Sequioa Financial (ASX:SEQ) - Management Call #1

Call with Garry Crole

1. If you were to start over (or start a competitor) which part of the business would be the most difficult to replicate?

   • diverger - hard to build training business again - win market share would be hard

2. If you had 1 bullet, which competitor would you shoot with it?

   • insignia financial - product distribution allows them to be quite profitable

3. Who is your favorite customer and why?

   • adviser, super fund trustee, accountancy practice.

   • accountancy practice is perfect client - can be licensed, refer to adviser, set up companies, outsource smsf administration. 20k+ w/200k employees.

4. What is your view on leverage?

   • wants to remain relatively underlevered unless the right thing comes around.

5. What's one aspect of your business that keeps you up at night?

   • government keeps me up at night - continue to make life difficult for adviser.

   • franking credits - knows people such as geoff wilson at WAM etc. that speak in his ear about them cutting it, so wants to use his credits.

   • he doesn't see any real risks for the business at all

6. What do other investors never ask that they should?

   • I said the question wrong, I said "what do investors ask that they shouldn't" lol.

   • pay more dividends - because i don't want to stay small.

7. What has the company done to widen its moat over the past year?

   • broaden services to advisers

8. If I had sufficient capital, what would stop me from competing head-to-head with you in one year?

   • breadth of services - need advisers existing.

9. If you had unlimited capital- what initiatives would you take on that you are currently not able to?

   • buy diverger (keep 1 afsl and add training/edu into our offer, use managed accounts) and count (close business and take advisers)

10. What other CEO's do you look up to?

    • impressed with diverger ceo

    • impressed with amp ceo

    • impressed with former ceo of westpac - gail kelly

11. What are the 2-3 key metrics that management looks at to drive the business?

    • operating cash flow

    • some form of moat - difficult in advice space, provide all services adviser might need.

    • staff turnover - relationship business. 35 of the 40 of the advisers that left last year went on to retire

12. Do you have any good book recommendations?

    • roger montgomery - valueable (Not impressed with record but good sound fundamentals)

    • another audibook he was going to share via email.

13. What do you see as the biggest near-term and long-term risks to your business?

    • biggest risk is takeover

    • insignia - likely

    • hub24 - building their distribution via. equity stakes make a lot of sense.

14. What's your philosophy on buybacks and dividends?

    • dividends - if someone were to buy out morrissons, he would use the cash inflow to move to 70% payout ratio right away rather than payout a special dividend etc.