figure by the time the complete roll out is made.

60% of ~$137M is $82M (per year)

Now these figures need to be looked at in terms of portions captured and contingency figures.

If we say that NAB will only outsource 50% of its back office expenses, then the figure become $41M (per year)

So once we roll this out completely with NAB, we should be making ~$40M per year alone.
A smart way to compare the deals would also say that Sentry is of similar size given their planner and practice numbers.

If Sentry completely roll their solution out, then we'll be looking at around $80M per year.

That could be a little optimistic so I'll assign another 60% factoring to make sure I haven't missed anything:

0.6*80 = $48M per year.

Of that money, we want to find the associated NPAT.

Right now, our expenses are minimal due to having very few personnel to pay.
Expenses seem to be ~$1.2M per year.
I imagine it will triple/quadruple once we are fully up and running so I'll assume $5M

A crude model brings the operating margin to ~$43M per year from operations involving NAB and Sentry.

If we take NPAT as a crude 70% of this figure, then we're left with:

0.7*43 = ~$30M (per year)

Apply whichever multiple you wish to this one in order to find the share price.

The biggest note should be that we are all of a sudden about to be very cash flow positive with many sources to spend the money in order to expand.
We also have many shareholders that deserve the benefit of a regular dividend from the cash profits.

Great Times ahead.

And Sower, give it a rest brother.

Expand

Thanks CK, you obviously have put in a lot of thoughts.

Let me have a go with a simplistic model:

1. NAB
200 branches (wholly owned by NAB), @$100k to $200k each

=$20m to $40m revenue

+

2.Senrty
100 , out of 220 branches , @$100k to $200k ea

=$10m to $20m revenue

3 .Sub Total

= $30m to $60m , excluding KLIP online,

+ approx 10% KLIP , $3m to $6m

=$33m to $66m

4. Median revenue" = $45m to $50m

5. Net Margin

less"
Opre & misc costs , ($12m to $15m)

Net Margin = $33m to $45m ,

+

5 . Future MoUs, pilots' immediate revenues , etc

Aimo . Cheers

----------------------------------------------
Think outside the round Box. Dyor
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(20min delay)
Last 2.6¢		Change 0.000(0.00%)		Mkt cap ! $14.76M

Open	High	Low	Value	Volume
2.6¢	2.6¢	2.6¢	$5.98K	230K

Ann: Memorandum of Understanding with NAB Financial Planning, page-115

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