Eqt Holdings Ltd. · ASX:EQT
Eqt — H1 FY2018 Earnings Presentation
34 slides from Eqt's earnings presentation, Feb 20, 2018
Slide 1: EQT Holdings Limited Half-Year Results to 31 December 2017
For personal use only EQT Holdings Limited Half-Year Results to 31 December 2017 Mick O’Brien, Managing Director Philip Gentry, Chief Financial Officer and Chief Operating Officer Released 20 February 2018
Slide 2: Agenda
Agenda For personal use only Overview Financials Strategy and Outlook Questions 2
Slide 3: Overview
For personal use only Overview
Slide 4: Substantial lift in performance
Substantial lift in performance For personal use only • Net profit after tax (NPAT) up 33% to $9.6m • Revenue growth up 9% • Disciplined expense management • Dividend up 14% to 40 cents per share • FUMAS* up 8% to $78.6b • Basic earnings per share (EPS) up 32% to 47.47 cents 4 All numbers compared w
Slide 5: Substantial lift in performance: result built on strong core businesses
Substantial lift in performance For personal use only Result built on strong core businesses • Particularly strong Trustee and Wealth Services (TWS) performance • Consistent Corporate Trustee Services (CTS) performance and successful business transition • Corporate restructure delivering expected be
Slide 6: Growth to record levels
Growth to record levels For personal use only CTS FUS* TWS FUMAS** 23% Growth excl. Client exit (on pcp***) 46% Growth (on pcp***) $b 70 $b 14 65.5 13.1 63.5 Appointment 60 12 3.4 as Aon 49.4 Superannuation 50 10 9.0 Trustee 8.2 9.7 40.3 8 7.6 40 32.5 53.2 65.5 30 40.0 6 31.7 4.0 20 23.8 4 10 2 8.7
Slide 7: Strong momentum: strategic initiatives
Strong momentum For personal use only Strategic initiatives strengthening platform for growth • Sandhurst acquisition fully integrated and performing well • Acquisition of majority stake in UK-based Treasury Capital Limited (TCL) – Tapping into global expansion opportunity – Positioning EQT as provi
Slide 8: CTS highlights
CTS highlights For personal use only No. of Managers No. of Funds 4.6% on pcp* 14% on pcp* New clients include: 1H18 114 1H18 271 • Milford Asset Management • Redpoint Investment Management 1H17 109 1H17 237 • Citadel LLC • Investible Prime Early Stage Management 1H16 86 1H16 212 - 50 100 150 200 22
Slide 9: TWS highlights
TWS highlights For personal use only Core Trustee Services (FUMAS*) Emerging Markets (FUMAS*) $b $m 1.8 0.35 1.6 0.30 1.4 1.2 0.25 1.0 0.20 0.8 0.15 0.6 0.4 0.10 0.2 0.05 - Estate Testamentary Mandates Perpetual - Management Trusts Charitable Trusts Community Trusts Living Donors Compensation Trusts
Slide 10: Focus on six key drivers
Focus on six key drivers For personal use only Current Next Driver % change on pcp Measure reviewed T1 Improve Client Satisfaction (NPS) +12 n/a April 2018 T2 Lifting Employee Engagement 58% 18% increase April 2018 EPS T3 Increase Total FUMAS $78.6b 8.4% increase June 2018 Growth CTS# – 10 new funds
Slide 11: Financials
For personal use only Financials Philip Gentry Chief Financial Officer and Chief Operating Officer
Slide 12: Strong financial performance
Strong financial performance For personal use only 1H18 vs. 1H18 1H17 1H17 % • Solid revenue growth driven by Operating revenue ($m) 43.2 39.5 9.4 organic growth, strategic initiatives and positive markets Operating expenses ($m) 28.1 27.0 4.1 • Disciplined approach to operating Non-operating expens
Slide 13: Non-operating expenses well managed
Non-operating expenses well managed For personal use only Non-operating expenses ($m) 1H18 2H17 1H17 2H16 1H16 • M&A expenses reflect OneVue Responsible Entity and Treasury M&A Activity 0.7 0.6 0.1 0.6 0.4 Capital Limited acquisitions • Non-operating expenses reduced Restructuring costs 0.3 0.3 1.3
Slide 14: Solid underlying revenue growth
Solid underlying revenue growth For personal use only $m 44 Group Revenue 43 43.2 42 41 1.8 41.4 40 39.5 (1.0) 1.1 39 38 37 36 1H17 Impact of Single Client Exit Sandhurst Market impact on FUM* Adjusted Revenue 1H17 1H18 Market impact on FUM (Funds under management) assumes 50% of TWS revenue linked
Slide 15: Strong TWS performance
Strong TWS performance For personal use only $m TWS Revenue TWS FUMAS* 32 $b 14 13.1 1.2 12 30 29.9 10 1.0 9.0 28 28.7 8.2 1.2 1.1 8 0.5 26 26.6 6 6.8 3.1 3.0 1.0 4 1.1 1.2 24 1.4 1.2 1.3 2 22 2.3 2.3 2.7 - 1H16 1H17 1H18 20 Philanthropy 1H17 Sandhurst Market impact on Adjusted 1H18 FUM** Revenue 1H
Slide 16: Solid CTS performance
Solid CTS performance For personal use only $m CTS Revenue CTS FUS* $b 14 70 65.5 63.5 60 13.2 13 12.2 49.4 12.9 50 11.6 9.4 15.8 13 12.5 40 (1.0) 12.3 10.9 0.8 30 12 30.0 25.2 20 21.7 12 10 1.7 3.7 3.0 6.6 9.0 4.4 11 - 1H16 1H17 1H18 11 Total 1H17 Impact of Client Exit Market impact on Adjusted Rev
Slide 17: Balance sheet strength provides security and flexibility
Balance sheet strength provides security and flexibility For personal use only 31-Dec-17 30-Jun-17 31-Dec-16 $m $m $m Assets Cash and cash investments 56.2 58.4 52.2 Trade receivables and accrued • Low gearing – debt to equity 6.0% income 22.3 17.9 20.4 • Substantial headroom in covenants Goodwill a
