EQT Holdings Ltd. · ASX:EQT
EQT — Equity Trustees — Shareholder Meeting (October 2013)
43 slides from EQT's shareholder meeting presentation, Oct 25, 2013
Slide 1: 2013 Annual General Meeting
2013 Annual General Meeting 25th October 2013
Slide 2: Board of Directors
Board of Directors Mr JA (Tony) Killen OAM Mr Robin Burns Mr David Groves Non Executive Director, Chairman Managing Director Non Executive Director Deputy Chairman Ms Alice Williams The Hon Jeffrey Ms Anne O’Donnell Mr Kevin Eley Non Executive Director Kennett AC Non Executive Director Non Executive
Slide 3: Agenda
Agenda 1. Overview and highlights Mr Tony Killen 2. Operational performance Mr Robin Burns 3. Items of business Mr Tony Killen 4. Questions 3
Slide 4: Sharemarket performance S&P/ASX200 Index vs. RBA Cash Rate
Sharemarket performance S&P/ASX200 Index vs. RBA Cash Rate % change S&P/ASX 200 RBA Cash 30% Rate 8% 20% 7% 10% 0% 6% -10% 5% -20% -30% 4% -40% 3% -50% S&P/ASX 200 Index RBA Cash Rate -60% 2% 4
Slide 5: Overview – FY2013
Overview – FY2013 • Operating profit before tax up 18% (before takeover expenses). • Underlying EPS up 13% - breakout from trend line of last few years. • Organic revenue growth in both business units – in total revenue up 9%. • Business re-structure completed – consolidated private client unit, sin
Slide 6: Profitability
Profitability Net profit after tax up at $8.7m, net of takeover costs of $1.2m (includes profit on sale of investments) $9.9m $1.2m $8.7m $8.4m $8.2m $8.0m $8.0m 2009 2010 2011 2012 2013 6
Slide 7: Dividends
Dividends Full year, fully franked dividend Interim (cps) Final (cps) 110 110 100 92 85 50 50 50 42 40 60 60 50 45 50 2009 2010 2011 2012 2013 7
Slide 8: Dividend payout ratio
Dividend payout ratio Target Ratio: 70-90% of NPAT 120% 113.9% 111.7% 103.1% 100% 95.2% 87.9% 80% 60% 40% 20% 0% 2009 2010 2011 2012 2013 8 Dividend payout policy range
Slide 9: Relative share price performance
Relative share price performance EQT’s has delivered better returns for shareholders over the past 8 years. 250% 200% 150% 100% 50% % -50% -100% Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 EQT TRU S&P/ASX 200 Index S&P/ASX 200 Diversified Financials Source: S&P CapitalIQ, Total Sh
Slide 10: The Trust Company Ltd – takeover offer
The Trust Company Ltd – takeover offer • Several attempts to combine in past years – none reach mutually satisfactory outcomes. • Consolidation occurring in sector – TRU a target (performance, no CEO, systems spend) – therefore timing right for EQT. • TRU’s market value gain since our offer illustra
Slide 11: Trust Company – valuing the competing offers
Trust Company – valuing the competing offers • TRU’s “Independent Expert’s Report” (IER) materially understates the value of EQT’s offer compared with the competing proposal from Perpetual. • Fundamental questions regarding the IER: 1. Understates EQT’s sustainable EBIT – EQT is valued using past (F
Slide 12: EQT’s offer provides higher value
EQT’s offer provides higher value Correcting for IER’s flaws, the value of EQT’s offer increases by 18% – 29%. ADJUSTED VALUATION OF EQT’S OFFER $23.00 $21.84 $22.00 High $21.00 Value of EQT share $20.00 $18.20 $19.00 Low $18.00 $18.94 $16.96 $17.00 $17.20 $16.00 $15.00 $16.02 1. Higher EBIT 2. High
Slide 13: EQT’s offer remains superior - value
EQT’s offer remains superior - value EQT’s offer delivers higher capital value to TRU shareholders. INDICATIVE VALUE OF A TRU SHARE $7.23 - $8.30 ADJUSTED $6.14 - $6.51 IER $6.95 - $7.50 IER $6.00 $6.50 $7.00 $7.50 $8.00 $8.50 Note: EQT Adjusted = using LEA methodology, including EQT’s adjustments f
Slide 14: EQT’s offer remains superior – estimated dividends
