Eqt Holdings Ltd. · ASX:EQT
Eqt — Equity Trustees — Shareholder Meeting (October 2013)
76 slides from Eqt's shareholder meeting presentation, Oct 25, 2013
Slide 1: 2013 AGM Chairman & MD Speeches
1 Equity Trustees Limited 2013 AGM Chairman & MD Speeches For personal use only Slide 1: Cover page 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
Slide 2: The Board (speech notes)
2 9. The Honourable Jeffrey Kennett AC joined the Board in September 2008 and is a member of the Remuneration, Human Resources and Nominations Committee. Ms Anne O’Donnell joined the Board in September 2010. Anne is a For personal use only 10. member of the Audit & Compliance Committee, is the Chair
Slide 3: S&P/ASX200 Index, Cash Rate (speech notes)
3 Slide 4: S&P/ASX200 Index, Cash Rate 16. After a number of years of relatively subdued equity markets the ASX200 produced its strongest return for six years, with a gain of 16.2% over the For personal use only course of the 2013 financial year. For the fourth year in a row, however, the last quart
Slide 4: Profitability and Dividends (speech notes)
4 Slide 6: Profitability 21. Net profit after tax (NPAT) grew by 3% for the year, but as I have already noted this was after incurring material costs associated with the Trust For personal use only takeover bid. Excluding these takeover expenses, the NPAT increase would have been 16.7%. Return on Sh
Slide 5: Share performance and Trust Company takeover offer (speech notes)
5 Slide 9: Relative share price performance 25. On this chart we have tracked the total return from an investment in Equity Trustees – comprising dividends and changes in the market value of the shares – against the market as a whole, against our sector and For personal use only against our takeover
Slide 6: Trust Company offer rationale (speech notes)
6 28. In February we announced our intention to make an offer – and the rest of the process since then has been thoroughly detailed in our announcements, the formal offer documents from the respective parties, and public commentary of one sort or another. For personal use only 29. The improvement in
Slide 7: Valuing the competing offers (speech notes)
7 significant factor in the assessment of competing offers. While the independent expert report canvasses this issue in respect to EQT, it does so in our opinion in quite a flawed manner. Let me elaborate. In what follows, all figuring is based on the prices adopted for calculation purposes For pers
Slide 8: EQT's offer provides higher value (speech notes)
8 Slide 12: EQT’s offer provides higher value. 37. This slide has a lot of information on it so I will summarise it simply, and of course copies of this pack are available if you’d like to look at this in detail. For personal use only What this graphic illustrates is that if you re-state the value o
Slide 9: Takeover next steps (speech notes)
9 41. We are still very keen to acquire Trust as it represents the single best opportunity to achieve step growth in earnings and dividends for EQT shareholders. We will therefore continue to actively pursue the opportunity as far as it makes economic and operational sense to do so for our For perso
Slide 10: The Board (speech notes)
10 attendance statistics of all the Directors, with in total a 97% combined attendance ratio for the 32 full Board meetings held. The number of meetings reflects not just the increasing complexity and demands of running a highly-regulated diversified financial services business but the For personal
Slide 11: Looking ahead (speech notes)
11 assets has waned significantly and the record flows of the last two financial years will not, on current trends, be replicated this year. 49. The business does continue to perform well and the Managing Director will For personal use only provide some statistics to demonstrate this in his address
Slide 12: Overview FY2013 (speech notes)
12 Slide 19: Overview FY2013 53. The Shareholder Review, the Annual Report, and the complementary information package provide a good understanding of the company’s For personal use only activities, operating performance and recent initiatives. I will therefore spend more time commenting on some meas