Slide 18: Strong capital position
Strong capital position For personal use only • Comfortably meet regulatory capital requirements • Streamlining of structures and entities improving capital efficiency by ~$2m over the next 18 months • Consolidation of licences has potential to reduce capital requirements a further $5m in the medium
Slide 19: Strong operating cash flow
Strong operating cash flow For personal use only Operating Cash Flow $m 70 10.94 0.02 0.01 60 (2.40) (3.55) • Cash principally utilised to 12.35 50 (3.66) fund acquisitions, office fit (4.91) 49.12 out, tax payments and 40 dividends 40.32 30 • Consistent, high quality cash generation 20 • Negligible
Slide 20: Summary
Summary For personal use only • Substantial improvement in financial performance ‒ Strong revenue growth ‒ Expenses well managed ‒ Operating margins enhanced ‒ Significant increase in NPAT and dividend • Benefits flowing from corporate restructure and operating model review • Three strategic initiat
Slide 21: Strategy and Outlook
For personal use only Strategy and Outlook Mick O’Brien Managing Director
Slide 22: Vision
Vision For personal use only EQT aims to be Australia’s leading specialist trustee company 22
Slide 23: Forging ahead: a growth agenda
Forging ahead: a growth agenda For personal use only • Targeting market leadership in areas of the wealth chain where we have competitive advantage • Pursuing growth in all lines of business Organic – Developing innovative new solutions in key growth areas – Targeting new markets – Improved service
Slide 24: TWS Private Client focus
TWS Private Client focus For personal use only Estate planning • Digitisation of Will bank and implementation of document management system to leverage value of will bank. • Distribution focus on Will reviews and strategic partnerships Estate management • Focus on beneficiary experience • Create inc
Slide 25: Reconciliation Action Plan (RAP)
Reconciliation Action Plan (RAP) For personal use only • First Reflect RAP has been formally endorsed approved by Reconciliation Australia • RAP formalises our public commitment to: “contribute to greater equality in social and economic outcomes between our First Australians and the broader communit
Slide 26: TWS Superannuation Portfolio Services focus
TWS Superannuation Portfolio Services focus For personal use only Trustee for Partner • Leveraging the strength of our brand as the specialist independent trustee • Partnering with superannuation fund providers where trustee services are not core – EQT assumes responsibility for trustee services and
Slide 27: Strategic alliance with Aon
Strategic alliance with Aon For personal use only Funds Under Supervision (FUS) $b 8 7 6.8 3.4 • Appointment as Trustee to the Aon Master Trust and Aon Eligible 6 Rollover Fund 5 • Entered into strategic alliance to jointly develop the business 4 • Doubles funds under trusteeship 3.4 3 3.2 • Number
Slide 28: CTS focus
CTS focus For personal use only Grow existing business • Continuing promotion of core Responsible Entity service to existing and new fund managers • Capitalise on trend for quality Australian managers to enter retail market • Utilise our leading expertise to structure attractive solutions for supera
Slide 29: Significant global opportunity
Significant global opportunity For personal use only Fiduciary going global • Global funds market is over US$70 trillion with centres of CIVs in Luxembourg, Dublin, London and Cayman Islands • Most funds management industry services are now largely global – (e.g. custody, investment management, audi
Slide 30: Acquisition of majority stake in TCL
Acquisition of majority stake in TCL For personal use only Treasury Capital Limited (TCL) • Operates in key fund centres of UK and Ireland providing Authorised Corporate Director (ACD) solutions – Responsible Entity equivalent • Experienced, local management – fully aligned with EQT • Similar approa
Slide 31: Acquisition of OneVue RE business
Acquisition of OneVue RE business For personal use only Strengthens position as the leading provider of Responsible Entity services in Australia • Acquisition further builds CTS scale, contributing: ‒ 26 managed investment schemes ‒ ~$2.3 billion funds under supervision • Expect synergies from apply
Slide 32: Conclusion and outlook
Conclusion and outlook For personal use only Significant improvement in financial performance • NPAT, revenue, earnings per share and dividend all higher Result built on fundamentals • Strong organic growth • Benefits from restructuring being realised • Full 6 months contribution from Sandhurst Esta
Slide 33: Questions
For personal use only Questions
Slide 34: Disclaimer
Disclaimer For personal use only This document was prepared by EQT Holdings Limited (ABN 22 607 797 615) 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 th