Eqt Holdings Ltd. · ASX:EQT
Eqt — H1 2022 Earnings Presentation
40 slides from Eqt's earnings presentation, Feb 25, 2022
Slide 1: Investor Presentation: Results for Half Year Ended 31 December 2021
INVESTOR PRESENTATION RESULTS FOR HALF YEAR ENDED 31 DECEMBER 2021 Mick O’Brien, Managing Director Philip Gentry, Chief Financial Officer and Chief Operating Officer 25 FEBRUARY 2022
Slide 2: Agenda
AGENDA 1 1H22 OVERVIEW 2 FINANCIALS 3 STRATEGY UPDATE AND OUTLOOK 4 QUESTIONS Equity Trustees acknowledges Aboriginal and Torres Strait Islander people as the First Australians and respects their long and enduring connection to their land. We pay our respects to all Elders past, present and emerging
Slide 3: 1H22 Overview
1H22 OVERVIEW
Slide 4: Strong earnings increase on continued FUMAS growth
STRONG EARNINGS INCREASE ON CONTINUED FUMAS GROWTH FUMAS* REVENUE NPAT DIVIDENDS $151.8b $55.9m $12.7m 48 cents ↑ Up 18.5% on 1H21 ↑ Up 15.8% on 1H21 ↑ Up 29.3% on 1H21 ↑ Up 4 cents per share on 1H21 ↑ (Up 19.1% on 1H21 Underlying NPAT) ↑ (Up 1 cent per share on 2H21) • Strong growth in revenue and
Slide 5: Growing our competitive edge
GROWING OUR COMPETITIVE EDGE • Benefiting from focussed strategy which has driven strong funds growth • Funds growth flowing through to earnings • Investment in people and technology continuing to underpin growth • Independent model becoming the preferred industry standard • Expertise in an increasi
Slide 6: FUMAS up 18.5% on 1H21 to $151.8b
FUMAS UP 18.5% ON 1H21 TO $151.8B $b TOTAL EQT FUMAS1 160 150 151.8 144.2 140 18.5% increase in FUMAS principally driven by: 130 128.1 • Significant new business activity 120 in Corporate Trustee Services 110 111.1 • New Superannuation Trustee appointments for Centric and 100 101.0 Aracon 90 • Growt
Slide 7: FUMAS growth continues
FUMAS GROWTH CONTINUES $b CTS FUS1 $b STS FUS1 $b TWS FUMAS2 110 38 11 36 105 106.7 10 34 35.4 9.8 9.7 100 32 33.6 9 100.8 9.1 30 Aon*** 95 8 28 29.2 90 26 7 89.7 24 85 6 22 80 20 5 1H21 2H21 1H22 1H21 2H21 1H22 1H21 2H21 1H22 • FUS up 19.0% • FUS up 21.2% • FUMAS up 6.6% • Multiple new fund manager
Slide 8: Delivering for all stakeholders
DELIVERING FOR ALL STAKEHOLDERS SHAREHOLDER EMPLOYEE CLIENT COMMUNITY VALUE ENGAGEMENT SATISFACTION IMPACT* Earnings Per Share (EPS) Engaged and enabled Net Promoter score (NPS)1 Granting and pro bono/ growth staff Net Loyalty score (NLS)2 volunteering and dividend growth • Next survey in April • NP
Slide 9: Delivering for shareholders
DELIVERING FOR SHAREHOLDERS Cents EARNINGS PER SHARE 70 60.5 60 55.8 56.0 51.2 50 55.4 47.3 * 55.9 • Strong EPS growth: 40 37.2 47.2 60.5CENTS – Statutory EPS up 28.2% – Underlying EPS up 18.1% 30 20 1H20 2H20 1H21 2H21 1H22 Underlying EPS1 Statutory EPS Cents DIVIDENDS 50 48 48 47 47 46 44 • Health
Slide 10: Other achievements and focus
OTHER ACHIEVEMENTS AND FOCUS PEOPLE TECHNOLOGY • Continuing to build capability while managing • Deployed new risk and compliance platform - turnover and pressure on remuneration in some CAMMS areas of the business • Deployed new third party service provider oversight • Appointed new leaders includi