Slide 13: Growth projects and staff survey (speech notes)
13 58. In 2013 we launched a second major long-term development project, in the Private Wealth business unit, focused on generating increased client numbers, broader distribution, and higher revenue per client, through improvements and initiatives in both internal and external marketing and For pers
Slide 14: Business units (speech notes)
14 Investment Officer, joined us in April, and has brought in additional highly- regarded expertise to his team. Mr Boubouras comes to us with exceptional credentials in this role. For personal use only 62. I spoke last year about the strategic rationale for the creation of the single business unit
Slide 15: Funds distribution flows (speech notes)
15 period in the 2013 year, and it appears very unlikely that we will see a repeat of the exceptional net inflows of 2012 and 2013. We have witnessed in the last few months a number of significant redemptions in some of the defensive asset funds we distribute, although in total these For personal us
Slide 16: AON wills and estate planning (speech notes)
16 will writing and estate planning services. This followed a pilot scheme with AON which demonstrated the attractions of this proposal for AON’s clients, advisors and for Equity Trustees. There are two basic benefits for us in this relationship: firstly, we generate immediate revenue from providing
Slide 17: Aged care and RSE services (speech notes)
17 significance of this is the ability to provide a much more immediate cross- referral to other EQT wealth services for clients who are seeking aged care advice. This increases the success rate of cross-sell opportunities, and I should point out that the aged care services business has on For perso
Slide 18: Expense growth and 2014 margin outlook (speech notes)
18 an element of capital investment to implement. In addition we have had to incur significant time and costs to restructure the business, adapt for legislative changes and remodel for the current environment. In some areas we have had to build up staff to be able to take on new business For persona
Slide 19: Closing remarks and thanks (speech notes)
19 81. Our industry is a dynamic and very competitive one, with a high profile in the nation’s economic and business life and an incredibly demanding, intricate and ever-changing regulatory environment. The last two years have seen a tidal wave of regulatory-induced change, and during this we For pe
Slide 20: Item 1: Financial statements (speech notes)
20 Slide 25: Items of ordinary business – Item 1 86. The first Item of business is to receive and consider the Financial Statements and the Reports of the Directors and Auditor for the year For personal use only ended 30 June 2013. 87. The Financial Statements have been formally approved by the boar
Slide 21: Item 2: Remuneration Report (speech notes)
21 95. The Remuneration Report is contained in the Directors’ Report and set out in detail on pages 7 to 13 of the Annual Report. This is an opportunity for shareholders to discuss the Remuneration Report and to vote upon it. This is a non-binding vote, the result of which your directors would, if F
Slide 22: Remuneration plans (speech notes)
22 100. The Employee Share Acquisition Plan has again been implemented and allocations have been made to qualifying staff in all but one of the 11 years the ESAP has been in existence. Staff who have participated in the ESAP for the whole of this time and reinvested via the dividend For personal use
Slide 23: Remuneration vs dividends (speech notes)
23 directors and dividends paid to shareholders, using 2004 as the base year. The chart compares the cumulative growth in remuneration year by year, with the cumulative growth in dividends paid. The values in the chart are multiples of the values applying in the base year. The cumulative For persona
Slide 24: Resolution vote and Item 3 Election of Directors (speech notes)
24 <Pause> 112. I would now like to put this resolution to a vote. Please note this is a non- binding vote, however, we note the potential impact of the ‘two strikes’ For personal use only policy. 113. This will be determined by a show of hands. Therefore, if you wish to vote, when asked to do so, p
