Eqt Holdings Ltd. · ASX:EQT
Eqt — Equity Trustees — Shareholder Meeting (October 2011)
75 slides from Eqt's shareholder meeting presentation, Oct 28, 2011
Slide 1: 2011 AGM Chairman Speech
1 Equity Trustees Limited 2011 AGM Chairman Speech For personal use only Slide 1: 1. Shareholders, ladies and gentlemen, good morning. My name is Tony Killen, I have the honour of being your Chairman. 2. On behalf of my fellow directors, executives and all staff of Equity Trustees it gives me great
Slide 2: Introduction of the Board
2 10. Ms Anne O’Donnell is attending her second AGM as a director having joined the Board in September 2010. Anne is a member of the Audit & Compliance Committee. For personal use only 11. I am very pleased that Ms Alice Williams, who was unable to attend the AGM last year due to ill health, has bee
Slide 3: Annual Report and Shareholder Review
3 16. On the right of the screen is the Shareholder Review. This is a condensed version of the Annual Report containing a detailed review of the operating performance of the company and is sent to all shareholders. For personal use only 17. On the left of the screen is the Annual Report. This is sen
Slide 4: Fund flows and FY2011 overview
4 Slide 6: FM Funds Flow Slide 21. This slide shows net fund flows over the past four years. These funds are sourced predominantly from master trust platforms, the domain of the retail For personal use only investor. The preference for cash and fixed interest over growth assets is clear, and continu
Slide 5: Profitability and shareholder dividends
5 after several one – off expense items were incurred in the year under review. Return on Shareholders’ Funds was 15%, the same outcome achieved now in each of the last 3 years. The Board regards these metrics as important barometers of the progress of the company. For personal use only Slide 9: Sha
Slide 6: Shareholder returns and recent acquisitions
6 Slide 12: Shareholder returns 27. Cold comfort though it may be, our performance against the more directly comparable of our peers amongst the Diversified Financials is in fact more For personal use only than competitive, as this chart illustrates. The comparison is sensitive to the time periods s
Slide 7: Acquisitions and the Board
7 business in Victoria with EQT’s backing, and we see the potential to grow the business interstate in due course. We welcome the Lifetime Planning and Tender Living Care employees to our company and are pleased that they have all elected to join us. This acquisition has also been earnings For perso
Slide 8: Director retirement and succession
8 acknowledged. John has the scar tissue of the veteran banker that he is, which he has brought to bear on our more difficult discussions. Outside of meetings he has been a ready source of constructive advice both to fellow directors and management in furtherance of the company’s goals. John, For pe
Slide 9: Economic conditions and market outlook
9 and the US continue to struggle to put in place the appropriate fiscal and monetary settings to reinstate the confidence investment markets rely on. Retail investors remain risk averse, not at all confident that a sustained recovery from the after effects of the 2007/8 credit crisis is anywhere ne
Slide 10: Managing Director presentation: overview FY2011
10 42. I now invite the Managing Director to address the meeting. Thank you. Slide 16: Mr. Robin Burns, MD EQT For personal use only 2011 AGM Managing Director Presentation Mr Robin Burns takes the lectern. 43. Thank you Chairman. Slide 17: Overview FY2011 44. The generally difficult business condit
Slide 11: Acquisitions, IT upgrade and financial durability
11 Planning and Tender Living care operations) is already demonstrating that it has significant scope to be a very positive long-term opportunity for the group. It operates in a specialised niche that possesses a very attractive demographic structure and that links well with our existing activities.