Slide 11: Summary
SUMMARY STRONG PERFORMANCE WITH CONTINUED GROWTH MOMENTUM FUMAS increasing to $151.8 billion, Continuing investment creating a supported by organic growth and strong foundation for more sustainable future equity markets growth Strong EPS growth on both underlying and Continuing to deepen our communi
Slide 12: Financials
FINANCIALS
Slide 13: Positive financial performance
POSITIVE FINANCIAL PERFORMANCE 1H22 v 1H22 v FOR THE PERIOD 1H22 2H21 1H21 2H21 % 1H21% • Strong revenue growth Total revenue ($m) 55.9 52.7 48.3 5.9 15.8 up 15.8% Total expenses ($m) 36.1 35.5 35.2 (1.5) (2.7) • Expense growth contained, EBITDA ($m) 23.2 20.5 16.6 13.1 39.3 up 2.7% on statutory bas
Slide 14: Solid half on half revenue growth
SOLID HALF ON HALF REVENUE GROWTH $m REVENUE 58 2.7 • 15.8% growth in revenue on the 56 55.9 prior corresponding period driven by: 54 4.9 • Good organic 52 revenue growth of 5.6%, across all 50 three business units 48 48.3 • Positive markets assisting FUMAS 46 growth, particularly in CTS and TWS 44
Slide 15: Consistent performance
CONSISTENT PERFORMANCE $55.9M $23.2M $m TOTAL REVENUE $m EBITDA 58 55.9 23.2 24 55 22 52.8 20.6 53 20 19.3 18.4 20.5 48.9 17.4* 50 48.3 18 48 46.5* 16 16.6 45 14 12 43 10 40 1H20 2H20 1H21 2H21 1H22 1H20 2H20 1H21 2H21 1H22 1 Underlying EBITDA1 Statutory EBITDA $12.7M 48CENTS $m NET PROFIT AFTER TAX
Slide 16: TWS – significant growth in revenue driven by organic growth and positive markets
TWS – SIGNIFICANT GROWTH IN REVENUE DRIVEN BY ORGANIC GROWTH AND POSITIVE MARKETS $m TWS REVENUE $b TWS FUMAS1 0.9 26 12 2.4 9.8 9.7 25 25.7 10 9.1 24 8 4.6 4.6 4.4 23 6 0.6 0.7 22 4 0.6 22.4 2.1 1.7 1.9 21 2 2.2 2.5 2.7 20 - 1H21 Equity market impact Organic growth 1H22 1H21 FY21 1H22 on FUMAS¹ Phi
Slide 17: TWS – consistent growth in most businesses
TWTH – GROWTH ACROSS TWS – CONSISTENT GROWTHALL BUSINESSES IN MOST BUSINESSES CORE TRUSTEE SERVICES FUMAS1 EMERGING MARKETS FUMAS1 All graphs in Millions All graphs in Millions 1,000 Living Donors 400 Estate Management • New clients, material growth • FUMAS down due to 500 300 in donations and posit
Slide 18: STS – continued solid growth
STS – CONTINUED SOLID GROWTH $m STS REVENUE '000 STS MEMBERS $b STS FUS1 10.8 0.6 40 800 10.4 10.5 35 700 30 600 10.0 0.5 25 500 20 9.6 400 15 300 9.4 9.2 200 10 100 5 8.8 - - 1H21 Equity market Organic growth 1H22 1H21 FY21 1H22 1H21 FY21 1H22 impact on FUS¹ MAJOR NEW APPOINTMENTS INCLUDE: SUPERANN
Slide 19: CTS – strengthened market leadership
CTS – STRENGTHENED MARKET LEADERSHIP $m CTS REVENUE $b CTS FUS1 19.0 0.8 18.5 18.7 120 1.9 106.7 18.0 100 89.7 17.5 41.4 80 22.6 17.0 16.5 60 11.1 8.3 16.0 16.0 40 38.0 39.1 15.5 20 15.0 7.9 6.5 10.1 11.4 14.5 - 1H21 Equity market impact on FUS¹ Organic growth 1H22 1H21 1H22 Total • Headline growth
Slide 20: CTS – servicing the global fund manager industry