Slide 25: Item 3(a) Re-election of Ms A O'Donnell (speech notes)
25 Slide 32: Item of ordinary business – Item 3(a) Re-election of Ms A O’Donnell 120. Item 3(a) is the re-election of Ms Anne O’Donnell. For personal use only 121. I invite questions from shareholders, proxyholders and authorised representatives of shareholders. 122. If you would like to comment or
Slide 26: Item 3(b) Re-election of Mr JA Killen (speech notes)
26 130. For those against, please raise your hand. <Count> 131. I declare that the resolution is passed. For personal use only 132. Thank you. Slide 34: Items of ordinary business – Item 3(b) Re-election of Mr JA Killen 133. As this involves my own position as a director of the company I will hand t
Slide 27: Chairman succession and Killen re-election (speech notes)
27 institute our earlier plans for orderly succession to a new Chair.. This would include the appointment of a new non-executive director. 137. Tony’s decision to seek re-election and to continue as Chairman on this For personal use only basis is wholly endorsed by the other Board members who recomm
Slide 28: Item 3(b) vote and Item 4 (speech notes)
28 <Count> 147. For those against, please raise your hand. <Count> For personal use only 148. I declare that the resolution is passed. 149. Thank you. I will now hand the Chair back to Mr Killen. Mr Killen re-assumes the Chair 150. Thank you David and shareholders. I should tell you that my strong p
Slide 29: MD Long Term Incentive Award (speech notes)
29 also the same, viz possible 60% of TEC. This means that the maximum number of shares that could ultimately be vested to the MD under this series would be 19,915. For personal use only 154. As usual the fine detail of the arrangement is fully outlined in the Notice of Meeting so I won’t go into it
Slide 30: Proxies received: LTI award to MD (speech notes)
30 <Pause> 159. Thank you For personal use only Slide 38: Proxies received – Long-term incentive award to MD 160. I would like to inform the meeting that the proxy position at the outset of the meeting is as shown on the screen. 161. In accordance with the Notice of Meeting Mr Burns and his respecti
Slide 31: Item 5: Share Grant for MD (speech notes)
31 Slide 39: Items of special business – Item 5 169. Item 5 is the approval of a Share Grant for the Managing Director, of up to $50,000 in EQT shares in accordance with the conditions that are set out For personal use only in the Notice of Meeting. Slide 40: Items of special business – Item 5 (cont
Slide 32: Proxies received: Share Grant (speech notes)
32 176. In accordance with the Notice of Meeting Mr Burns and his respective related parties are excluded from this vote except, in limited circumstances, where they hold proxies and Key Management Personnel are subject to restrictions where they hold proxies. These restrictions have For personal us
Slide 33: Close of meeting (speech notes)
33 Slide 43: Logo 186. That concludes the formal agenda items at today’s AGM 187. As mentioned at the beginning of the meeting I would now like to invite you For personal use only to join us for some light refreshments. Thank you for your attendance and support at today’s meeting. I declare the meet
Slide 34: 2013 Annual General Meeting
For personal use only 2013 Annual General Meeting 25th October 2013
Slide 35: Board of Directors
Board of Directors For personal use only Mr JA (Tony) Killen OAM Mr Robin Burns Mr David Groves Non Executive Director, Chairman Managing Director Non Executive Director Deputy Chairman Ms Alice Williams The Hon Jeffrey Ms Anne O’Donnell Mr Kevin Eley Non Executive Director Kennett AC Non Executive
Slide 36: 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 4. Questions 3
Slide 37: Sharemarket performance
Sharemarket performance S&P/ASX200 Index vs. RBA Cash Rate For personal use only % change S&P/ASX 200 RBA Cash 30% Rate 8% 20% 7% 10% 0% 6% -10% 5% -20% -30% 4% -40% 3% -50% S&P/ASX 200 Index RBA Cash Rate -60% 2% 4
Slide 38: Overview – FY2013
Overview – FY2013 For personal use only • Operating profit before tax up 18% (before takeover expenses). • Underlying EPS up 13% - breakout from trend line of last few years. • Organic revenue growth in both business units – in total revenue up 9%. • Business re-structure completed – consolidated pr
