Eqt Holdings Ltd. · ASX:EQT
Eqt — Equity Trustees — Shareholder Meeting (October 2010)
70 slides from Eqt's shareholder meeting presentation, Oct 29, 2010
Slide 1: 2010 AGM Chairman and Managing Director Speeches
1 Equity Trustees Limited 2010 AGM Chairman and Managing Director Speeches For personal use only Slide 1: 1. Shareholders, ladies and gentlemen, good morning. 2. On behalf of my fellow directors, executives and all staff of Equity Trustees it gives me great pleasure to welcome you to the 2010 annual
Slide 2: Chairman's speech: introduction of directors
2 7. Mr David Groves, a director since November 2000, is our Deputy Chairman and is also Chairman of our Audit & Compliance Committee. 8. Mr John McConnell joined our Board in January 2002 and is a member of For personal use only the Audit & Compliance Committee; 9. Mr Barry Jackson, the Chair of th
Slide 3: Agenda and annual report
3 after which there will be an opportunity for questions. Light refreshments will be served in the foyer outside after the conclusion of the meeting, providing a good opportunity for shareholders to meet informally with the directors and management of the company For personal use only Slide 4: Annua
Slide 4: Fund flows and economy
4 inflows in the latest year. Clearly there is plenty of cash on the sidelines waiting for an appropriate opportunity to return to active investments. 20. The Australian economy is fundamentally sound though obviously not For personal use only immune from international influences. The Australian eco
Slide 5: Shareholder dividends and franking credits
5 Slide 9: Shareholder Dividends 23. Again it was a conscious decision of the Board to maintain dividends at the level of the past two years. The Board was comfortable in maintaining it at For personal use only this level because we have confidence in the company’s underlying profitability and futur
Slide 6: Growth by acquisition: OAMPS
6 27. Growth by acquisition is an important strategic objective of the company. Last month we announced that we have reached agreement with Wesfarmers Ltd to purchase the OAMPS superannuation business for $10m. Due diligence is currently underway and we expect completion of For personal use only the
Slide 7: Board performance and succession
7 diligent, work extremely well as a team, and it is a pleasure to chair meetings of the Board. 31. The Board has also been keeping under active review succession For personal use only planning for its ongoing development. We have a clear view of the skills we wish to maintain around the Board table
Slide 8: Outlook
8 34. Looking ahead, economic conditions are clearly still difficult in a number of the developed economies. Australia benefits from its relationship with the growth engine that is China and with other developing economies in the region. We have survived the GFC better than most and our major For pe
Slide 9: Competitive position; Managing Director's address
9 Australian financial services landscape, we remain confident of our position in it, of our capacity to compete effectively, and to do so profitably on behalf of our shareholders. For personal use only 39. I now invite the Managing Director to address the meeting. Thank you. Slide 16: Mr. Robin Bur
Slide 10: Managing Director: FY2010 overview
10 45. The Chairman has already noted the moderate growth in revenue in the year, following a decline in 2009 as the impact of the fallout from the credit crisis and subsequent market rout. I will provide an analysis of the revenue numbers in a little more detail later on. For personal use only 46.
