Eqt Holdings Ltd. · ASX:EQT
Eqt — FY2022 Earnings Presentation
44 slides from Eqt's earnings presentation, Aug 22, 2022
Slide 1: Investor Presentation: Results for Year Ended 30 June 2022
INVESTOR PRESENTATION RESULTS FOR YEAR ENDED 30 JUNE 2022 Mick O’Brien, Managing Director Philip Gentry, Chief Financial Officer and Chief Operating Officer 22 AUGUST 2022
Slide 2: Agenda
AGENDA 1 FY22 OVERVIEW 2 FINANCIALS 3 STRATEGY UPDATE AND OUTLOOK 4 QUESTIONS Equity Trustees acknowledges Aboriginal and Torres Strait Islander people as the First Australians and respects their long and enduring connection to their land. We pay our respects to all Elders past and present. 2 2
Slide 3: FY22 Overview
FY22 OVERVIEW
Slide 4: Strong earnings increase on continued FUMAS growth
STRONG EARNINGS INCREASE ON CONTINUED FUMAS GROWTH FUMAS* REVENUE NPAT DIVIDENDS $148.9b $111.5m $24.2m 97 cents ↑ Up 3.3% on FY21 ↑ Up 10.4% on FY21 ↑ Up 12.5% on FY21 ↑ Up 6 cents per share on FY21 ↑ (Up 9.0% on FY21 Underlying NPAT) ↑ (Final dividend of 49cents) • Strong growth in revenue and ear
Slide 5: Growing our competitive edge
GROWING OUR COMPETITIVE EDGE • Benefiting from focussed strategy which has driven strong funds growth • Funds growth is strongly flowing through to earnings • Investment in people and technology continuing to underpin growth • Independent trustee model becoming the preferred industry standard • Expe
Slide 6: FUMAS up 3.3% to $148.9b
FUMAS UP 3.3% ON FY22 TO $148.9b $b TOTAL EQT FUMAS1 160 150 148.9 3.3% increase in FUMAS principally 140 144.2 driven by: 130 • Significant new business activity in Corporate Trustee 120 Services 110 • Growth in Superannuation Trustee funds under supervision 100 101.0 • Offset by deterioration in 9
Slide 7: FUMAS growth continues
FUMAS GROWTH CONTINUES $b CTS FUS1 $b STO FUS1 $b TWS FUMAS2 110 45 11 10 105.1 100 35 9.8 100.8 34.7 9 Aon*** 33.6 9.1 90 25 8 8.1 7 80 15 81.7 6 11.2 70 5 5 FY20 FY21 FY22 FY20 FY21 FY22 FY20 FY21 FY22 • FUS up 4.3% • FUS up 3.3% • FUMAS down 7.1%, vs ASX200 • down 10.2% • Multiple new fund manage
Slide 8: Delivering for all stakeholders
DELIVERING FOR ALL STAKEHOLDERS SHAREHOLDER EMPLOYEE CLIENT COMMUNITY VALUE ENGAGEMENT SATISFACTION IMPACT* Earnings Per Share (EPS) Engaged and enabled Net Promoter score (NPS)1 Granting and pro bono/ growth staff Net Loyalty score (NLS)2 volunteering and dividend growth • Employee engagement • NPS
Slide 9: Delivering for shareholders
DELIVERING FOR SHAREHOLDERS Cents EARNINGS PER SHARE 120 115.94 108.61 115.07 • Strong EPS growth: 110 107.21 102.73 – Statutory EPS up 11.7% – Underlying EPS up 8.1% 115.94CENTS 100 97.27 103.04 90 92.95 80 FY18 FY19 FY20 FY21 FY22 1 Underlying EPS1 Statutory EPS Cents DIVIDENDS 100 97 90 90 91 • H
Slide 10: Governance, risk and regulatory management is core to our business
GOVERNANCE, RISK AND REGULATORY MANAGEMENT IS CORE TO OUR BUSINESS EXCELLENT RISK CULTURE IS FUNDAMENTAL PRODUCTIVE REGULATOR RELATIONSHIPS 90% 85% • Broad, deep and constructive relationships with APRA 80% and ASIC 75% • No adverse actions being taken by key regulators 70% • Expert advice being sou
Slide 11: Other achievements and focus
OTHER ACHIEVEMENTS AND FOCUS PEOPLE • Excellent results for engagement and enablement • Continuing to build capability while managing turnover and pressure on remuneration in some areas of the business • Appointed new leaders including • Company Secretary • CTS – GM Business Development • Head of Re
Slide 12: Asset management performing well
ASSET MANAGEMENT PERFORMING WELL The EQT Diversified FI Fund delivered the following: ASSET MANAGEMENT • Building an outstanding investment record, adding material alpha to TO 30 JUNE 22 1 YEAR 3 YEARS client portfolios AUSTRALIAN EQUITIES • Major consolidation of 24 to 13 Gross Alpha +5.0% +3.1% p.