Slide 12: Market sensitivity and revenue assumptions
12 terms we estimate that our revenue could be impacted by approximately $200,000 by a 1% change in the ASX. 52. As you can see from this graph, the index has been through significant For personal use only volatility in recent financial periods, which is continuing. The red line is the index through
Slide 13: Expense management
13 Slide 20: Expense Management, composition and change 55. Expenses grew significantly in the year, but a number of different factors underlie the increase. Firstly, the operating expenses in the Apex business For personal use only for 8 months represented about one third of that increase. What we’
Slide 14: Business Units, Operations & Performance
14 Slide 21 Business Units, Operations & Performance 58. This slide summarises some of the key measures of our revenue generating units for the year to June 2011, and gives an overall idea of For personal use only how they performed. 59. I’ll speak separately about each of these in more detail immed
Slide 15: Private Clients unit overview
15 62. The aged care advisory business that was referred to earlier will form part of the Wealth Management unit, which itself sits within Private Clients. 63. In a number of areas the Private Clients unit had a good year: an increase For personal use only in new deceased estates; a record year for
Slide 16: Superannuation business unit
16 Slide 24: Business Unit Overview, Superannuation 67. The superannuation business unit spent a significant amount of time and energy in the year on the inwards transition and integration of the acquired For personal use only Apex business. This was accomplished on time and very effectively, and is
Slide 17: Superannuation and support services
17 we will wait to see what MySuper actually turns out to look like after a few years of implementation before judging its success. 71. In anticipation of some of these issues we continue to make operational For personal use only improvements to our super products and services and our additional sca
Slide 18: Business Update
18 76. At the same time we made a number of other changes in our internal group structure to facilitate a more matrix-style approach to managing the support units across all activities, and I expect this will continue in the near future. For personal use only Slide 26: Business Update 77. The Chairm
Slide 19: Regulatory reform: Stronger Super and FoFA
19 adopted in the ‘Stronger Super’ draft provisions and these have been discussed widely. The Ripoll review into advice has been developed into the Future Of Financial Advice, or FoFA, reforms, some parts of which are now in draft legislation. Each of Stronger Super and FoFA will have For personal u
Slide 20: Long-term focus and financial position
20 2000s may now be seen as an aberration, rather than normal operating conditions. Given this, we need to keep looking to the long-term and continue to develop the business for success in the future as well as focus on results today. For personal use only 86. The company is debt-free, which places
Slide 21: Strategic priorities and staff
21 complete strategic, earnings-accretive acquisitions that build on existing strengths and capabilities. 90. We need to balance investment to maximise efficiency and long-term For personal use only business development with the desire to maximise today’s returns, and this compromise is of course at
Slide 22: Items of ordinary business – Item 1
22 consider the grant of a long-term incentive award to the Managing Director. Slide 30: Items of ordinary business – Item 1 For personal use only 95. The first Item of business is to receive and consider the Financial Statements and the Reports of the Directors and Auditor for the year ended 30 Jun
Slide 23: Item 2: Remuneration Report
23 Slide 31: Items of ordinary business – Item 2 103. The 2nd Item of business is to adopt the Remuneration Report for the year ended 30 June 2011. For personal use only 104. The Remuneration Report is contained in the Directors’ Report set out in detail on pages 6 to 13 of the Annual Report. This i
Slide 24: Remuneration incentives
24 108. The results in the year to June 2011 did meet pre-defined targets and objectives, thus triggering the payment of STI awards at more customary levels, another factor in expense comparisons between 2010 and 2011. For personal use only 109. So far as the long term incentives are concerned we ha