Slide 11: Revenue recovering
11 Slide 18: Revenue Recovering 51. Some of my presentation materials may look a little complex but I’m not going to go through them all in detail. There are hard copies available for For personal use only you to read at leisure and this pack will also be on our web site. 52. The purpose of this sli
Slide 12: Revenue and All Ords year on year
12 56. But despite the very challenging conditions of these last few years the group’s revenue base in 2010 was nearly 7% higher than it had been in 2007. The key point I’d like to close on here is that if equity markets stage a sustained recovery we’d expect to see a significant reflection in our F
Slide 13: Expenses and business units
13 were no staff incentive payments in 2009 compared to 2008. For those reasons I don’t regard the growth in expenses in 2010 of 4% as representing a material cause of concern. For personal use only 61. Attracting and retaining experienced, skilled and motivated employees is a strategic imperative f
Slide 14: Business unit performance
14 investor sentiment. This is demonstrated by the fact that the funds under management at period end grew by 12.3%, but revenue actually declined marginally. For personal use only 66. In the Fund Services unit we provide responsible entity and responsible superannuation entity services to external
Slide 15: Private Clients and Funds Management
15 71. We recently appointed our first dedicated business to business relationship manager for the private clients arm and we’ve also recently gained our first interstate compensation trust clients. For personal use only Slide 23: Business Unit Overview, Funds Management 72. As you can see we starte
Slide 16: Fund Services and Superannuation
16 76. Again, money has been flowing into lower margin products in this business unit. 77. Our reputation and service quality as a responsible entity are the reasons For personal use only we do get strong referral leads and we will take a disciplined approach to taking on new managers, new funds and
Slide 17: Support services and systems
17 82. Just as important to our overall business and success are the support services or functions. Each of these is represented in the executive team and is seen as an integral part or the overall business. For personal use only 83. The implementation of the new back office system is in its very la
Slide 18: Trust and business update
18 88. The image of many financial services organisations has been tarnished by an enormous loss of trust and goodwill, which I believe creates immense opportunities for Equity Trustees. For personal use only 89. Personal investors and entities with fiduciary responsibilities alike are looking to se
Slide 19: Regulatory changes
19 95. Dealing with frequent changes in the regulatory environment is a routine task for financial services companies and there are a number of potentially significant issues heading our way. The national Trustee company legislation is now in place and although some details are still to be worked Fo
Slide 20: Acquisition strategy and summary
20 high-quality financial advice businesses that meet our criteria and if a suitable opportunity arose with one of these we would actively consider it. 101. The group’s ‘step-growth’ strategy, which has been in place for some time, For personal use only is in our view still appropriate and consequen
Slide 21: Industry growth and positioning
21 107. Australia’s financial services industry is one of the largest in the world – often said to be the 4th biggest, having grown from maybe being the 10th largest just 9 or 10 years ago. That spectacular growth has been driven by not just relative economic success, but more significantly by the f
Slide 22: Staff satisfaction
22 But our industry has in effect returned to normal operating conditions in many ways and expertise, relationships and experience are sought after resources. For personal use only 112. Staff satisfaction, which we survey annually, did decline in 2010 compared to 2009 and previous years. Part of thi
Slide 23: Items of business and remuneration report
23 The second is to adopt the remuneration report for year ended 30 June 2010. The third is to consider the election of directors. The fourth is to consider the grant of a long-term incentive award to the Managing Director. For personal use only Item 1 – Financial Statements Item 2 – Remuneration Re
Slide 24: Remuneration
