Eqt Holdings Ltd. · ASX:EQT
Eqt — FY2019 Earnings Presentation
43 slides from Eqt's earnings presentation, Aug 21, 2019
Slide 1: Investor Presentation: Results for Year Ended 30 June 2019
INVESTOR PRESENTATION RESULTS FOR YEAR ENDED 30 JUNE 2019 Mick O’Brien, Managing Director Philip Gentry, Chief Financial Officer and Chief Operating Officer 21 AUGUST 2019
Slide 2: Agenda
AGENDA 1 2019 IN REVIEW 2 FINANCIALS 3 STRATEGY UPDATE AND OUTLOOK 4 QUESTIONS 2
Slide 3: 2019 in Review
2019 IN REVIEW
Slide 4: Strong FY19 and well positioned for continued growth
STRONG FY19 AND WELL POSITIONED FOR CONTINUED GROWTH • Continuing strong performance in changing environment • Consistent underlying organic growth • Poised for new growth phase, with pipeline of opportunities under development • Investing now to support this growth • Delivering for all stakeholders
Slide 5: Continuing strong performance in changing environment
CONTINUING STRONG PERFORMANCE IN CHANGING ENVIRONMENT • Net profit up 12.7% to $22.2m • Revenue up 4.6% • Disciplined expense management – increase 2.4% • Basic earnings per share up 11.7% to 108.6 cents • Total dividend for the year 90 cents, up 9.8% • All areas of business experiencing good growth
Slide 6: Consistent improvement in performance
CONSISTENT IMPROVEMENT IN PERFORMANCE $92.5M $31.3M TOTAL REVENUE NPBT 95 92.5 35 31.3 28.7 30 90 88.5 25 22.3 85 83.7 18.9 20 79.9 15 80 10 75 5 0 70 FY16 FY17 FY18 FY19 FY16 FY17 FY18 FY19 108.6CENTS 90CENTS EARNINGS PER SHARE DIVIDENDS 120 108.6 100 90.0 97.3 82.0 100 80 71.0 68.0 77.0 80 67.0 60
Slide 7: FUMAS on growth trajectory
FUMAS ON GROWTH TRAJECTORY $b TWS FUMAS** $b CTS FUS* 75 20 71.1 • FUMAS down 16.8 70 slightly to $84.9b, 68.1 principally reflecting Aon*** 15 15.1 65 one-off client changes in 1H19 60.3 11.1 60 • Good growth in 10 10.1 56.8 2H19 and trending 55 upwards 50 5 45 40 - FY16 FY17 FY18 FY19 FY16 FY17 FY
Slide 8: Consistent organic growth
CONSISTENT ORGANIC GROWTH SOUND PERFORMANCES FROM CORE BUSINESSES TWS AND CTS $m TWS NPBT $m CTS NPBT 20 14 18.1 16.4 14.2 12.9 15 13 12.4 12.5 12.1 10 12 11.3 5 11 - 10 FY16 FY17 FY18 FY19 FY16 FY17 FY18 FY19 Acquisitions and partnerships delivering: • Equity Trustees (UK and Europe Ltd) expanding
Slide 9: Organic growth continuing
ORGANIC GROWTH CONTINUING • EQT strategy to become Australia’s leading trustee • Changing industry environment continues to support independent trustee model – ~ 99% of all assets in Australia’s superannuation system are overseen by an “internal” trustee - as a truly independent provider, EQT is wel
Slide 10: Poised for continuing growth
POISED FOR CONTINUING GROWTH • Investing heavily in capability and technology to support further growth – Key board and management appointments – Targeted technology investment – Continuing emphasis on governance and risk management to underpin performance • Organic growth supplemented with non-orga
Slide 11: Delivering for all stakeholders
DELIVERING FOR ALL STAKEHOLDERS MEASUREMENT: T1 T2 T1 Net promoter score IMPROVING LIFTING Net loyalty score CLIENT EMPLOYEE T2 SATISFACTION ENGAGEMENT Engaged and enabled staff T3 T3 T4 Earnings per share growth and FUMAS GROWING DEEPENING growth SHAREHOLDER COMMUNITY VALUE IMPACT T4 Granting and v