Slide 25: Tracking Remuneration vs Dividends
25 with effect from 1 July, 2011. The new fees are contained within the overall limit last approved by shareholders in 2008. Slide 33: Tracking Remuneration vs Dividends For personal use only 113. This chart illustrates the relationship between remuneration paid to the top executives in the company,
Slide 26: Item 2: Proxies received
26 Slide 34: Items of ordinary business – Item 2: Proxies received 119. I would like to inform the meeting that the proxy position at the outset of the meeting is as shown on the screen. For personal use only 120. In accordance with new legislation, Key Management Personnel (KMP’s), which includes d
Slide 27: Re-election of Directors
27 Slide 35: Items of ordinary business – Item 3 Re-election of Directors 128. In relation to this item of business you would be aware from the Notice of Meeting that in accordance with Rule 49 of the company’s constitution two For personal use only Directors are retiring and, being eligible, are of
Slide 28: Item 3 voting
28 <Pause> 137. I would now like to put this resolution to a vote. 138. This will be determined by a show of hands. Therefore, if you wish to vote, For personal use only when asked to do so, please raise your hand showing your blue card. Note that visitors with a white card or joint holders with a y
Slide 29: Proxies received – Re-Election of Mr Kennett
29 Slide 39: Proxies received – Re-Election of The Hon Jeffrey G Kennett AC 148. I would like to inform the meeting that the proxy position at the outset of For personal use only the meeting is as shown on the screen. 149. In relation to the Open votes, the directors of EQT hold proxies totalling 41
Slide 30: Item 4: Managing Director LTI
30 outcomes for shareholders, taking into account as it does growth in both earnings per share and TSR. Slide 41: MD s LTI 2011/12 Series For personal use only 158. The performance measures - 50% relative TSR and 50% EPS – and the qualifying criteria, are the same as last year. However the quantum o
Slide 31: Item 4 voting and close
31 <Pause> 167. I would now like to put this resolution to a vote. 168. This will be determined by a show of hands. Therefore, if you wish to vote, For personal use only when asked to do so, please raise your hand showing your blue card. Note that visitors with a white card or joint holders with a y
Slide 32: 2011 Annual General Meeting
For personal use only 2011 Annual General Meeting 28th October 2011
Slide 33: Board of Directors
For personal use only 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 Mr John McConnell Ms Alice Williams The Hon Jeffrey Ms Anne O’Donnell Non Executive Director Non Executive Director
Slide 34: Agenda
For personal use only 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 35: 2011 Shareholder Review and Annual Report
For personal use only 2011 Shareholder Review and Annual Report 4
Slide 36: Sharemarket performance
Sharemarket performance. For personal use only S&P/ASX200 Accum Index vs. MSCI ex Australia 20.0% 10.0% 0.0% -10.0% -20.0% -30.0% -40.0% -50.0% -60.0% 30 June 2007 30 June 2008 30 June 2009 30 June 2010 30 June 2011 MSCI Ex Australia (USD) S&P/ ASX 200 Accumulation Index 5
Slide 37: External net flows to EQT retail funds
For personal use only External net flows to EQT retail funds $m. $400 $300 $200 $100 $0 -$100 2007/8 2008/9 2009/10 2010/11 Aust Cash & Fixed Interest International Equities Aust Equities Listed Property 6
Slide 38: Overview – FY2011
For personal use only Overview – FY2011 • Profit growth despite difficult conditions. • All revenue business units profitable. • Two acquisitions – one completed, one in progress at 30 June 2011. • 100¢ full-year, fully franked dividend, reduced by 10¢ from 2010. • Strong balance sheet, nil debt. •
Slide 39: Profitability
For personal use only Profitability Net profit after tax up at $8.2m (includes profit on sale of investments) 8
Slide 40: Shareholder Dividends
For personal use only Shareholder Dividends Full-year, fully-franked dividend Reflecting a current yield of approximately 8.0% before franking credits 9
Slide 41: Dividend payout ratio
For personal use only Dividend payout ratio Full-year divided as percentage of EPS 120% 111.7% 113.9% 103.1% 100% 75.5% 71.5% 71.3% 82.5% 80% 60% 40% 20% 0% 2005 2006 2007 2008 2009 2010 2011 Dividend payout policy range 10
