Eqt Holdings Ltd. · ASX:EQT
Eqt — H1 FY2017 Earnings Presentation
35 slides from Eqt's earnings presentation, Feb 24, 2017
Slide 1: EQT Holdings Limited (Equity Trustees) Half-Year Results to 31 December 2016
EQT Holdings Limited (Equity Trustees) Investor Presentation Half-Year Results to 31 December 2016 Mick O’Brien, Managing Director Philip Gentry, Chief Financial Officer and Chief Operating Officer 24 February 2017
Slide 2: Agenda
Agenda Overview Financials Sandhurst Trustees Estates Acquisition Update Strategy and Outlook Q&A 2
Slide 3: Overview
Overview • Solid underlying result # – Underlying revenue growth 6.8% – Net profit after tax (NPAT) up 2.9% to $7.2m – FUMAS* up 26% to $72.5b – Dividend up 3.0% to 35 cents per share • Result reflects business transition – Exit from non-core activities, i.e. funds distribution / super administratio
Slide 4: Building the platform for growth
Building the platform for growth • Equity Trustees undertook a restructure and other initiatives in FY16 to streamline and reposition the business for growth: – Corporate restructure – new holding company – Repricing of superannuation and outsourcing of superannuation administration – Exiting distri
Slide 5: Equity Trustees strategy
Equity Trustees strategy • Pursuing attractive market opportunities • Clear growth drivers in each business • Equity Trustees aims to be the market leader in chosen parts of the wealth value chain – Corporate Trustee Services • Responsible entity services – Trustee & Wealth Services • Private client
Slide 6: CTS growth highlights
CTS growth highlights New fund manager clients include Mittleman, Pentalpha, Mirae, Wellington, Pzena, APSEC, Colonial First State (Infrastructure), GESB, Loftus Peak and Viburnum No. Managers No. Funds CTS FUS* 120 250 70 $b 60 100 200 50 80 150 40 60 30 100 40 20 50 20 10 - 0 0 1H16 1H17 1H16 1H17
Slide 7: TWS growth highlights
TWS growth highlights Improving momentum in both traditional and emerging trustee services Traditional Trustee Services Emerging Trustee Services (FUMAS*) (FUMAS*) 1.8 $b 1.6 0.25 $b 1.4 0.20 1.2 1.0 0.15 0.8 0.10 0.6 0.4 0.05 0.2 0.00 0.0 Indigenous Trusts Living Donors Compensation Estate Testamen
Slide 8: Financials
Financials Philip Gentry Chief Financial Officer and Chief Operating Officer
Slide 9: Group financial performance
Group financial performance 1H17 1H16 1H17 v 1H16 $m $m % • Transition year with solid Revenue 39.5 42.6 (7.3) underlying revenue growth Operating Expenses 27.0 28.5 (5.3) offset by exit from funds OPBT 12.5 14.1 (11.3) distribution and upgrade of Projects 1.2 3.1 (61.3) superannuation business Redu
Slide 10: Solid underlying revenue growth
Solid underlying revenue growth Organic growth partially offsetting exit of funds distribution and superannuation upgrade Revenue $m 45 40 42.6 2.4 0.5 39.5 35 37.0 3.7 30 25 20 15 10 5 0 1H16 Impact of Exiting Superannuation TWS ASX 200 Adjusted Revenue 1H17 CTS Funds Upgrade ~ 6 Months impact aver
Slide 11: Continuing strong growth in funds
Continuing strong growth in funds Strong growth in funds under management, administration, advice and supervision TWS FUMAS* CTS FUS** Total EQT FUMAS* 10 70 80 $b $b $b 9 60 70 8 60 7 50 6 50 40 5 40 30 4 30 3 20 20 2 10 10 1 - - - 1H15 1H16 1H17 1H15 1H16 1H17 1H15 1H16 1H17 *FUMAS: Funds under ma
Slide 12: TWS performance
TWS performance Organic growth to offset superannuation restructure and repricing over next 6 – 12 months TWS OPBT* TWS FUMAS** $m 8 7 $b 10 7.2 9.0 9 8.2 1.2 6 6.1 8 0.5 0.5 7 3.1 3.0 5 5.1 2.6 6 4 5 3 4 1.1 1.2 3 1.2 1.3 2 2 2.3 2.3 1 1 0 0 1H16 1H17 1H16 Super ASX 200 Adjusted 1H17 Philanthropy R
Slide 13: CTS performance
CTS performance Strong organic growth largely offsets exit of funds distribution CTS OPBT* CTS FUS* $m 7 70 $b 63.5 6 6.3 60 12.2 $62.1 6.1 50 49.4 5 15.8 9.4 $49.4 40 1.8 4.5 10.9 4 25.2 30 3 21.7 20 2 10 3.7 3.0 4.4 6.6 1 - 1H16 1H17 0 Other (Property, Multi-Strategy, Alternatives) 1H16 Distributi
Slide 14: Consistent growth track record
Consistent growth track record Expect growth momentum to replace PIMCO revenue within 6 – 12 months CTS FUS 70 63.5 • $63.5b FUS* 27% CAGR (34% excl PIMCO) 60 • Focus on core fiduciary 49.4 50 • FUS* 40 40.3 – RE / Trustee $62.6b 32.5 53.2 30 – Corporate Trust $0.9b 40.0 24.7 23.8 31.7 • PIMCO exit
Slide 15: Balance sheet strength provides security and flexibility
Balance sheet strength provides security and flexibility Consolidated Balance Sheet Summary 31-Dec-16 30-Jun-16 31-Dec-15 • Low gearing $m $m $m (Debt to Equity 5%) Assets Cash and cash equivalents 52.2 48.7 26.4 Trade receivables and accrued income • Surplus borrowing 20.4 16.8 19.4 capacity Goodwi
Slide 16: Strong capital position
Strong capital position • Comfortably meets regulatory capital requirements • Capital requirement to be held 50% in cash and 100% liquid assets (ASIC requirement) – Buffer also held in liquid assets • Additional streamlining of structures and consolidation of licences has the potential to reduce cap
Slide 17: Key initiatives on track
Key initiatives on track Projects Costs ($m) 1H17 2H16 1H16 • Corporate Restructure and Business Assurance Project 0.7 0.7 1.2 Superannuation - - Operating Model Review 1.3 Upgrade complete - • Business Assurance Corporate Restructure 0.2 0.7 Project complete - Superannuation Restructure 1.3 1.3 • O
