Slide 1: EQT Holdings Limited Results for year ending 30 June 2017
For personal use only EQT Holdings Limited (Equity Trustees) Investor Presentation Results for year ending 30 June 2017 Mick O’Brien, Managing Director Philip Gentry, Chief Financial Officer and Chief Operating Officer 25 August 2017
Slide 2: Agenda
Agenda For personal use only 2017 in Review Financials Strategy Update Summary and Outlook Questions 2
Slide 3: 2017 in Review
For personal use only 2017 in Review Mick O’Brien, Managing Director
Slide 4: Overview
Overview For personal use only Year of achievement following business transition • Significant improvement in performance – Businesses performing strongly – Increased profit – Reduced costs – Strong underlying funds management growth • Successful business transition – Corporate restructure completed
Slide 5: Significant improvement in performance
Significant improvement in performance For personal use only • Very strong Corporate Trustee Services (CTS) performance • Improving Trustee & Wealth Services (TWS) momentum • Reduction in both operating and one-off costs • Significant improvement in staff and client engagement • ~ $67m in philanthro
Slide 6: Positioned for growth
Positioned for growth For personal use only • Leaner and more focused after restructure and other initiatives – Targeted initiatives over 12-18 months to streamline and reposition business for growth • Risk assurance investment and upgrade • Repositioning of superannuation to create competitive trus
Slide 7: CTS highlights
CTS highlights For personal use only Very Strong organic growth No. of Managers No. of Funds New Funds FUS* 15% on prior year 25% on prior year 42% on prior year FY17 FY17 264 110 FY17 7.5 FY16 96 FY16 212 FY16 5.3 FY15 82 FY15 199 FY15 2.7 $b 0 50 100 150 0 100 200 300 0 2 4 6 8 *FUS: Funds under s
Slide 8: CTS new clients in 2017
CTS new clients in 2017 For personal use only Australia Global APSEC Artesian New Clients GQG Partners Colonial First State Global Asset Mirae Asset Global Investments Management (Unlisted Infrastructure) Mittleman Cooper Investors Pzena JCP Investment Partners Sanlam Private Wealth L1 Capital Penta
Slide 9: TWS highlights
TWS highlights For personal use only Improving momentum in both core and emerging trustee services $b $b Emerging Markets Core Trustee Services (FUM*) 0.3 1.8 1.6 0.3 1.4 1.2 0.2 1.0 0.2 0.8 0.6 0.1 0.4 0.1 0.2 0.0 0.0 Estate Testamentary Perpetual Mandates Community Trusts Living Donors Compensatio
Slide 10: Sandhurst Estates integration complete
Sandhurst Estates integration complete For personal use only • Purchase price $5.0m – funded out of existing liquidity and funding arrangements • No material impact on capital requirements • Transition and integration successfully completed on time and on budget • Five year mutual referral agreement
Slide 11: Performance drivers
Performance drivers For personal use only Actual Actual % FY16 FY17 Change T1 Improve client satisfaction n/a NPS +12 n/a T2 Lifting employee Engagement 49% 58% +18% EPS T3 Increase total FUMAS $65.5b ~$68.4b +6% Growth (Norm1+26%) ROE Under construction and a focus for T4 Growing sales value FY18 T
Slide 12: Financials
For personal use only Financials Philip Gentry, Chief Financial Officer and Chief Operating Officer
Slide 13: Significant profit improvement
Significant profit improvement For personal use only FY17 v FY17 FY16 FY16 $’m $’m % Operating revenue 79.9 83.7 (4.5) • Reduced revenue reflects superannuation Operating expenses 54.6 57.0 (4.1) restructure and exit of Non-operating expenses 3.0 7.8 (61.3) funds distribution Net Profit Before Tax •
Slide 14: Key initiatives successfully implemented
Key initiatives successfully implemented For personal use only Projects Costs ($m) 2H17 1H17 2H16 1H16 Business Assurance Project - 0.7 0.7 1.2 Operating Model Review 0.3 1.3 - - All completed within time and Corporate Restructure - - 0.2 0.7 budget Superannuation Restructure - - 1.3 1.3 Largely M&A
Slide 15: Solid underlying revenue growth
Solid underlying revenue growth For personal use only Organic growth partially offsetting exit of funds distribution and superannuation upgrade $m Revenue $90 $80 $70 5.0 3.9 0.9 $60 $50 83.7 $40 79.9 73.9 $30 $20 $10 $- FY16 Impact of Exiting Impact of Client Exit Super Restructure Adjusted Revenue
Slide 16: Strong growth in funds
Strong growth in funds For personal use only Growth in funds under management, administration, advice and supervision TWS FUMAS* CTS FUS** Total EQT FUMAS* 30% CAGR*** 20% CAGR 21% CAGR FY17 9.4 FY17 60.3 FY17 69.7 FY16 8.7 FY16 56.8 FY16 65.5 FY15 8.4 FY15 47.9 FY15 56.3 FY14 4.3 FY14 35.6 FY14 39.