EQT’s offer remains superior – estimated dividends EQT’s offer is expected to deliver higher dividends to TRU shareholders. STAND-ALONE BROKER INDICATIVE DIVIDENDS PER TRU CONSENSUS DIVIDENDS SHARE (WITH SYNERGIES) $1.50 $0.70 $1.25 $0.60 $0.50 $1.00 0.37 $0.40 $0.75 $0.50 $0.92 $1.00 $1.07 $1.14 sy
Slide 15: The Trust Company Ltd – takeover offer
The Trust Company Ltd – takeover offer • Will continue to actively pursue the opportunity – continue to engage with major shareholders. • Will continue to consider other attractive acquisition opportunities. 15
Slide 16: The Board
The Board • Composition unchanged from prior year – deferring consideration of changes during TRU process, but orderly succession planning in place. • Very active year – 65 Board/Board Committee meetings. Directors achieved 97% attendance record at 32 full Board meetings. • Number of meetings reflec
Slide 17: Looking ahead
Looking ahead • Some buoyancy in share market, but underlying economic conditions and confidence still far from strong – US debt ceiling issue an example. • Switching out of defensive assets evident in recent months, but flow to growth assets still appears subdued. • Recent record flows to EQT-distr
Slide 18: Mr Robin Burns
Mr Robin Burns Managing Director Equity Trustees Limited 18
Slide 19: FY2013 – a break-out year
FY2013 – a break-out year • Organic revenue growth 19% in corporate business unit, 3% in private wealth unit. • Recurring expense growth 6% - includes additional costs to meet regulatory changes, for re-structuring, and higher incentives based on improved operating performance. • Operating margin 27
Slide 20: Equity Trustees Limited Organisation Structure
Equity Trustees Limited Organisation Structure Managing Director Robin Burns Corporate Chief Financial Chief Investment Private Wealth Fiduciary & Officer & Company Officer Services Financial Services Secretary Geoff Rimmer George Harvey Kalman Terry Ryan Boubouras Legal, Risk Operations & Operation
Slide 21: Business update
Business update • Net inflows to EQT co-branded funds at 23% of 2012 level for Q1. Dundas Global Investors signed as distribution client – global equities class. • 4 new RE appointments, 1 new manager in Q1 (closed 3 funds, terminated 1 manager). Further appointments in progress. RE FUA up $1.6b at
Slide 22: Summary
Summary • Company is performing well, no debt, good cash flow. • Break out year in 2013. • Business efficiency and long-term growth projects in progress – both tracking well. • Dynamic, competitive industry has attractive long term growth prospects. • Unprecedented period of regulatory change – shou
Slide 23: Agenda
Agenda 1. Overview and highlights Mr Tony Killen 2. Operational performance Mr Robin Burns Items of business Mr Tony Killen 4. Questions 23
Slide 24: Items of business
Items of business Item 1 To receive and consider the financial statements and the reports of the directors and auditor for the year ended 30 June 2013. Item 2 To adopt the remuneration report for year ended 30 June 2013. Item 3 To consider the election of directors. Item 4 To consider a grant of a l
Slide 25: Items of ordinary business – Item 1
Items of ordinary business – Item 1 Item 1 To receive and consider the financial statements and the reports of the directors and auditor for the year ended 30 June 2013. 25
Slide 26: Items of ordinary business – Item 2
Items of ordinary business – Item 2 Item 2 To adopt the remuneration report for year ended 30 June 2013. 26
Slide 27: Remuneration
Remuneration • Short Term Incentives - 59% of maximum pool paid in 2013 (31% in 2012). • Long Term Incentive allocations each year: Series 1 Earned (ended 30/6/08) Series 2 Partially Earned (ended 30/6/09) Series 3 Not Earned (ended 30/6/10) Series 4 Not Earned (ended 30/6/11) Series 5 Not