Slide 39: Profitability
Profitability For personal use only Net profit after tax up at $8.7m, net of takeover costs of $1.2m (includes profit on sale of investments) $9.9m $1.2m $8.7m $8.4m $8.2m $8.0m $8.0m 2009 2010 2011 2012 2013 6
Slide 40: Dividends
Dividends For personal use only Full year, fully franked dividend Interim (cps) Final (cps) 110 110 100 92 85 50 50 50 42 40 60 60 50 45 50 2009 2010 2011 2012 2013 7
Slide 41: Dividend payout ratio
Dividend payout ratio For personal use only Target Ratio: 70-90% of NPAT 120% 113.9% 111.7% 103.1% 100% 95.2% 87.9% 80% 60% 40% 20% 0% 2009 2010 2011 2012 2013 8 Dividend payout policy range
Slide 42: Relative share price performance
Relative share price performance For personal use only EQT’s has delivered better returns for shareholders over the past 8 years. 250% 200% 150% 100% 50% % -50% -100% Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 EQT TRU S&P/ASX 200 Index S&P/ASX 200 Diversified Financials Source: S
Slide 43: The Trust Company Ltd – takeover offer
The Trust Company Ltd – takeover offer For personal use only • Several attempts to combine in past years – none reach mutually satisfactory outcomes. • Consolidation occurring in sector – TRU a target (performance, no CEO, systems spend) – therefore timing right for EQT. • TRU’s market value gain si
Slide 44: Trust Company – valuing the competing offers
Trust Company – valuing the competing offers For personal use only • TRU’s “Independent Expert’s Report” (IER) materially understates the value of EQT’s offer compared with the competing proposal from Perpetual. • Fundamental questions regarding the IER: 1. Understates EQT’s sustainable EBIT – EQT i
Slide 45: EQT's offer provides higher value
EQT’s offer provides higher value For personal use only Correcting for IER’s flaws, the value of EQT’s offer increases by 18% – 29%. ADJUSTED VALUATION OF EQT’S OFFER $23.00 $21.84 $22.00 High $21.00 Value of EQT share $20.00 $18.20 $19.00 Low $18.00 $18.94 $16.96 $17.00 $17.20 $16.00 $15.00 $16.02
Slide 46: EQT's offer remains superior - value
EQT’s offer remains superior - value For personal use only EQT’s offer delivers higher capital value to TRU shareholders. INDICATIVE VALUE OF A TRU SHARE $7.23 - $8.30 ADJUSTED $6.14 - $6.51 IER $6.95 - $7.50 IER $6.00 $6.50 $7.00 $7.50 $8.00 $8.50 Note: EQT Adjusted = using LEA methodology, includi
Slide 47: EQT's offer remains superior – estimated dividends
EQT’s offer remains superior – estimated dividends For personal use only EQT’s offer is expected to deliver higher dividends to TRU shareholders. STAND-ALONE BROKER INDICATIVE DIVIDENDS PER TRU CONSENSUS DIVIDENDS SHARE (WITH SYNERGIES) $1.50 $0.70 $1.25 $0.60 $0.50 $1.00 0.37 $0.40 $0.75 $0.50 $0.9
Slide 48: The Trust Company Ltd – takeover offer
The Trust Company Ltd – takeover offer For personal use only • Will continue to actively pursue the opportunity – continue to engage with major shareholders. • Will continue to consider other attractive acquisition opportunities. 15
Slide 49: The Board
The Board For personal use only • Composition unchanged from prior year – deferring consideration of changes during TRU process, but orderly succession planning in place. • Very active year – 65 Board/Board Committee meetings. Directors achieved 97% attendance record at 32 full Board meetings. • Num
Slide 50: Looking ahead
Looking ahead For personal use only • Some buoyancy in share market, but underlying economic conditions and confidence still far from strong – US debt ceiling issue an example. • Switching out of defensive assets evident in recent months, but flow to growth assets still appears subdued. • Recent rec
Slide 51: Mr Robin Burns, Managing Director
For personal use only Mr Robin Burns Managing Director Equity Trustees Limited 18
Slide 52: FY2013 – a break-out year
FY2013 – a break-out year For personal use only • Organic revenue growth 19% in corporate business unit, 3% in private wealth unit. • Recurring expense growth 6% - includes additional costs to meet regulatory changes, for re-structuring, and higher incentives based on improved operating performance.