24 hurdles are met. You can see the actual outcomes over the first three years have been mixed. 122. For the same reason, each year we have also continued to issue shares For personal use only to staff under the Employee Share Acquisition Plan. 123. It’s of interest to note that an employee with 5 y
Slide 25: Managing Director long term incentive award
25 Item 4 – Managing Director – Long Term Incentive Award Slide 41 128. Item 4 is the approval of the Long Term Incentive Award for the Managing For personal use only Director, Series 2010/11, with a commencement date of 1/7/10. 129. The Managing Director took up his appointment in March of this yea
Slide 26: 2010 Annual General Meeting October 2010
1 For personal use only Equity Trustees Limited 2010 Annual General Meeting 29 October 2010
Slide 27: Board of Directors
Board of Directors For personal use only Mr JA (Tony) Killen Mr Robin Burns Mr David Groves Mr John McConnell Non Executive Managing Director Non Executive Non Executive Director Director Director Chairman Deputy Chairman The Hon Jeffrey Ms Alice Williams Mr Barry Jackson Ms Anne O’Donnell Kennett A
Slide 28: Agenda
Agenda For personal use only 1. Overview and highlights Mr Tony Killen 2. Operational performance Mr Robin Burns 3. Items of business Mr Tony Killen Mr David Groves 4. Questions Trusted since 1888 3
Slide 29: For personal use only
For personal use only Trusted since 1888 4
Slide 30: Sharemarket performance
Sharemarket performance S&P/ASX200 Accum Index 30 June 2007 to 30 September 2010 For personal use only 120 7,510 110 6,510 100 Index base date 30 June 2007 S&P/ASX 200 Accum Index 90 5,510 80 4,510 70 60 3,510 50 40 2,510 Jun 2007 Dec 2007 Jun 2008 Dec 2008 Jun 2009 Dec 2009 Jun 2010 Trusted since 1
Slide 31: Net Yearly Fund Flow
Net Yearly Fund Flow Funds Management Business Unit For personal use only Million $200 $150 $100 $50 $0 -$50 2007/2008 2008/2009 2009/2010 Aust Cash & Fixed Interest International Equities Aust Equities Listed Property Trusted since 1888 6
Slide 32: Overview – FY2010
Overview – FY2010 For personal use only ¾ Satisfactory profits given testing conditions. ¾ Company well poised to continue to deliver for shareholders. ¾ 110¢ full-year, fully franked dividend maintained at 2009 levels. ¾ Sensible investment in the business, balanced by expenditure control. ¾ Strong
Slide 33: Profitability
Profitability For personal use only ¾ Operating profit before tax down 1.8% to $10.7m $14.6m ¾ Net profit after tax maintained at $8.0m (Includes profit on sale of investments) $11.1m $10.9m $10.7m $10.6m Operating profit before tax Net profit after tax $8.1m $8.0m $8.0m $6.6m $5.2m $4.2m $3.4m 2005
Slide 34: Shareholder Dividends
Shareholder Dividends For personal use only 110 110 110 Final (cps) Interim (cps) 60 60 60 75 50 45 40 30 30 25 50 50 50 20 30 20 15 10 2004 2005 2006 2007 2008 2009 2010 Trusted since 1888 9
Slide 35: Franking Credits Balance
Franking Credits Balance For personal use only Greater utilisation in 2009 and 2010 due to increased dividend. 8000 7335 7311 7000 6246 6000 5876 5252 5000 4000 3610 3000 3060 2000 2004 2005 2006 2007 2008 2009 2010 Trusted since 1888 10
Slide 36: Dividend payout ratio
Dividend payout ratio For personal use only Full-year dividend as percentage of Earnings Per Share 140% 120% 114.5% 111.7% Note, change of policy to 70-90% of NPAT (from 60-80%) 100% 82.5% 80% 75.5% 71.5% 71.3% 65.9% 60% 40% 20% 0% 2004 2005 2006 2007 2008 2009 2010 Dividend payout policy range Trus
Slide 37: Sustained share price outperformance
Sustained share price outperformance For personal use only 1 July 2005 to 30 June 2010 S&P/ASX 200 Accum. Index 24.8% EQT Total Shareholder Return 74.8% EQT Compound Growth pa. over the 5 years 11.8% 300 250 EQT Share Price 200 150 132.9 100 S&P/ASX 200 Index 107.1 Base (100) taken at 1 July 2005 50
Slide 38: Recent acquisition – OAMPS Superfund
Recent acquisition – OAMPS Superfund For personal use only ¾ Further step growth into Super ¾ 27,000 members ¾ $265m FUM ¾ Cost approximately $10 million – funded from internal resources ¾ Profitable from day one, 1 November 2010 ¾ Synergy benefits expected ¾ Bolt-on to existing master trust ¾ Earni
Slide 39: The Board
The Board For personal use only ¾ Triennial formal performance appraisal in March 2010 – some suggestions to be considered but overall conclusion was positive. ¾ Succession planning process is in place – based on desired skills mix and timetable for renewal. ¾ Barry Jackson stepping down after 8 yea
Slide 40: Looking ahead