Slide 12: T1 – Improving client satisfaction
T1 – IMPROVING CLIENT SATISFACTION NET PROMOTER SCORE (NPS) NET LOYALTY SCORE (NLS) • Digital strategy 20 20 focused on significantly 15 15 improved client experience 10 10 • Investment in 5 Financial Services 5 business Average *** development, front- - - line capabilities and 2017 2018 2019 2017 2
Slide 13: T2 – Lifting employee engagement
T2 – LIFTING EMPLOYEE ENGAGEMENT EMPLOYEE ENGAGEMENT EMPLOYEE ENABLEMENT 80 TRAINING 80 HP Norm (74)* HP Norm(73) FS Norm (69) FS Norm (67)** 60 60 COLLABORATION 40 40 2016 2017 2018 2019 2016 2017 2018 2019 WORK, STRUCTURE AND PROCESS * High Performing Norm ** Financial Services Norm 13
Slide 14: T3 – Growing shareholder value
T3 – GROWING SHAREHOLDER VALUE EARNINGS PER SHARE DIVIDENDS Cents Cents 120 100 108.6 90.0 90 97.3 82.0 100 80 70 68.0 71.0 • Consistent lift in 80 77.0 earnings per share 67.0 60 and dividends 60 50 40 • Dividend payout 40 ratio of 82.9% 30 20 20 10 0 - FY16 FY17 FY18 FY19 FY16 FY17 FY18 FY19 14
Slide 15: T4 – Deepening community impact
T4 – DEEPENING COMMUNITY IMPACT $m GRANTING CHARITABLE TRUSTS BY GRANT TYPE 130 124.3 • Annual granting program to ~3,000 110 beneficiaries 45.5 • 450+ hours 90 85.4 87.2 volunteer leave 11.0 18.9 70 76.2 78.8 66.5 50 Jun-17 Jun-18 Jun-19 Granting from Granting from Ageing & Aged Care Animals & Envi
Slide 16: Financials
FINANCIALS
Slide 17: Strong financial performance
STRONG FINANCIAL PERFORMANCE • Solid revenue growth YEAR ENDED 30 JUNE FY19 FY18 FY19 VS FY18 % • Driven by organic growth, Total revenue ($m) 92.5 88.5 4.6 strategic initiatives and markets Expenses ($m) 61.2 59.7 2.4 • Disciplined approach to expenses Net Profit Before Tax (NPBT $m) 31.3 28.7
Slide 18: Half on half performance
HALF ON HALF PERFORMANCE YEAR ENDED 30 JUNE 2H19 1H19 2H18 1H18 Slower 2H19 due to: Total revenue ($m) 46.2 46.3 45.3 43.2 • Full half impact of CTS client Expenses ($m) 31.1 30.1 30.6 29.2 mandate losses Net profit before tax (NPBT $m) 15.1 16.2 14.7 14.0 • TWS - PC seasonality and one offs ~ $1m c
Slide 19: Solid underlying revenue growth
SOLID UNDERLYING REVENUE GROWTH $m REVENUE 94 3.3 92 • 4.6% headline growth in 1.8 0.2 revenue 90 90.5 • 3.6% underlying organic (1.2) (0.1) revenue growth 88 88.5 • Market impact limited 86 92.5 (on average) 84 82 80 FY18 OVRE UK Adjusted Client exit Equity market Organic FY19 Acquisition Acquisiti
Slide 20: Strong operating cash flow
STRONG OPERATING CASH FLOW CASH FLOW • Pre-tax operating cash $m flow up 12.0% on pcp 100 35.5 • Consistent, high 90 quality cash generation 80 (13.5) • Cash principally used for debt reduction, tax 70 payments and (8.0) dividends (8.0) 60 60.7 • Negligible bad debts (12.3) 54.4 50 40 Opening Balanc
Slide 21: TWS highlights
TWS HIGHLIGHTS $b CORE TRUSTEE SERVICES (FUMAS*) $b EMERGING MARKETS (FUMAS*) SUPERANNUATION 2.0 0.40 TRUSTEE OFFICE 1.8 $b (FUS**) 0.35 9.0 1.6 0.30 8.0 1.4 0.25 7.0 1.2 6.0 1.0 0.20 5.0 0.8 0.15 4.0 0.6 0.10 3.0 0.4 2.0 0.05 0.2 1.0 - - - Estate Testamentary Perpetual Indigenous Trusts Living Dono
