Diverger : 2022 Annual Report

onlyANNUAL REPORT

For the year ended 30 June 2022

useDIVERGER LIMITED

ABN 48 111 695 357 personalFor

DIVERGER LIMITED

ABN 48 111 695 357

CORPORATE DIRECTORY

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Directors

Peter Brook	Chairman (appointed 17 March 2022), Non-executive Director (appointed 20 December 2021)
Nathan Jacobsen	Managing Director
Grahame Evans	Non-executive Director (Executive Director up until 30 June 2022)
Carl Scarcella	Non-executive Director
Anthony McDonald	Non-executive Director
Kevin White	Chairman (resigned 17 March 2022)

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Greg Hayes

Non-executive Director (resigned 26 August 2021)

Joint Company Secretaries

Mark Licciardo

Michael Harris

Mertons Corporate Services Pty Ltd

Level 7, 330 Collins Street

Chief Financial Officer and Joint Company Secretary

MELBOURNE VIC 3000

Diverger Limited

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Principal registered office in Australia

Level 7, 115 Pitt Street SYDNEY NSW 2000

Communications

Telephone:	1300 655 695
Mail:	Level 7, 115 Pitt Street SYDNEY NSW 2000
Email:	[e-mail]

Share Registry

Link Market Services Limited

Locked Bag A14

Sydney South NSW 1235

Shareholder Enquiries: 1300 554 474

Shareholders requiring clarification of holdings or requesting changes of name or address should contact Link Market Services Limited directly on the above number, or email [e-mail].

Bankers		Auditors		Legal Advisers
Westpac Banking Corporation		BDO Audit Pty Ltd		Colin Biggers & Paisley
360 Collins Street		Level 11, 1 Margaret Street		Level 42, 2 Park Street
MELBOURNE VIC 3000		SYDNEY NSW 2000		SYDNEY NSW 2000

Annual General Meeting

Diverger Limited's Annual General Meeting will be held at 11.30am (Sydney time) on 11 November 2022 at Rooms

5-8, Level 11/1 Margaret Street, Sydney, NSW, 2000. The AGM will be held in hybrid format whereby there will be a choice to attend in person or via virtual link that will be provided with the Notice of AGM. The Notice of AGM and related Proxy Form will be available on the Company's website on or before 7 October 2022.

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ANNUAL REPORT 2022 DIVERGER LIMITED ABN 48 111 695 357

CONTENTS

onlyChairman and Managing Directors' Report

Directors' Report

Auditor's Independence Declaration

useFinancial Statements:

Consolidated statement of comprehensive income

Consolidated statement of financial position

Consolidated statement of changes in equity

personalConsolidated statement of cash flows

Notes to the consolidated financial statements

Directors' Declaration

Independent Auditor's Report

Additional Australian Securities Exchange Information

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ANNUAL REPORT 2022

DIVERGER LIMITED

ABN 48 111 695 357

CHAIRMAN AND MANAGING DIRECTOR'S REPORT

onlyThe Year in Review

Dear Shareholders,

On behalf of the directors, we are pleased to present you the 2022 Annual Report for Diverger Limited (Diverger or the Company).

We are pleased to report that the refocussed efforts of the Diverger team has delivered strong results over the financial year to 30 June 2022. In particular we want to draw your attention to:

FINANCIAL HIGHLIGHTS:

use	• Underlying Profit (normalised EBITA) from continuing operations up 11% to $7.06m (2021: $6.38m)
•	Increased Net Revenue by 9% to $30.15m (2021: $27.71m)
	• Statutory EBITA up 18% to $6.56m, with strong alignment to cash generated from operations
	• Net Profit After Tax up 26% to $3.75m (2021: $2.98m)
	• Materially improved return to shareholders, with Earnings Per Share up 35% to 9.47 cents and Return on Equity up
		45% to 9.4%, the latter more than doubled in two years
personal	• Capacity to invest in the growth strategy, with $2.5m net cash after investing $3+m of capital

These results have been achieved in a competitive operating environment and while progressing our strategic agenda, which this year included acquiring full ownership of a key profit contributing subsidiary, our first adviser equity investment for practice growth, a company rebrand and corporate entity rationalisation, investment into technology capabilities and launch of four new services to our target market of financial advice and accounting firms.

Diverger believes that there is a significant growth opportunity in its market where the demand for financial advice remains under serviced, primarily through adviser population constraints and cost to serve. A core plank of our strategy is to provide solutions to these issues. In addition to our methodical execution of the strategy, Diverger looks to assess and act on opportunities to accelerate growth and take advantage of market dynamics. In this light Diverger submitted a Non Binding Indicative Offer predicated on several assumptions, for the full acquisition of Centrepoint Alliance Limited, which would have resulted in a very significant and commanding position in the market. The proposal was through a scheme of arrangement, a co-operative means to consolidation. To facilitate that process we obtained support from a major Centrepoint shareholder and an interest in 19.99% of Centrepoint through a call option. Diverger saw the opportunity to have a commanding position in our section of the market which would facilitate the growth in services provided, scale efficiencies and margins. At the time of writing, the Board of Centrepoint has rebuffed our proposal. This outcome does not

Fordiminish Diverger's desire for growth both organically and through acquisition where the targeted medium to long term returns to shareholders are compelling. In that regard the Diverger Board has introduced a Capital Management Plan to guide the consideration of development opportunities and its capital deployment.

During the past financial year, Diverger has continued to invest in its proposition, adding a number of internal resources to provide additional capabilities including HR and finance support, staff training and enhanced incentive and retention schemes. The same approach has been taken to the expansion of services which has seen the launch of the Knowledge Shop education platform in the advice market and the launch of a governance offer to self-licensed practices.

Customer service sits at the heart of our strategic intent to be a market-leading provider of services to advisers across wealth and accounting. Our focus is to ensure that Diverger is a relevant part of the industry. Through our strategic technology relationships and expanding services and capabilities, we are focused on developing innovative technology and data solutions to enhance Diverger's efficient delivery of cost-effective solutions and services to advisers, accountants and their clients.

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ANNUAL REPORT 2022

DIVERGER LIMITED

ABN 48 111 695 357

CHAIRMAN AND MANAGING DIRECTOR'S REPORT

(continued)

onlyMoving forward we expect ongoing strong support from our collective of advice networks as we work to demonstrate value

to advisers and to bring to them innovative market solutions to remain competitive amidst ongoing industry transformation. This value was recently recognised through an independent survey of Adviser satisfaction by CoreData research, with advisers in GPS Wealth reporting satisfaction above the industry average and a net promoter score of 30, well above the industry average of 20.

The year to June 2022, has been another year of growth for Diverger adding to a multi-year momentum of shareholder return on equity. We are pleased that our strong results and our expectations for the year ahead have allowed the Board to

	increase the previously announced final dividend to 3.5 cents per share, consistent with our new Capital Management
	Policy. Record and Payment dates for the dividend remain unchanged. Going forward, we continue our strategy to extend
	our industry relevance through a quality, sustainable business with high recurring revenue and strong cashflow alignment
	to EBITDA. We are actively looking to opportunities to accelerate our strategy whilst judiciously managing our capital and
	returns to shareholders.
	We look forward to speaking with shareholders at the Annual General Meeting and on behalf of the Directors, I would like to
usethank our advisers and accountants for their support as well as our talented team for their ongoing commitment to them and
	to Diverger.
personal
	Yours Sincerely,
	Peter Brook	Nathan Jacobsen
	Chairman	Managing Director
	23 August 2022
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