Slide 42: Share price performance - diversified financials
For personal use only Share price performance - diversified financials 80% 60% 40% 20% 0% -20% -40% -60% -80% 30/06/2005 30/06/2006 30/06/2007 30/06/2008 30/06/2009 30/06/2010 30/06/2011 S&P/ASX 200 Index S&P/ASX 200 Banks S&P/ASX 200 Diversified Financials 11
Slide 43: Shareholder Returns
For personal use only Shareholder Returns 5 Year and 6 Year Total Shareholder Returns as at 30 June. EQT and five comparable organisations 15.00% 10.00% 5.00% 0.00% Return -5.00% -10.00% -15.00% -20.00% EQT B C D E F Company 6 Years 5 Years 12
Slide 44: Recent acquisition – OAMPS Superfund
For personal use only Recent acquisition – OAMPS Superfund • Completion of OAMPS super fund (renamed Apex) acquisition as planned on 1 November 2010. $265m FUM. • Profitable from day one and generated better performance than expected in first 8 months. • Transition and integration complete. • Lifeti
Slide 45: The Board
For personal use only The Board • Formal performance appraisal in March 2010 – overall conclusion was positive – tracking progress on suggestions. Board actively reviewing deliberative processes to enhance focus on strategic issues. • Succession planning process is in place – based on desired skills
Slide 46: Looking ahead: Outlook for 2012
For personal use only Looking ahead Outlook for 2012 • Economic conditions still difficult in some major economies – continues to impact confidence, equity markets, investors and therefore fund flows. • Despite Australia’s better position, same factors affecting business conditions here. • Long term
Slide 47: Mr Robin Burns, Managing Director
For personal use only Mr Robin Burns Managing Director Equity Trustees Limited 16
Slide 48: Overview – FY2011
For personal use only Overview – FY2011 • Revenue growth 14% – mix of organic (Private Clients, Corporate) and acquired. • Expenses grew 19% – comprises recurring, non-recurring and acquired. • Mixed conditions affected revenue units performances – overall margin healthy. • Base IT operating platfor
Slide 49: S&P/ASX All Ordinaries Index – Year on Year
For personal use only S&P/ASX All Ordinaries Index – Year on Year 5500 5000 4500 4000 3500 3000 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun All Ords 2011/12 All Ords 2010/11 All Ords 2009/10 All Ords 2008/09 18
Slide 50: Share price performance - diversified financials
For personal use only Share price performance - diversified financials 15.00% 10.00% 5.00% 0.00% -5.00% -10.00% -15.00% -20.00% -25.00% -30.00% -35.00% -40.00% 31/12/2010 31/01/2011 28/02/2011 31/03/2011 30/04/2011 31/05/2011 30/06/2011 31/07/2011 31/08/2011 30/09/2011 S&P/ASX 200 Index S&P/ASX 200
Slide 51: Expense composition
For personal use only Expense composition Year-on-year, Group expenses have increased by 19% $28.4m $1.5 $0.7 $23.8m $0.4 Apex Recurring Expenses - 8 mths ($m) Recurring Non-Recurring Expenses ($m) expenses $26.2 increase $23.4 by 11.8% Recurring Expenses ($m) 2010 2011 20
Slide 52: Business units – activities and key measures
For personal use only Business units – activities and key measures 2011 Revenue, 2011 FUM/FUA, Business unit Key services Target market / channel vs 2010 vs 2010 Private Clients • Trusts & Estates • Private clients $9.6m $1,312m • Philanthropy • Business to business referrals +12.2% +4% • Wealth Man
Slide 53: Business unit overview – Private Clients
For personal use only Business unit overview – Private Clients Operating revenue up 12.2% to $9.6m FUM/FUA at 30 June 2011 up 4.0% to $1,312m Significant one‐off ($m) ($m) estates boost $1,490 $10.4 $9.6 $1,303 $1,333 $1,312 $1,128 $1,261 $9.3 $1,112 $8.5 $7.6 $5.9 $6.1 2005 2006 2007 2008 2009 2010
Slide 54: Business unit overview – CF&FS
For personal use only Business unit overview – CF&FS Operating revenue up 6.4% to $17.2m FUM/FUA at 30 June 2011 up 20.5% to $19,485m ($m) ($m) $18.7 $17.2 $15.9 $16.1 $19,485 $15.8 $14,949 $15,646 $16,171 $12.6 $12,124 $12,542 $9.3 $7,978 2005 2006 2007 2008 2009 2010 2011 2005 2006 2007 2008 2009
Slide 55: Business unit overview – Superannuation
For personal use only Business unit overview – Superannuation Operating Revenue up 34.9% to $11.2m FUM at 30 June 2011 up 56.9% to $979m ($m) ($m) $11.2 $979 $8.5 $8.3 $7.9 $635 $615 $626 $565 $5.3 $4.4 $400 $3.4 $319 2005 2006 2007 2008 2009 2010 2011 2005 2006 2007 2008 2009 2010 2011 • Integratio