CTS – SERVICING THE GLOBAL FUND MANAGER INDUSTRY 400 FUND MOVEMENTS FUND MANAGER LOCATION 45 350 26 (6) 349 Other 300 3% 306 (22) 310 250 Asia 200 4% 150 Europe 100 19% 1H21 New Funds Funds Closed 2H21 New Funds Funds Closed 1H22 Australia 51% FUND MANAGER MOVEMENTS 140 1 12 135 130 133 US 23% 125 (
Slide 21: CTS – corporate trust and securitisation
CTS – CORPORATE TRUST AND SECURITISATION $m REVENUE $b FUS1 NUMBER OF ACCOUNTS 1.8 1.7 1.6 12.0 10.9 80 75 1.6 70 1.4 10.0 60 56 1.2 51 1.2 8.0 50 1.0 42 6.0 5.6 40 0.8 3.8 30 0.6 4.0 3.4 0.4 20 2.0 0.2 10 - - - 1H21 2H21 1H22 1H19 1H20 1H21 1H22 1H19 1H20 1H21 1H22 • Significant retail note transac
Slide 22: CTS – UK/Ireland
CTS – UK/IRELAND NO. CLIENTS NO. FUNDS £b TOTAL FUS 12 32 4.0 28 3.5 10 24 3.0 8 20 2.5 6 16 2.0 12 1.5 4 8 1.0 2 4 0.5 - - - FY20 1H21 FY21 1H22 FY20 1H21 FY21 1H22 FY20 1H21 FY21 1H22 • Strong FUS growth, notwithstanding a more challenging environment as a result of COVID-19 impacts throughout FY2
Slide 23: Strong balance sheet
STRONG BALANCE SHEET $M 1H22 FY21 1H21 Assets • Debt/equity 3.6% (excluding cash Cash and liquid investments 79.8 73.9 73.9 backed ORFR facilities) ORFR cash 30.5 23.3 23.3 • Majority of cash and liquid assets Trade receivables and accrued income 33.9 34.6 31.6 supports regulatory capital Goodwill a
Slide 24: Strong operating cash flow
STRONG OPERATING CASH FLOW $m CASH FLOW 100 22.9 95 90 • Consistent, high quality (8.3) 85 cash generation 79.8 80 (7.0) • Surplus cash principally (1.7) used for tax payments 73.9 75 10.0 and dividends 5.0 70 • Negligible bad debts 69.8 68.9 65 60 FY21 Net cash flow from Payment of Income tax paid
Slide 25: Strong liquidity position
STRONG LIQUIDITY POSITION $m 1H22 UNENCUMBERED LIQUIDITY POSITION • Low gearing, healthy liquidity and net cash 140 positive position • $96.8m regulatory capital 120 126.7 requirement consisting of: − $66.3m in net tangible 100 assets (largely held as cash) 80 − $30.5m of ORFR related 30.0 cash 60 •
Slide 26: Summary
SUMMARY STRONG EARNINGS PERFORMANCE ON CONTINUED FUNDS GROWTH Strong organic revenue growth, supported Increased EBITDA margins to 41.5% by growth in equity markets Underlying cost growth below revenue growth as we invest and create a Strong cash generation foundation for more sustainable future gro
Slide 27: Strategy update and outlook
STRATEGY UPDATE AND OUTLOOK
Slide 28: A company founded on trust
A COMPANY FOUNDED ON TRUST PURPOSE: HELP PEOPLE TAKE CARE OF THE FUTURE Safeguard people’s wealth now and for Provide trustee services to help clients protect generations to come members’ and investors’ interests Act as a trusted, independent partner to grow Empower clients to improve the lives of o
Slide 29: Trust is in demand
TRUST IS IN DEMAND Increasing demand for an independent fiduciary model Regulatory landscape continues to evolve following the Royal Commission Increasing Conflicts of regulatory interest oversight Changes in ownership of wealth management businesses has increased Ownership changes in KEY Focus on G
Slide 30: Group strategy overview