Slide 13: Summary
SUMMARY STRONG PERFORMANCE WITH CONTINUED GROWTH MOMENTUM Continuing investment creating a FUMAS increasing to $148.9b supported by foundation for more sustainable future strong organic growth growth Strong EPS growth on both underlying and Continuing to deepen our community statutory bases impact I
Slide 14: Financials
FINANCIALS
Slide 15: Strong financial performance
STRONG FINANCIAL PERFORMANCE FY22 2H22 1H22 FY21 FY22 v FY21 % • Strong revenue growth Total revenue ($m) 111.5 55.6 55.9 101 10.4 up 10.4% Total expenses ($m) 74.3 38.2 36.1 70.7 5.1 • Expense growth, up 5.1% on EBITDA ($m) 43.9 20.7 23.2 37.1 18.3 statutory basis (up 7.4% on an underlying basis) E
Slide 16: Strong year on year revenue growth
STRONG YEAR ON YEAR REVENUE GROWTH $m REVENUE 114 5.8 112 • 10.4% growth in revenue on the 110 111.5 prior corresponding period driven by: 108 6.1 • Good organic 106 (0.9) revenue growth of 104 ~ 5%, across all three business 102 units 100 101.0 (0.5) • Positive markets 98 assisting FUMAS 96 growth,
Slide 17: Consistent performance
CONSISTENT PERFORMANCE $111.5M $43.9M $m 120 TOTAL REVENUE $m EBITDA 111.5 45 44.1 110 43.9 101.0 100 95.4 40 38.9 92.5 36.7 88.5 36.2 90 35 33.4 37.1 80 70 30 FY18 FY19 FY20 FY21 FY22 FY18 FY19 FY20 FY21 FY22 1 Underlying EBITDA1 Statutory EBITDA $m NET PROFIT AFTER TAX $24.4M 97CENTS Cents DIVIDEN
Slide 18: EQT's revenues are leveraged to equity markets as fees largely asset-based
EQT’S REVENUES ARE LEVERAGED TO EQUITY MARKETS AS FEES LARGELY ASSET-BASED FY22 TOTAL FUMAS LEVERAGE REVENUE AS AT 30 JUNE 22 TWS $51.0m $8.9b 60%-70% to average daily ASX200 • Equity markets at 30 June 22 are lower than the 30 STS $20.7m $34.7b 20%-30% to average daily ASX200 June 21 40%-50% to ave
Slide 19: TWS – significant growth in revenue driven by organic growth and positive markets
TWS – SIGNIFICANT GROWTH IN REVENUE DRIVEN BY ORGANIC GROWTH AND POSITIVE MARKETS $b $m TWS REVENUE TWS FUMAS1 52 12 1.5 9.8 51 10 9.1 3.1 51.0 8.1 50 8 4.6 49 (0.9) 4.3 6 3.9 48 0.6 4 0.8 0.6 2.1 47 1.5 47.3 1.6 46 2 2.0 2.5 2.5 45 - FY21 Equity market Decrease in EP Organic growth FY22 FY20 FY21 F
Slide 20: TWS – consistent growth across all businesses
TWS – CONSISTENT TWTH GROWTH IN – GROWTH ACROSS ALLCLIENT NUMBERS THOUGH BUSINESSES FUMAS IMPACTED BY ADVERSE MARKET IMPACT CORE TRUSTEE SERVICES FUMAS1 EMERGING MARKETS FUMAS1 All graphs in Millions All graphs in Millions Estate Management 700 Living Donors 450 • FUM lower due to delays from 500 •
Slide 21: STS – continued solid growth
STS – CONTINUED SOLID GROWTH '000 STS MEMBERS $b STS FUS1 $m STS REVENUE 40 21.2 1.4 800 35 20.8 20.7 700 30 20.4 600 25 20.0 500 19.6 20 0.4 400 19.2 15 300 18.8 10 18.9 200 18.4 100 5 18.0 FY21 Equity market Organic growth FY22 - - impact on FUS¹ FY20 FY21 FY22 FY20 FY21 FY22 MAJOR NEW APPOINTMENT
Slide 22: CTS – strengthened market leadership
CTS – STRENGTHENED MARKET LEADERSHIP $m CTS REVENUE $b CTS FUS1 2.9 39.0 38.9 120 38.0 105.0 100.8 100 14.7 37.0 9.1 2.6 81.7 36.0 80 3.1 25.3 33.2 20.4 35.0 9.9 60 9.8 6.9 34.0 40 38.0 33.0 33.4 32.3 33.2 20 32.0 8.0 5.5 7.7 8.4 10.5 11.5 31.0 - FY21 Equity market impact on FUS¹ Organic growth FY22