Slide 17: TWS performance
TWS performance For personal use only Strong performance by Philanthropy and good overall FUMAS growth offset by Superannuation restructure and lower investment and advice revenue $m TWS Revenue TWS FUMAS** $70 $b 10 $60 9 1.26 $50 8 1.23 5.0 7 $40 3.2 6 2.9 5 $30 58.3 53.3 53.8 1.1 4 1.2 $20 3 1.4
Slide 18: CTS performance
CTS performance For personal use only Strong organic growth offsets exit of funds distribution and one client CTS Revenue $b CTS FUS* $m 70 30 60 7.9 25 4.9 50 3.6 1.5 20 40 24.1 27.8 3.9 30 15 0.9 20 24.1 25.1 13.2 10.1 10 19.3 10 11.0 13.0 0 5 FY16 FY17 Australian Equities 0 Australian Fixed Inter
Slide 19: CTS consistent growth
CTS consistent growth For personal use only Strong growth momentum has already replaced lost client FUS $b CTS FUS 70 • $60.3b FUS* 60.3 60 56.8 • 30.2% CAGR** 50 45.4 • Client exit from March 2017 40 35.6 47.2 • Focus on core fiduciary 29.0 30 36.2 60.3 services 27.3 20 21.0 10 8.0 8.3 9.2 9.6 0 FY
Slide 20: Balance sheet strength
Balance sheet strength For personal use only 30-Jun-17 31-Dec-16 30-Jun-16 $’m $’m $’m Assets Cash and cash equivalents 58.4 52.2 48.7 • Low gearing (Debt to Equity Trade receivables and accrued 6.1%) 17.9 20.4 16.9 income Goodwill and intangible assets 210.4 206.2 206.6 • Substantial Other assets 5
Slide 21: Strong operating cash flow
Strong operating cash flow For personal use only $m 90 0.2 7.0 80 27.4 5.0 70 3.7 4.9 60 11.4 50 48.7 40 18.0 40.3 30 20 10 0 Opening Net cashflow Proceeds Cash from Sandhurst Other Income tax Payment of Investment in Closing Balance from from issuance of Acquisition Investing paid dividend Cash Fun
Slide 22: Strong capital position
Strong capital position For personal use only • Comfortably meet regulatory capital requirements • Streamlining of structures and entities is improving capital efficiency by ~$2-3m over time • Consolidation of licences has the potential to reduce capital requirements by a further $5m in the longer t
Slide 23: Summary
Summary For personal use only • Strong improvement in financial performance • Key initiatives completed ‒ Strengthened corporate structure and risk management framework ‒ Upgraded superannuation business ‒ Group Operating Model Review completed • Improved productivity – $2.7m of annualised cost savi
Slide 24: Strategy and Outlook
For personal use only Strategy and Outlook Mick O’Brien, Managing Director
Slide 25: Vision
Vision For personal use only EQT aims to be Australia’s leading specialist trustee company 25
Slide 26: Forging ahead: a growth agenda
Forging ahead: a growth agenda For personal use only • Targeting market leadership in areas of the wealth chain where we have competitive advantage ‒ Playing to our strengths ‒ Leveraging our unique position and specialist capability ‒ The preferred partner of other financial services and legal firm
Slide 27: Playing to our strengths
Playing to our strengths For personal use only Aiming to be market leader in areas of the wealth value chain where we have a competitive advantage Wealth protection Providing responsible entity, superannuation trustee, executor, funds management, custody services and corporate trustee appointments W
Slide 28: Leveraging our unique position
Leveraging our unique position For personal use only EQT has a unique position that provides an advantage in seeking new opportunities • Specialist capability and experience focused solely on trusteeship • Independent, un-conflicted model – Not part of a broad-based financial services conglomerate –
Slide 29: Attractive industry fundamentals
Attractive industry fundamentals For personal use only Corporate TWS TWS Private Clients Trustee Superannuation Services Demographic changes due to ageing population “~500,000 currently over Growth in mandated superannuation age 85 – will double in 20 years…3.5% “1.1x GDP to peak at 1.6x GDP in 20 y
Slide 30: Pursuing a clear growth strategy
Pursuing a clear growth strategy For personal use only Organic • Developing innovative new solutions in key growth areas – living donors • Targeting new markets where expertise can be applied e.g. compensatory trust clients • Improved service and cross-sell across our client base • Aligning our appr
Slide 31: TWS focus
TWS focus For personal use only Estate planning and management • Leveraging our Will Bank for growth – 50,000 Wills/$20b+ assets • Increased engagement with clients to promote products and services Trustee management • Targeting specialist areas where expertise can be applied, e.g. compensatory clie
Slide 32: Superannuation Services focus
Superannuation Services focus For personal use only Trustee for Partner • Leveraging the strength of our brand as the specialist independent trustee • Partnering with superannuation fund providers where trustee services are not core (promoters, administrators, employers, insurers and other providers
Slide 33: CTS focus
CTS focus For personal use only Growth of existing business • Continuing promotion of core Responsible Entity service to existing and new funds managers • Capitalise on the trend for highest quality Australian managers to enter the retail market • Utilise our leading expertise to structure convenien
Slide 34: CTS focus: offshore expansion opportunity
CTS focus For personal use only Offshore expansion opportunity • Global ‒ Global funds management market is over US$70 trillion with a high proportion invested via Collective Investment Vehicles (CIVs) ‒ A number of offshore locations are established centres of CIVs – Luxembourg, Dublin, London and
Slide 35: Summary and outlook
Summary and outlook For personal use only • Well positioned following restructure and recent investments • Attractive industry fundamentals • Leading market positions in chosen sectors of wealth management chain • Unique proposition that provides specialist advantage • Good underlying organic growth
Slide 36: Questions
For personal use only Questions
Slide 37: Appendix
For personal use only Appendix
Slide 38: Business units
Business units For personal use only Business unit Key services Target market/channel Trustee & Wealth • Personal estates & • Private clients Services trusts • Business-to-business (TWS) • Philanthropy referrals • Wealth management • Small-medium size • Asset management corporates • Community Trust
Slide 39: Core Trustee Services – Client Lifecycle
Core Trustee Services – Client Lifecycle For personal use only Perpetual Charitable Trusts Distribution Will Bank External Estate Estate Testamentary Planning Management Trusts Review Advice Light Blue = Discretionary Dark Blue = Set at Estate Planning stage 39
Slide 40: Disclaimer
Disclaimer For personal use only 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 thi
Slide 41: Thank you
For personal use only Thank you