Eqt Holdings Ltd. · ASX:EQT
Eqt — Equity Trustees — FY2007 Earnings Presentation
33 slides from Eqt's earnings presentation, Aug 27, 2007
Slide 1: Record result for Equity Trustees
For personal use only 27 August 2007 Record result for Equity Trustees Equity Trustees Limited (ASX: EQT) today announced its full year results for the 2007 financial year, confirming the company’s highest ever levels of revenue and profitability since its founding in 1888. In summary, • Operating R
Slide 2: For personal use only
For personal use only demand from global and domestic investment managers seeking access to Australian markets.” “We have taken the opportunity in our Private Clients business unit to invest in the depth of our team. This will complement the previous investment in a market leading information techno
Slide 3: Full Year Results to 30 June 2007
1 For personal use only Equity Trustees Limited Full Year Results to 30 June 2007
Slide 4: Equity Trustees
2 Equity Trustees For personal use only An independent Australian based financial services firm that is increasing its market presence and generating improved returns. Our performance is based upon: ¾ Well developed revenue streams ¾ Clear performance indicators ¾ An established growth strategy
Slide 5: Strategic direction
3 Strategic direction For personal use only 2004 2005/06 2006/07 Æ Recovery Organic Step Growth Growth Cultural change. Improvement in Improvement in processes profit margins enabling better Development of appropriate through quality business. marketing, merger and efficiency gains. acquisition oppo
Slide 6: Themes - 2006/07
4 Themes - 2006/07 For personal use only Record full year result: – Record group operating revenue – Record group operating profit – Record net profit after tax – Record operating margin – Record earnings per share – Record dividend per share
Slide 7: Themes – 2006/07
5 Themes – 2006/07 For personal use only Growth in all business units Prudent approach to costs Investment in people Eastern seaboard expansion Acquisition activity
Slide 8: Overview
6 Overview For personal use only 2007 2006 Variance (1) Group operating revenue $32.4m $24.8m 30.8% (1) Group operating profit (after tax) $11.1m $6.6m 67.7% (1) Group operating profit (after tax) $7.7m $4.7m 61.3% Net profit (after tax) $8.1m $5.2m 58.0% Earnings per share (basic) 105.18¢ 69.94¢ 50
Slide 9: Operating revenue
7 Operating revenue For personal use only 35 $m 32.4 • Growth across all +30.8% 30 business lines 25 24.8 • Benefiting from past +25.3% investment in 20 19.8 systems, marketing 16.8 +17.9% and people 15 • Positive impact of regulatory changes • Favourable market 10 conditions 5 • Excludes gains from
Slide 10: Profitability
8 Profitability For personal use only Operating profit pre-tax Net profit after-tax ($m) ($m) 12 Excludes gains from the sale of investments 9 $m $m 11.1 8.1 8 10 +67.7% 7 +58.0% 8 6 5.2 6.6 5 6 +25.3% +52.9% 4 3.4 4.2 2.8 4 3 +21.4% 3.1 +35.5% 2 2 1 0 0 2004 2005 2006 2007 2004 2005 2006 2007 • Str
Slide 11: Operating margin
9 Operating margin For personal use only 35 $m 12 40.0% Operating revenue & Operating profit & margin expenses 32.4 11.1 35.0% 25 10 24.8 34.3% 30.0% Operating profit 19.8 8 Operating margin 15 16.8 25.0% 26.8% 6 6.6 20.0% 5 21.2% CAGR = 24.5% 18.4% 2004 2005 2006 2007 15.0% 4 -5 4.2 10.0% (13.7) CA
Slide 12: Earnings per share
10 Earnings per share For personal use only 120 ¢ cents per share Weighted average 105.18 number of shares on 100 issue +50.4% 2004 6.18m 80 69.94 2005 6.42m +32.0% 60 52.98 45.52 +16.4% 2006 7.37m* 40 2007 7.74m 20 * Note – a capital raising in late 2005 increased the number of 0 shares on issue by
Slide 13: Dividends
11 Dividends For personal use only 80 ¢ cents per share 75 • Dividend payout ratio is 70 at the upper end of the +50.0% stated target range – 60 being 60-80% of Operating Profit after 50 45 50 Final Tax (excl gains on the Interim sale of investments) 40 40 30 • Dividends remain fully 30 30 franked @
Slide 14: Total shareholder return
12 Total shareholder return For personal use only 800,000 $ $100,000 invested in Equity Trustees shares on 1 July 2003 700,000 would be worth over $650,000 in July 2007. 600,000 This represents an annual return of approximately 61.3% 500,000 Note – total shareholder return incorporates movements in
Slide 15: Balance sheet
13 Balance sheet For personal use only 50.0 $m 7 Net assets ($m) Franking credit balance ($m) 45.0 44.4 +22.2% 6 5.8 40.0 +36.7% 36.4 5 35.0 4.3 30.0 4 3.6 25.0 21.6 3.1 3 20.0 16.5 15.0 2 10.0 1 5.0 0.0 0 2004 2005 2006 2007 2004 2005 2006 2007 • Investment portfolio reflects unrealised gains (net
Slide 16: Company overview
14 Company overview For personal use only Board of Directors Managing Director Private Funds Fund Superannuation Clients Management Services 29% of 29% of 25% of 17% of operating operating operating operating revenue revenue revenue revenue Support Services An uncomplicated structure designed for ef