Slide 23: CTS – corporate trust and securitisation
CTS – CORPORATE TRUST AND SECURITISATION $m REVENUE $b FUS1 NUMBER OF ACCOUNTS 4.0 3.8 16.0 90 14.7 80 77 3.5 14.0 70 2.9 12.0 61 3.0 60 54 2.5 10.0 9.1 2.5 50 46 8.0 2.0 1.8 40 33 6.0 1.4 30 1.5 3.1 4.0 20 1.5 1.8 1.0 2.0 10 0.5 - 0 FY18 FY19 FY20 FY21 FY22 FY18 FY19 FY20 FY21 FY22 FY18 FY19 FY20 F
Slide 24: CTS – UK/Ireland
CTS – UK/IRELAND NO. CLIENTS NO. FUNDS £b TOTAL AUM 12 36 3.5 32 3.0 10 28 2.5 8 24 20 2.0 6 16 1.5 4 12 1.0 8 2 0.5 4 - - - FY18 FY19 FY20 FY21 FY22 FY18 FY19 FY20 FY21 FY22 FY18 FY19 FY20 FY21 FY22 • Funds and FUS growth, notwithstanding a more challenging environment as a result of COVID-19 impac
Slide 25: Strong balance sheet
STRONG BALANCE SHEET $M FY22 1H22 FY21 Assets • Debt/equity 3.6% (excluding cash Cash and liquid investments 87.3 79.8 73.9 backed ORFR facilities) ORFR cash 31.0 30.5 23.3 • Majority of cash and liquid assets Trade receivables and accrued income 30.9 33.9 34.6 supports regulatory capital Goodwill a
Slide 26: Strong operating cash flow
STRONG OPERATING CASH FLOW $m CASH FLOW 130 47.2 120 110 • Consistent, high quality cash generation 100 (16.7) • Surplus cash principally used for tax payments 90 87.3 and dividends (13.6) (3.5) 10.0 • Negligible bad debts 80 73.9 77.3 5.0 70 68.9 60 FY21 Net cash flow from Payment of dividends Inco
Slide 27: Strong liquidity position
STRONG LIQUIDITY POSITION $m FY22 UNENCUMBERED LIQUIDITY POSITION • Low gearing, healthy liquidity and net 140 cash positive position 120 • $99.4m regulatory capital requirement 123.1 consisting of: 100 − $68.4m in net tangible assets (largely held as cash) 80 − $31.0m of ORFR related cash 60 30.0 •
Slide 28: Summary
SUMMARY STRONG EARNINGS PERFORMANCE ON CONTINUED FUNDS GROWTH Strong organic revenue growth, supported Increased EBITDA margins to 39.4% by growth in equity markets Underlying cost growth below revenue growth as we invest and create a Strong cash generation foundation for more sustainable future gro
Slide 29: Strategy Update and Outlook
STRATEGY UPDATE AND OUTLOOK
Slide 30: A company founded on trust
A COMPANY FOUNDED ON TRUST PURPOSE: HELP PEOPLE TAKE CARE OF THE FUTURE Providing trustee services and fiduciary Safeguard people’s wealth now and for support to help to protect the interests of generations to come investors, members and beneficiaries Act as a trusted, independent partner to grow Em
Slide 31: Business unit strategies
BUSINESS UNIT STRATEGIES TRUSTEE & WEALTH SERVICES SUPERANNUATION CORPORATE TRUSTEE SERVICES (TWS) TRUSTEE SERVICES (STS) (CTS) Achieve leadership in Achieve further scale by Build on Australian multiple states and more securing trusteeship for leadership position in lines of business large funds an
Slide 32: Business unit initiatives in FY2023