Looking ahead For personal use only Outlook for 2011: ¾ Economic conditions still difficult in US and Europe – impacting confidence and equity markets worldwide, and hence investors. ¾ Company well placed to benefit from a sustained recovery. ¾ Overall strategic plan still relevant and balanced – ap
Slide 41: Mr Robin Burns, Managing Director
For personal use only Mr Robin Burns Managing Director Equity Trustees Limited Trusted since 1888 16
Slide 42: Overview – FY2010
Overview – FY2010 For personal use only ¾ Operating revenue growth 2.1%. ¾ Operating margin 31.1%, compared with 32.4% in previous year. ¾ New business generation continued, although varied between business units. ¾ All business units continue to earn positive EBIT. ¾ Expenses grew 4% ¾ No impairmen
Slide 43: Revenue recovering
Revenue recovering For personal use only S&P / ASX200 Index July 2007 to June 2010 7500 7000 6828.7 6500 FY 2008 FY 2009 FY 2010 6000 S&P/ASX200 5500 (16.9%) (24.1%) +10.9% 4954.3 Year on year 5000 4500 EQT operating revenue +21.2% (13.7%) +2.1% 4000 4301.5 year on year 3500 3145.5 3000 09/08 11/08
Slide 44: S&P/ASX All Ordinaries Index Year on Year
S&P/ASX All Ordinaries Index Year on Year FY08/09, FY09/10 & YTD10/11 For personal use only 5500 5000 4500 4000 3500 3000 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun All Ords 2010/11 All Ords 2009/10 All Ords 2008/9 Trusted since 1888 19
Slide 45: Expense management and margins
Expense management and margins For personal use only Growth - operating revenue (net of gains on the sale of investments) Growth - operating expenses (net of depreciation/amortisation) +30.8% +25.0% +21.1% +18.0% +15.7% +14.1% +14.2% +14.6% +4% +2.1% 2005 2006 2007 2008 2009 2010 (10.5%) (13.7%) Ope
Slide 46: Business units – activities and key measures
Business units – activities and key measures For personal use only 2010 2010 Revenue Business unit Key services Target market / channel FUM/FUA vs 2009 vs 2009 Private Clients ¾ Wealth Management ¾ Private investors $8.5m $1,261m ¾ Asset Management ¾ Business to business +12.6% +13.5% ¾ Trusts & Est
Slide 47: Business unit overview - Private Clients
Business unit overview - Private Clients For personal use only Operating revenue up 12.6% to $8.5m FUM up 13.5% to $1,261m Significant one-off estates boost 1,490 10.4 1,303 1,333 9.3 1,261 8.5 1,128 1,112 7.6 998 5.9 6.1 5.2 2004 2005 2006 2007 2008 2009 2010 2004 2005 2006 2007 2008 2009 2010 ¾ Co
Slide 48: Business unit overview – Funds Management
Business unit overview – Funds Management For personal use only Operating revenue down 2.3% to $8.3m FUM up 12.3% to $2,176m 2,367 10.0 2,176 9.0 2,002 1,938 8.5 8.3 7.5 6.4 1,414 5.9 989 617 2004 2005 2006 2007 2008 2009 2010 2004 2005 2006 2007 2008 2009 2010 ¾ Strong increase in flows into the EQ
Slide 49: Business unit overview - Fund Services
Business unit overview - Fund Services For personal use only Operating revenue up 4.8% to $8.5m FUA up 28.9% to $14,452m 13,845 14,046 14,452 9.6 8.1 8.5 11,130 11,209 7.7 5.6 7,211 3.1 4,130 2.1 2004 2005 2006 2007 2008 2009 2010 2004 2005 2006 2007 2008 2009 2010 ¾ Activity from domestic and globa
Slide 50: Business unit overview - Superannuation
Business unit overview - Superannuation For personal use only Operating revenue down 1.8% to $8.3m FUM up 10.4% to $624m 8.5 8.3 635 624 7.9 615 565 5.3 400 4.4 319 2.9 3.4 149 2004 2005 2006 2007 2008 2009 2010 2004 2005 2006 2007 2008 2009 2010 ¾ The EquitySuper brand was launched and the integrat
Slide 51: Support Services
Support Services For personal use only ¾ Support services provided by Corporate, Human Resources, Business Systems & Technology, Marketing, Operations, Risk Management & Compliance are all integral parts of the business. ¾ Last stages of implementing new back office system. ¾ Business Process Manage
Slide 52: Business update
Business update For personal use only Regulatory changes ¾ Trustee companies have commenced the transition to national legislation (from the previous state based legislation). ¾ Cooper, Ripoll and Henry reviews contain recommendations which may affect EQT’s operation, products and services . All bus
Slide 53: Summary
Summary For personal use only Current results and activities ¾ Business has diversified revenue streams, all making solid earnings contributions. ¾ Despite continuing volatility, underlying margins remain healthy and revenue has held up well. ¾ Tight expenditure control through difficult period but
Slide 54: Summary (cont)