Slide 22: Improved TWS performance
IMPROVED TWS PERFORMANCE TWS REVENUE TWS FUMAS $m $b 62 16.8 2.0 16 • Headline revenue up 61.3 15.1 2.8% 61 4.3 14 4.4 • Significant growth in 60 12 superannuation FUS from 59.7 ZAS** 10 59 (0.4) acquisition/appointment 8.1 8 6.7 • Underlying revenue up 58 6 3.4% 4 0.7 0.7 • Negative market impact 5
Slide 23: CTS highlights
CTS HIGHLIGHTS CONTINUING GOOD UNDERLYING MOMENTUM DEBT CAPITAL AND NEW CLIENTS $b FUS* FY18-FY19 BRIDGE $m 72 LOAN MARKETS INCLUDE 71.1 DIVISION REVENUE 70 2.0 AUSTRALIA 4.2 68.1 68 30% Federation (3.4) 1.5 66 Regal Funds Management 64 (3.0) 2.0 1.0 Auctus Western Asset Management 62 (2.8) 0.5 Swi
Slide 24: Solid CTS performance
SOLID CTS PERFORMANCE CTS REVENUE CTS FUS** • Headline revenue up $m 31 $b 8.9% supported by 1.3 30.1 80 acquisitions and new 30 71.1 68.1 clients 0.2 29.6 70 1.8 30 13.8 • Underlying organic 60 1.7 16.7 revenue growth of 29 0.4 50 10.1 2.2 4.4% 7.5 29 40 • Impacted by loss of (1.2) 12.9 28 9.4 one
Slide 25: Balance sheet strength
BALANCE SHEET STRENGTH PROVIDES SECURITY AND FLEXIBILITY • Reduced debt 40% to $M FY19 1H19 FY18 $12m over the year Assets • Debt to equity 4.6% Cash and liquid investments 69.8 65.6 67.8 Trade receivables and accrued income 22.1 23.7 23.5 • Substantial headroom Goodwill and intangible assets in cov
Slide 26: Strong capital position
STRONG CAPITAL POSITION • ASIC has granted approval for the transfer of former OVRE clients to Equity • Comfortably Trustees Limited. This transition is expected to be completed by December meeting regulatory 2019 and will release $2-3m of capital capital requirements • Consolidation of licences has
Slide 27: Summary
SUMMARY CONTINUING IMPROVEMENT IN FINANCIAL PERFORMANCE • Sound revenue growth • Operating margins enhanced • Disciplined expense management • Significant increase in NPAT, EPS and dividends • Balance sheet strength and capacity to support growth plans • Improvement across all T4 measures – delivery
Slide 28: Strategy Update and Outlook
STRATEGY UPDATE AND OUTLOOK
Slide 29: Clear strategy – to be Australia's leading trustee company
CLEAR STRATEGY – TO BE AUSTRALIA’S LEADING TRUSTEE COMPANY 29
Slide 30: Favourable industry dynamics
FAVOURABLE INDUSTRY DYNAMICS • Underpinned by demographic and industry trends – Ageing, wealthier population with more complex needs – Mandated superannuation flows support ongoing growth INDUSTRY TRENDS CONTINUE TO • Boosted by industry transformation FAVOUR – Continued pressure on financial servic
Slide 31: Investing to support further growth - people
INVESTING TO SUPPORT FURTHER GROWTH - PEOPLE EQT HOLDINGS LIMITED BOARD CORPORATE TRUSTEE SERVICES • Tim Hammon, NED – appointed 1 December 2018 Expanding our global footprint with new hires in the UK and Ireland to support growth EQUITY TRUSTEES SUPERANNUATION LIMITED TRUSTEE & WEALTH SERVICES • To
Slide 32: Investing to support growth - technology