BUSINESS UNIT INITIATIVES IN FY 2023 TRUSTEE & WEALTH SERVICES SUPERANNUATION CORPORATE TRUSTEE SERVICES (TWS) TRUSTEE SERVICES (STS) (CTS) • Targeted business development • Capitalise on industry changes and • Digitise/streamline workflows to increase through partners (legal, planners, etc) conflic
Slide 33: Investing in technology
INVESTING IN TECHNOLOGY CONTINUING TO DRIVE EFFICIENCIES AND ENHANCE THE CUSTOMER EXPERIENCE FOCUS FOR FY23-24 • EQT have continued to invest in a number of critical technology • A number of projects are underway aiming to deliver: areas, enhancing the overall technology architecture and − Corporate
Slide 34: Significant investment in technology and capability to support growth
SIGNIFICANT INVESTMENT IN TECHNOLOGY AND CAPABILITY TO SUPPORT GROWTH • $2.5m – $3.0m investment in technology and FY23 reducing to $0.5m – $1.0m in FY24 • Increased investment in trustee capability in STS and CTS to support high levels of activity and increased regulatory intensity • Vacancy levels
Slide 35: Strong organic growth momentum across all businesses
STRONG ORGANIC GROWTH MOMENTUM ACROSS ALL BUSINESSES TRUSTEE & WEALTH SERVICES SUPERANNUATION CORPORATE TRUSTEE SERVICES (TWS) TRUSTEE SERVICES (STS) (CTS) • AFLPA client win encouraging for • Good success with platform • Strong pipeline with 30-40 new other opportunities superannuation clients fund
Slide 36: Summary and outlook
SUMMARY AND OUTLOOK STRATEGY REINFORCED AND MOMENTUM CONTINUES • Strategy reinforced by strong client and revenue growth • Trend to outsource fiduciary services continues to transform industry and benefit Equity Trustees • Growth in debt/securitisation and other corporate trust products provide furt
Slide 37: Appendix
APPENDIX
Slide 38: CTS – servicing the global fund manager industry
CTS – SERVICING THE GLOBAL FUND MANAGER INDUSTRY FUND MOVEMENTS 380 60 FUND MANAGER LOCATION 360 (16) 354 340 Asia 320 4% Other 300 310 7% 280 FY21 New Funds Funds closed FY22 Europe 13% FUND MANAGER MOVEMENTS Australia 55% 140 14 135 US 21% 130 (5) 132 125 120 123 115 FY21 New Managers Managers Exi
Slide 39: Trust is in demand
TRUST IS IN DEMAND Increasing demand for an independent fiduciary model Regulatory landscape continues to evolve following the Royal Commission Increasing Conflicts of regulatory interest oversight Changes in ownership of wealth management businesses has increased Ownership changes in KEY Focus on G
Slide 40: Group strategy overview
GROUP STRATEGY OVERVIEW OUR OBJECTIVES Consistent growth in shareholder value Reputation as a stable, enduring, Market leadership in our specialty areas and returns trusted corporation GROUP STRATEGY BUSINESS GROWTH CLIENT SERVICE CAPABILITY COMMUNITY • Capture opportunities from • Deliver seamless,
Slide 41: Questions
QUESTIONS
Slide 42: Thank you
THANK YOU
Slide 43: Slide 43
Slide 44: EQT Holdings Limited ABN 22 607 797 615
EQT Holdings Limited ABN 22 607 797 615 Level 1, 575 Bourke Street Melbourne VIC 3000 1300 133 472 www.eqt.com.au Disclaimer The Board has authorised that this document be given to the ASX. EQT Holdings Limited ABN 22 607 797 615. This document was prepared by EQT Holdings Limited and is only provid