Slide 53: Organisation Structure
Equity Trustees Limited Organisation Structure For personal use only Managing Director Robin Burns Corporate Chief Financial Chief Investment Private Wealth Fiduciary & Officer & Company Officer Services Financial Services Secretary Geoff Rimmer George Harvey Kalman Terry Ryan Boubouras Legal, Risk
Slide 54: Business update
Business update For personal use only • Net inflows to EQT co-branded funds at 23% of 2012 level for Q1. Dundas Global Investors signed as distribution client – global equities class. • 4 new RE appointments, 1 new manager in Q1 (closed 3 funds, terminated 1 manager). Further appointments in progres
Slide 55: Summary
Summary For personal use only • Company is performing well, no debt, good cash flow. • Break out year in 2013. • Business efficiency and long-term growth projects in progress – both tracking well. • Dynamic, competitive industry has attractive long term growth prospects. • Unprecedented period of re
Slide 56: 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 4. Questions 23
Slide 57: 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 2013. Item 2 To adopt the remuneration report for year ended 30 June 2013. Item 3 To consider the election of directors. Item 4 To c
Slide 58: 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 2013. 25
Slide 59: 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 2013. 26
Slide 60: Remuneration
Remuneration For personal use only • Short Term Incentives - 59% of maximum pool paid in 2013 (31% in 2012). • 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 Not Earned (ended 3
Slide 61: Remuneration - disclosure
Remuneration - disclosure For personal use only • Annual report discloses MD total remuneration as: – Short-term benefits (salary, STI, non-monetary) $614,970 – Post-employment (superannuation) $16,470 – Long-term (LSL accrual) $3,905 – Share-based payments (LTI) $153,319 – Total $788,664 • “Share-b
Slide 62: Tracking remuneration vs Dividends
Tracking remuneration vs Dividends For personal use only Cumulative growth in Non-Executive Director remuneration 30 Cumulative growth in Top 5 Executive plus MD remuneration Cumulative growth in Dividend per Share (DPS) 25 20 15 10 5 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 29
Slide 63: Item 2 – proxies received
Item 2 – proxies received For personal use only To adopt the remuneration report for year ended 30 June 2013 In respect of item 2 of ordinary business, the following proxies have been received: For Against 153,709 2,897,061 (4.69%) Open (held by EQT directors) = 93,786 30
Slide 64: Items of ordinary business – Item 3
Items of ordinary business – Item 3 For personal use only Item 3 To consider the election of directors 31
Slide 65: Item 3(a): Re-election of Ms Anne O'Donnell
Items of ordinary business – Item 3 For personal use only Item 3(a): To consider the re-election of Ms Anne O’Donnell 32
Slide 66: Item 3(a) – proxies received
Item 3(a) – proxies received For personal use only To consider the re-election of Ms Anne O’Donnell In respect of item 3(a) of ordinary business, the following proxies have been received: For Against 52,731 Ms Anne O’Donnell 3,464,159 (1.31%) Open (held by EQT directors) = 483,757 33
Slide 67: Item 3(b): Re-election of Mr Tony Killen
Items of ordinary business – Item 3 For personal use only Item 3(b): To consider the re-election of Mr Tony Killen 34
Slide 68: Item 3(b) – proxies received
Item 3(b) – proxies received For personal use only To consider the re-election of Mr Tony Killen In respect of item 3(b) of ordinary business, the following proxies have been received: For Against Mr Tony Killen 3,515,127 1,230 Open (held by EQT directors) = 483,757 35
Slide 69: Item 4: LTI award to Managing Director
Items of special business – Item 4 For personal use only Item 4: To consider the grant of a long-term incentive award to Managing Director 36
Slide 70: Managing Director's LTI, 2013/2014 Series
Managing Director’s LTI, 2013/2014 Series For personal use only • Quantum: 60% of TEC ($550k) = $330k. Maximum potential issue is 19,915 shares. • 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
Slide 71: Item 4 – proxies received
Item 4 – proxies received For personal use only 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 3,188,114 336,900 (8.38%) Open (held by EQT directors) = 88,469 38
Slide 72: Item 5: Grant of shares to the Managing Director
Items of special business – Item 5 For personal use only Item 5: To consider a grant of shares to the Managing Director 39
Slide 73: Items of special business – Item 5
Items of special business – Item 5 For personal use only • To effect 50% ($50,000) of MD’s 2014 remuneration increase via an award of shares. • Better align MD’s overall rewards to company performance and shareholder outcomes. • Separate to normal annual STI and LTI plans. • Encourages MD to accumul
Slide 74: Item 5 – proxies received
Item 5 – proxies received For personal use only To consider a grant of shares to the Managing Director In respect of item 5 of special business, the following proxies have been received: For Against 323,599 3,210,225 (8.04%) Open (held by EQT directors) = 88,469 41
Slide 75: 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 • Questions 42
Slide 76: Thank you
For personal use only Thank you 43