Ann: Memorandum of Understanding with NAB Financial Planning, page-128

Hey mate,

Yep definitely get what you're saying but I found too many unknowns in trying to calculate from bottom up.
I decided to go from the top because I could find current figures from NAB in their 2016 Annual report.

Instead of looking at NAB's revenues, I directly wanted to look at their operating expenses.
This is where our money is going to come from.
However, I got this value from the Wealth Management's contributing share to the overall group profit figures.
i.e.(wealth management contributed 5.5% to overall profits, therefore must have contributed 5.5% to overall operating expense)

I continued on with the assumptions as follows:


1. We save 40% in all back office costs.
2. I take back office expenses as 1/3 of total operating expenses.
3. We should therefore make revenue in the ballpark of 60% of their current back office portion of operating expenses.
4. Take a bit off because we won't get their entire back-office expenses as revenue

You are totally correct in saying that this could be way off the mark.
Especially when you look at these figures in terms of the number of SOA's this would amount to.
It boggles the mind.

However, the saving grace is the "40% reduction in costs figure".
You wouldn't say this as a business if you couldn't do it.
You wouldn't do this as a business if you weren't grabbing close to the full 60% that's on offer.
In my opinion obviously.

I believe there's more to our offering than SOA's etc. That's really why I didn't want to model in terms of this.
We are essentially offering up whole back offices for 60% of the current costs.

What I imagine is that our services will be priced as such if we take over the work.
Again, large optimistic assumption that I've made.

Our own operating expenses is an interesting one and I agree that the margin I'm looking at could be rather high.
However, I also think that it might not be once the full rollout occurs.
This one is a complete guess that essentially has a stab in the dark.
My figures are optimistic.


As well as you are, really welcome differing points of view/feedback.
As an investor, I certainly don't want to be making decisions on over-inflated decisions.

My best guess would be to use this as an optimistic guide to what we currently have.

@Glyco, I agree with the basics of your calculations. Once we know the breakdown of where these revenues/expenses are coming from, modelling will be much more accurate.


Cheers guys