Slide 56: Support Services
For personal use only Support Services • Support services provided by Corporate, Human Resources, Business Systems & Technology, Marketing, Operations, Legal, Risk Management & Compliance and Internal Audit are all integral parts of the business. • Next major project – consolidate and integrate curr
Slide 57: Business update
For personal use only Business update • New business leads, generation continuing in private client and corporate services. • Fund inflows entirely skewed to defensive lower-margin classes, but strong. • Market volatility and low confidence affecting business conditions – industry experiencing retre
Slide 58: Summary
For personal use only Summary • Diversified revenue streams, all profitable and in attractive segments. • Group weathering a difficult period well – challenging conditions and volatile markets may be the norm for some time. • Need to continue to develop and invest for the long term, but cognisant of
Slide 59: Agenda
For personal use only Agenda 1. Overview and highlights Mr Tony Killen 2. Operational performance Mr Robin Burns Items of business Mr Tony Killen 4. Questions 28
Slide 60: Items of business
For personal use only 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 2011. Item 2 To adopt the remuneration report for year ended 30 June 2011. Item 3 To consider the election of directors. Item 4 To c
Slide 61: Items of ordinary business – Item 1
For personal use only 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 2011. 30
Slide 62: Items of ordinary business – Item 2
For personal use only Items of ordinary business – Item 2 Item 2 To adopt the remuneration report for year ended 30 June 2011. 31
Slide 63: Remuneration
For personal use only Remuneration • No Short Term Incentives paid for 2008/09 or 2009/10, and 38% of maximum pool paid in 2011. • 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
Slide 64: Tracking remuneration vs DPS
For personal use only Tracking remuneration vs DPS 33
Slide 65: Item 2 – proxies received
For personal use only Item 2 – proxies received To adopt the remuneration report for year ended 30 June 2011 In respect of item 2 of ordinary business, the following proxies have been received: For Against 226,985 3,365,356 (6.25%) 34
Slide 66: Items of ordinary business – Item 3
For personal use only Items of ordinary business – Item 3 Item 3 To consider the election of directors. 35
Slide 67: Item 3(a): Re-election of Mr D F Groves
For personal use only Items of ordinary business – Item 3 Item 3(a): To consider the re-election of Mr D F Groves 36
Slide 68: Item 3(a) – proxies received
For personal use only Item 3(a) – proxies received To consider the re-election of Mr D F Groves In respect of item 3(a) of ordinary business, the following proxies have been received: For Against Mr D F Groves 4,135,560 3,182 Open (held by EQT directors) = 403,953 37
Slide 69: Item 3(b): Re-election of The Hon J G Kennett AC
For personal use only Items of ordinary business – Item 3 Item 3(b): To consider the re-election of The Hon J G Kennett AC 38
Slide 70: Item 3(b) – proxies received
For personal use only Item 3(b) – proxies received To consider the re-election of The Hon J G Kennett AC In respect of item 3(b) of ordinary business, the following proxies have been received: For Against The Hon J G Kennett AC 4,054,942 80,814 Open (held by EQT directors) = 412,195 39
Slide 71: Items of special business – Item 4
For personal use only Items of special business – Item 4 Item 4: To consider the grant of a long-term incentive award to Managing Director. 40
Slide 72: Managing Director's LTI. 2011/2012 Series
For personal use only Managing Director’s LTI. 2011/2012 Series • Quantum: 54% of TEC ($450k) = $243k • 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% over 3 years) Nil 5%
Slide 73: Item 4 – proxies received
For personal use only 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 3,823,320 230,032 Open (held by EQT directors) = 139,066 42
Slide 74: Agenda
For personal use only Agenda 1. Overview and highlights Mr Tony Killen 2. Operational performance Mr Robin Burns 3. Items of business Mr Tony Killen • Questions 43
Slide 75: Thank you
For personal use only Thank you