GROUP STRATEGY OVERVIEW OUR OBJECTIVES Consistent growth in shareholder value Reputation as a stable, enduring, Market leadership in our specialty areas and returns trusted corporation GROUP STRATEGY BUSINESS GROWTH CLIENT SERVICE CAPABILITY COMMUNITY • Capture opportunities from • Deliver seamless,
Slide 31: Business unit strategies
BUSINESS UNIT STRATEGIES TRUSTEE & WEALTH SERVICES SUPERANNUATION CORPORATE TRUSTEE SERVICES (TWS) TRUSTEE SERVICES (STS) (CTS) Achieve leadership in Achieve further scale by Build on Australian multiple states and more securing trusteeship for leadership position in lines of business large funds an
Slide 32: TWS initiatives
TWS INITIATIVES IMPROVED CLIENT ENGAGEMENT AND BUSINESS DEVELOPMENT • Investment in targeted business development through strategic partners (legal industry, planners, HNW advisors) • Expand the services provided to each client • Commitment to philanthropic sector through launch of fourth Annual Giv
Slide 33: STS initiatives
STS INITIATIVES LEVERAGING OUR INDEPENDENT TRUSTEE MODEL • Take advantage of industry changes and potential conflicts of interest that drive strong demand for independent governance capability • Business development focused on existing and new clients to explore partnerships and growth opportunities
Slide 34: CTS initiatives
CTS INITIATIVES PROVIDING INDEPENDENT, SPECIALIST TRUSTEE AND FIDUCIARY SERVICES • Digitise and streamline workflows to increase productivity to support strong organic growth • Growing existing business – Strengthen leading proposition for quality fund managers to enter Australian retail market – Us
Slide 35: Investing in technology
INVESTING IN TECHNOLOGY CONTINUING TO DRIVE EFFICIENCIES AND ENHANCE THE CUSTOMER EXPERIENCE FOCUS FOR FY22-23 • EQT have continued to invest in a number of critical technology • A number of projects are underway aiming to deliver: areas, enhancing the overall technology architecture and − For the C
Slide 36: Sound risk management in an escalating regulatory environment
SOUND RISK MANAGEMENT IN AN ESCALATING REGULATORY ENVIRONMENT RISK CULTURE – PROPORTION OF POSITIVE SCALE, DATA MANAGEMENT AND TRUSTEE EXPERIENCE IS AN RESPONSES* INCREASING BARRIER TO ENTRY AND OPERATION 90% • Maintain broad, deep and constructive relationships with APRA and ASIC 85% • The frequenc
Slide 37: Summary and outlook
SUMMARY AND OUTLOOK STRATEGY REINFORCED AND MOMENTUM CONTINUES • Strategy reinforced by strong FUMAS and revenue growth • Trend to outsource fiduciary services continues to transform industry and benefit Equity Trustees • Strong equity markets have generated a positive impact but the conflict in Eas
Slide 38: Questions
QUESTIONS
Slide 39: Thank you
THANK YOU
Slide 40: EQT Holdings Limited
EQT Holdings Limited ABN 22 607 797 615 Level 1, 575 Bourke Street Melbourne VIC 3000 1300 133 472 www.eqt.com.au Disclaimer The Board has authorised that this document be given to the ASX. EQT Holdings Limited ABN 22 607 797 615. This document was prepared by EQT Holdings Limited and is only provid