Slide 17: Eastern seaboard
15 Eastern seaboard For personal use only The eastern seaboard states account for: • 77.5% of Australia’s population Brisbane • 80.8% of Australia’s population growth 2006 • 77.7% of Australia’s high income earners Sydney 2003 Data sourced from Australian Bureau of Statistics – 2006 Census Melbourne
Slide 18: Business unit overview
16 Business unit overview For personal use only Corporate superannuation: Sales & marketing + product management for • Wealthpac EQT co-branded funds • Templetons managed by external • Freedom of Super- specialists Choice annuation 17% Funds Management 29% Fund Services 25% Private Clients Wealth ma
Slide 19: Funds Management
17 Funds Management For personal use only A strategic approach to the value chain Investment Trustee / RE Distribution Investor Manager Institutional Provision of RE Alliances with services to a external range of investment Platforms domestic and managers to Sales & marketing international offer EQT
Slide 20: Funds Management
18 Funds Management For personal use only 10.0 $m Operating revenue ($m) +20.5% 9.0 9.0 8.0 7.5 • Strong net FUM inflows 7.0 6.4 5.9 6.0 5.0 • Focus on IDPS presence 4.0 3.0 • Good relationships with external managers 2.0 1.0 0.0 2004 2005 2006 2007 $m Funds under management ($m) 2,002 • Expanded BD
Slide 21: Private Clients
19 Private Clients For personal use only Generates Asset Fiduciary Trustee investment Management responsibility heritage is returns the basis of relative to Wealth creation all client client risk interaction profile Wealth protection Investment structures Philanthropy Trust structures Estate plannin
Slide 22: Private Clients
20 Private Clients For personal use only 10.0 $m Operating revenue ($m) 9.3 +54.2% • Impact of fee 9.0 8.0 7.0 5.9 6.1 improvements 6.0 5.2 • Focus on building 5.0 4.0 3.0 portfolio management services – cross-sell 2.0 1.0 0.0 • Consistent growth from 2004 2005 2006 2007 $m Assets under management (
Slide 23: Fund Services
21 Fund Services For personal use only Responsible Entity service chain Risk Compliance Documents Regulatory Operations management Due diligence Development Offer Management of Fund and plan on manager and approval of documentation. required operation. compliance and Appointment of documentation Dai
Slide 24: Fund Services
22 Fund Services For personal use only 9.0 $m Operating revenue ($m) 7.7 • Consistently strong 8.0 +37.8% 7.0 6.0 5.6 demand for RE 5.0 expertise 4.0 3.1 3.0 2.0 2.1 • Domestic and global 1.0 fund managers 0.0 • > 30 managers 2004 2005 2006 2007 16,000 $m Funds under administration ($m) 14,000 +24.9
Slide 25: Superannuation
23 Superannuation For personal use only Focus on superannuation services ¾ Wealthpac master-trust (acquired in 2003) ¾ Templetons master-trust (2005) ¾ Freedom of Choice master-trust (2007)
Slide 26: Superannuation
24 Superannuation For personal use only 6.0 $m Operating revenue ($m) 5.3 +18.5% 5.0 4.4 • Sydney base with 4.0 eastern seaboard reach 3.4 2.9 3.0 • Equity Trustees brand 2.0 introduced • Increased resources for 1.0 0.0 2004 2005 2006 2007 sales & marketing 700 $m Funds under management ($m) 635 600
Slide 27: Support services
25 Support services For personal use only • Continuing to invest in the business • Right people, right systems to match business requirements • Marketing activity lifting profile • IT projects delivering scale & efficiency • Process improvement in all business lines
Slide 28: Acquisitions
26 Acquisitions For personal use only Strategy • Flexibility in approach • Consistent with existing business lines • Eastern seaboard focus • Clearly measurable returns Capability • Consistent pipeline being reviewed • In-house assessment process • Quick turnaround – deal & integration
Slide 29: Acquisitions
27 Acquisitions For personal use only Freedom of Choice • Expands superannuation offering • $150m+ in FUM • Integration nearing completion Two small “bolt-ons” for the superannuation business are nearing due diligence
Slide 30: Outlook
28 Outlook For personal use only Continue to push organic growth in all business lines Seeking acquisitions where appropriate Investments in people, systems and process improvements Market movements can affect performance Focus on key KPIs: • Revenue • Margin
Slide 31: Outlook
29 Outlook For personal use only Market dynamics remain favourable: • Superannuation contributions = growth • “Better Super” = opportunity • Volatility Æ investors seeking safety • Risk management processes are critical • Diversification of revenue streams
Slide 32: Summary
30 Summary For personal use only Strong year all-around Performance from all business units Margin growth reflects efficiency Step growth under way – eg: FoC Eastern seaboard expansion – Qld office Investment in people and system resources
Slide 33: Trusted since 1888
EO ‘[rustees Trusted since 1888