Slide 18: Operating Model Review exceeding expectations
Operating Model Review exceeding expectations • Group wide Operating Model Review announced in June 2016 is delivering – Annualised productivity gains of $2.7m, to be realised by FY18 – One-off costs of ~$1.3m offset by benefits generated in FY17 – Phase 2 now underway – expected to see further incr
Slide 19: Summary
Summary • One-off key initiatives completed ‒ Strengthening corporate structure, risk management framework and upgrading superannuation business • Strong organic growth momentum • Expect organic growth and productivity improvements over FY17 to significantly offset earnings impact of funds distribut
Slide 20: Sandhurst Trustees' Estates Acquisition Update
Sandhurst Trustees’ Estates Acquisition Update Mick O’Brien Managing Director
Slide 21: Growing Equity Trustees Trusts and Estates business
Growing Equity Trustees Trusts and Estates business • Acquisition of Sandhurst Trustees’ Estates business announced on 19 December • Equity Trustees’ second acquisition of a bank-owned trustee business • Equity Trustees commitment to the values of customer service and care means we will retain the p
Slide 22: Overview of Sandhurst Trustees' Estates
Overview of Sandhurst Trustees’ Estates Estate Planning 141 Perpetual and Deceased Estates Ongoing Trust Clients Ongoing and 25,000 Perpetual Trusts WILLS Agency and Power of Attorney $140m Common Fund FUM 22
Slide 23: Key terms of acquisition
Key terms of acquisition • Purchase price $5.0m • Conditional on ASIC approval - targeting March 2017 • 4 month transition plan post-completion • Low execution risk – Utilising EQT’s internal expertise to integrate – Familiarity with Sandhurst Trustees’ estates legacy systems – Existing Sandhurst Tr
Slide 24: Earnings per share accretive in FY18
Earnings per share accretive in FY18 • Purchase price will be funded out of existing liquidity and funding arrangements • No material impact on capital requirements • Impact in FY18: – Expected Revenue ~$2m+ p.a. – Increased EBITDA ~$1m+ p.a. 24
Slide 25: Strategy update and outlook
Strategy update and outlook Mick O’Brien Managing Director
Slide 26: Equity Trustees strategy
Equity Trustees strategy • Equity Trustees aims to be the market leader in key parts of the wealth value chain – Wealth protection – acting as responsible entity, superannuation trustee, executor, powers of attorney and services in funds management advice and custody – Wealth transition – services i
Slide 27: Attractive market opportunities
Attractive market opportunities TWS Corporate TWS Private Clients Superannuation Trustee Services Demographic changes due to ageing Growth in mandated superannuation population “~500,000 currently over age 85 “1.1x GDP to peak at 1.6x GDP in 20 years”3 - will double in 20 years…3.5% CAGR”1 Superannu
Slide 28: Independent, unconflicted model offers significant business opportunities
Independent, unconflicted model offers significant business opportunities • Equity Trustees’ model is to Key distribution relationships provide specialist trustee and related services to other financial institutions • We offer financial institutions the opportunity to provide their clients with spec
Slide 29: TWS growth focus
TWS growth focus • Preferred choice by advisers for their best clients requiring the highest level of trust • The delivery of client centric services that enable cross referrals to all parts of our business • Grow our long-term, enduring revenue base through targeted initiatives – Build and capitali
Slide 30: Superannuation growth initiatives
Superannuation growth initiatives • Consolidate our position as the leading brand for independent superannuation trustee services • Increase our market share of the Trustee–for–Partner market • Successfully won and signed a new fund (~ $500m) subject to conditions • Further progress on large strateg
Slide 31: CTS continues to have substantial growth opportunities
CTS continues to have substantial growth opportunities Growth opportunity Strategy • Attribution Managed Investment Trust (AMIT) Collective New product Investment Vehicle (CIV): provide new fund structuring designs opportunities in the Australian market for existing clients • Leverage CTS’ experienc
Slide 32: Six key drivers
Six key drivers T1 Increase total FUMAS* $72.5b at 31 Dec 16 T2 Growing sales value Under development EPS T3 Enhancing operating margin 31.6% at 31 Dec 16 growth and T4 Improve customer satisfaction Surveying in Q2 ROE T5 Lifting employee engagement 55% at Jan 17 T6 Deepening community impact $71m i
Slide 33: Conclusion and outlook
Conclusion and outlook • Attractive industry fundamentals • Good organic growth in underlying revenue • Capitalising on recent investments – One-off Corporate Restructure, Superannuation Upgrade – Risk and Assurance Upgrade – Operating Model Review achieved $2.7m in annualised savings ahead of sched
Slide 34: Q&A
O&A CO) ‘Trustees
Slide 35: Disclaimer
Disclaimer EQT Holdings Limited ABN 22 607 797 615. This document was prepared by EQT Holdings Limited and is only provided for information purposes. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. To the
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