Summary (cont) For personal use only Looking ahead ¾ Demographic opportunity in private wealth management, good leverage to funds management industry. ¾ A market recovery and sustained return to equities will flow into revenue improvement. ¾ Focus on business development and sales/marketing culture,
Slide 55: Agenda
Agenda For personal use only 1. Overview and highlights Mr Tony Killen 2. Operational performance Mr Robin Burns Items of business Mr Tony Killen Mr David Groves 4. Questions Trusted since 1888 30
Slide 56: Items of business
Items of business For personal use only Item 1: To receive and consider the financial statements and the reports of the directors and auditor for the year ended 30 June 2010. Item 2: To adopt the remuneration report for year ended 30 June 2010. Item 3: To consider the election of directors. Item 4:
Slide 57: Items of ordinary business – Item 1
Items of ordinary business – Item 1 For personal use only Item 1: To receive and consider the financial statements and the reports of the directors and auditor for the year ended 30 June 2010. Trusted since 1888 32
Slide 58: Items of ordinary business – Item 2
Items of ordinary business – Item 2 For personal use only Item 2: To adopt the remuneration report for year ended 30 June 2010. Trusted since 1888 33
Slide 59: Remuneration
Remuneration For personal use only ¾ Pay freeze 1 July 2009. ¾ No Short Term Incentives paid for 2008/09 and 2009/10. ¾ Long Term Incentive allocations each year: ¾ Series 1 Earned (ended 30/6/08) ¾ Series 2 Partially Earned (ended 30/6/09) ¾ Series 3 Not Earned (ended 30/6/10) ¾ Series 4 Under Asse
Slide 60: Tracking remuneration vs DPS
Tracking remuneration vs DPS For personal use only 20 18 Cumulative growth in Non-Executive Director remuneration 16 Cumulative growth in Top 5 Executive plus MD remuneration 14 Cumulative growth in Dividends Per Share (DPS) 12 10 8 6 4 2 0 2004 2005 2006 2007 2008 2009 2010 Trusted since 1888 35
Slide 61: Item – proxies received
Item 2 – proxies received For personal use only To adopt the remuneration report for year ended 30 June 2010 In respect of item 2 of ordinary business, the following proxies have been received: For Against 3,676,988 199,387 Open (total) = 149,680 Open (held by EQT directors) = 114,504 Trusted since
Slide 62: Items of ordinary business – Item 3(a)
Items of ordinary business – Item 3 For personal use only Item 3(a): To consider the re-election of Mr J A Killen Mr. Groves to Chair the meeting for Item 3(a). Trusted since 1888 37
Slide 63: Item (a) – proxies received
Item 3 (a) – proxies received For personal use only To consider the re-election of Mr J A Killen In respect of item 3 (a) of ordinary business, the following proxies have been received: For Against 3,872,363 7,015 Open (total) = 170,180 Open (held by EQT directors) = 135,004 Trusted since 1888 38
Slide 64: Items of ordinary business – Item 3(b)
Items of ordinary business – Item 3 For personal use only Item 3(b): To consider the election of Ms A M O’Donnell Trusted since 1888 39
Slide 65: Item (b) – proxies received
Item 3 (b) – proxies received For personal use only Item 3 (b) – to consider the election of Ms Anne O’Donnell Ms Anne O’Donnell retires in accordance with Rule 48 of the company’s Constitution and, being an eligible person, offers herself for election. In respect of item 3 (b) of ordinary business,
Slide 66: Items of special business – Item 4
Items of special business – Item 4 For personal use only Item 4: To consider the grant of a long-term incentive award to the Managing Director. Trusted since 1888 41
Slide 67: Managing Director's LTI 2010/11 Series
Managing Director’s LTI 2010/11 Series For personal use only ¾ Quantum: 60% of TEC ($425,000) = $255k ¾ Measures: 50% TSR / 50% EPS, over 3 years ¾ Vesting Scales: TSR ¾ Less than 50 th per-centile Nil ¾ 50 th per-centile 50% ¾ 75 th per-centile 100% EPS ¾ Less than 5% pa Nil ¾ 5% pa 25% ¾ 15% pa an
Slide 68: Item – proxies received
Item 4 – proxies received For personal use only To consider the grant of a long-term incentive award to the Managing Director. In respect of item 4 of special business, the following proxies have been received: For Against 3,611,476 218,494 Open (total) = 150,119 Open (held by EQT directors) = 114,4
Slide 69: Agenda
Agenda For personal use only 1. Overview and highlights Mr Tony Killen 2. Operational performance Mr Robin Burns 3. Items of business Mr Tony Killen Mr David Groves Questions Trusted since 1888 44
Slide 70: For personal use only
EO ‘[rustees Trusted since 1888