INVESTING TO SUPPORT GROWTH - TECHNOLOGY VISION: TO CREATE PERSONALISED MULTI-CHANNEL INTERACTIONS WITH CLIENTS DELIVERED IN FY19 FOCUS FOR FY20 – FY22 • Consistent client engagement by all business units • Continue to invest in enhancing cyber security through the use of Salesforce CRM • Streamline
Slide 33: Improving risk culture – organisation wide
IMPROVING RISK CULTURE – ORGANISATION WIDE RISK CULTURE - PROPORTION • Significant investments in senior risk management capability OF POSITIVE RESPONSES* 90% • EQTH Board Risk Committee • ETSL Board Risk Committee 85% • UK and Ireland Boards 80% • New Chief Risk Officer – Owen Brailsford 75% • Enha
Slide 34: TWS private client focus
TWS PRIVATE CLIENT FOCUS ESTATE PLANNING ESTATE MANAGEMENT FUNDS MANAGEMENT • Leveraging will bank for • Focus on beneficiary experience • Invest in strengthening the growth team and capability • Create increased cross-sell • Focus on strategic opportunities partnerships ADVICE PHILANTHROPY SERVICES
Slide 35: Empowering Indigenous communities
EMPOWERING INDIGENOUS COMMUNITIES CONTRIBUTE TO GREATER SOCIAL AND ECONOMIC PARITY BETWEEN OUR FIRST AUSTRALIANS AND THE BROADER COMMUNITY • Reconciliation Action Plan OUR AIM IS TO – Endorsed by Reconciliation Australia BUILD CAPACITY AND EMPOWER – Completed first full year ABORIGINAL – Providing t
Slide 36: TWS superannuation trustee office focus
TWS SUPERANNUATION TRUSTEE OFFICE FOCUS SPECIALIST, INDEPENDENT TRUSTEE • Leveraging the strength of our business model and brand as Australia’s leading specialist independent trustee • Providing trusteeship to superannuation originators where trustee services are not core • The prevalence of vertic
Slide 37: CTS focus
CTS FOCUS PROVIDING INDEPENDENT, SPECIALIST TRUSTEE AND FIDUCIARY SERVICES • Growing existing business – Continuing promotion of core RE service to existing and new fund managers – Capitalising on trend for quality fund managers to enter Australian retail market – Using our specialist expertise to s
Slide 38: UK/Ireland building momentum
UK/IRELAND BUILDING MOMENTUM • Significant European opportunities in funds governance • Equity Trustees (UK and Europe) (formerly Treasury Capital Ltd) starting to deliver – Winning new large US and UK fund manager clients • Ireland expansion well underway – License application for the Irish Managem
Slide 39: Consistently strong performance in changing environment
CONSISTENTLY STRONG PERFORMANCE IN CHANGING ENVIRONMENT • Substantial lift in financial performance – NPAT, revenue, earnings per share and dividend all higher – Strong operating cash flow – Result built on fundamentals – Margins increased despite volatile markets – Acquisitions, partnerships delive
Slide 40: Well positioned for continued growth
WELL POSITIONED FOR CONTINUED GROWTH • Good momentum and clear growth agenda – Committed and engaged workforce – Attractive industry fundamentals – Australia and overseas – Leveraging core strengths and capabilities to grow organically and through partnerships and acquisitions – Investing in people
Slide 41: Questions
QUESTIONS
Slide 42: Thank you
THANK YOU
Slide 43: Disclaimer
DISCLAIMER 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 this information. To the