Slide 28: Remuneration - disclosure
Remuneration - disclosure • Annual report discloses MD total remuneration as: – Short-term benefits (salary, STI, non-monetary) $614,970 – Post-employment (superannuation) $16,470 – Long-term (LSL accrual) $3,905 – Share-based payments (LTI) $153,319 – Total $788,664 • “Share-based payments” is the
Slide 29: Tracking remuneration vs Dividends
Tracking remuneration vs Dividends Cumulative growth in Non-Executive Director remuneration 30 Cumulative growth in Top 5 Executive plus MD remuneration Cumulative growth in Dividend per Share (DPS) 25 20 15 10 5 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 29
Slide 30: Item 2 – proxies received
Item 2 – proxies received To adopt the remuneration report for year ended 30 June 2013 In respect of item 2 of ordinary business, the following proxies have been received: For Against 153,709 2,897,061 (4.69%) Open (held by EQT directors) = 93,786 30
Slide 31: Items of ordinary business – Item 3
Items of ordinary business – Item 3 Item 3 To consider the election of directors 31
Slide 32: Re-election of Ms Anne O’Donnell
Items of ordinary business – Item 3 Item 3(a): To consider the re-election of Ms Anne O’Donnell 32
Slide 33: Item 3(a) – proxies received
Item 3(a) – proxies received To consider the re-election of Ms Anne O’Donnell In respect of item 3(a) of ordinary business, the following proxies have been received: For Against 52,731 Ms Anne O’Donnell 3,464,159 (1.31%) Open (held by EQT directors) = 483,757 33
Slide 34: Re-election of Mr Tony Killen
Items of ordinary business – Item 3 Item 3(b): To consider the re-election of Mr Tony Killen 34
Slide 35: Item 3(b) – proxies received
Item 3(b) – proxies received To consider the re-election of Mr Tony Killen In respect of item 3(b) of ordinary business, the following proxies have been received: For Against Mr Tony Killen 3,515,127 1,230 Open (held by EQT directors) = 483,757 35
Slide 36: Items of special business – Item 4
Items of special business – Item 4 Item 4: To consider the grant of a long-term incentive award to Managing Director 36
Slide 37: Managing Director’s LTI, 2013/2014 Series
Managing Director’s LTI, 2013/2014 Series • Quantum: 60% of TEC ($550k) = $330k. Maximum potential issue is 19,915 shares. • Measures: 50% TSR / 50% EPS • Vesting Scales over 3 years: TSR Less than 50th percentile Nil 50th percentile 50% 75th percentile and above 100% EPS Less than 5% (15% o
Slide 38: Item 4 – proxies received
Item 4 – proxies received To consider the grant of a long-term incentive award to Managing Director. In respect of item 4 of special business, the following proxies have been received: For Against 3,188,114 336,900 (8.38%) Open (held by EQT directors) = 88,469 38
Slide 39: Items of special business – Item 5
Items of special business – Item 5 Item 5: To consider a grant of shares to the Managing Director 39
Slide 40: Items of special business – Item 5
Items of special business – Item 5 • To effect 50% ($50,000) of MD’s 2014 remuneration increase via an award of shares. • Better align MD’s overall rewards to company performance and shareholder outcomes. • Separate to normal annual STI and LTI plans. • Encourages MD to accumulate and hold greater p
Slide 41: Item 5 – proxies received
Item 5 – proxies received To consider a grant of shares to the Managing Director In respect of item 5 of special business, the following proxies have been received: For Against 323,599 3,210,225 (8.04%) Open (held by EQT directors) = 88,469 41
Slide 42: Agenda
Agenda 1. Overview and highlights Mr Tony Killen 2. Operational performance Mr Robin Burns 3. Items of business Mr Tony Killen • Questions 42
Slide 43: Thank you
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