Slide 1: Investor Presentation: Results for Half-Year Ended 31 December 2020
For personal use only INVESTOR PRESENTATION RESULTS FOR HALF-YEAR ENDED 31 DECEMBER 2020 Mick O’Brien, Managing Director Philip Gentry, Chief Financial Officer and Chief Operating Officer 18 FEBRUARY 2021
Slide 2: Agenda
AGENDA For personal use only 1 1H21 OVERVIEW 2 FINANCIALS 3 STRATEGY UPDATE AND OUTLOOK 4 QUESTIONS 2
Slide 3: 1H21 Overview
For personal use only 1H21 OVERVIEW
Slide 4: Strong Funds Growth Continues
STRONG FUNDS GROWTH CONTINUES For personal use only • FUMAS $128b – up 27% on previous half • Equity market recovery under way but not yet to pre-pandemic market levels • Industry trend to outsource fiduciary roles continues to benefit EQT • Investing heavily in people capability and technology to s
Slide 5: Solid Financial Performance
SOLID FINANCIAL PERFORMANCE For personal use only • Earnings steady and reflect ongoing impact of volatile markets and organic growth – Revenue up 3.7% on previous half and down 1.3% on 1H20 – Statutory NPAT of $9.8m, up 27.4% on previous half and down 14.5% on 1H20 – Underlying NPAT of $10.7m adjus
Slide 6: FUMAS Growth Continues – Up 27% on 2H20
FUMAS GROWTH CONTINUES – UP 27% ON 2H20 For personal use only $b TOTAL EQT FUMAS1 140 • Strong growth in TWS 128.0 driven by large 130 superannuation trustee appointments: 120 111.1 − AMP Life Trustee 110 appointment from 101.0 1 July 2020 100 − Hub 24 Trustee 90 86.2 85.4 appointment from 80.5 1 Au
Slide 7: Consistent Improvement on Previous Half
CONSISTENT IMPROVEMENT ON PREVIOUS HALF $48.3M $10.7M For personal use only $m TOTAL REVENUE $m NET PROFIT AFTER TAX 50 48.9 48.3 48 13 46.3 46.2 46.5 11.2 11.5 45.3 11.0 10.7 45 11 10.1 11.4 9.6 9.8 43.2 43 9 8.2 9.8 40.4 7.7 40 7 2H17 1H18 2H18 1H19 2H19 1H20 2H20 1H21 2H17 1H18 2H18 1H19 2H19 1H2
Slide 8: Delivering for All Stakeholders
DELIVERING FOR ALL STAKEHOLDERS MEASUREMENT: For personal use only 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 IM
Slide 9: T1 – Improving Client Satisfaction
T1 – IMPROVING CLIENT SATISFACTION • Very good client satisfaction For personal use only results. Expect continuation despite remote working NET PROMOTER SCORE (NPS)* NET LOYALTY SCORE (NLS)** environment 30 35 • Digital strategy focused on 24 30 29 significantly improved client 25 experience 25 20
Slide 10: T2 – Solid Employee Engagement
T2 – SOLID EMPLOYEE ENGAGEMENT For personal use only EMPLOYEE ENGAGEMENT EMPLOYEE ENABLEMENT • Employee Engagement and Enablement 80 80 76 76 70 72 maintained above 67 68 64 Financial Services Norm 62 60 58 60 despite remote working 49 environment. 40 40 20 20 - - FY16 FY17 FY18 FY19 FY20 FY16 FY17
Slide 11: T3 – Growing Shareholder Value
T3 – GROWING SHAREHOLDER VALUE For personal use only Cents EARNINGS PER SHARE Cents DIVIDENDS 60 48 47.0 55.1 55.8 46.0 55 46 53.5 • Resilient earnings in 51.2 44.0 44.0 49.8 44 55.4 43.0 50 47.5 47.5 42 42.0 challenging environment 45 47.2 40 40.0 • Reliable dividends 41.0 40 38 36.0 36 35 37.2 34
Slide 12: T4 – Deepening Community Impact
T4 – DEEPENING COMMUNITY IMPACT For personal use only CHARITABLE TRUSTS BY GRANT TYPE • Annual granting program to ~3,000 beneficiaries • 1200 hours of pro bono work to establish two bushfire trusts • 40 volunteering days Medical Research & Health Other Children & Young People Animals & Environment
Slide 13: Financials
For personal use only FINANCIALS
Slide 14: Positive Financial Performance
POSITIVE FINANCIAL PERFORMANCE For personal use only FOR THE PERIOD 1H21 2H20 % 1H20 % • Solid half on half revenue growth Total revenue ($m) 48.3 46.5 3.7% 48.9 (1.3%) • Expense growth, excluding $1.7m Total expenses ($m) 35.2 32.4 8.5% 32.7 7.5% M&A project expenses, contained Net profit before ta
Slide 15: Solid Half on Half Revenue Growth
SOLID HALF ON HALF REVENUE GROWTH For personal use only $m REVENUE 50 2.3 48 48.3 3.7% headline half on half 1.4 revenue growth driven by: 46 46.5 • Good organic revenue (0.6) (0.7) growth, especially in 44 44.6 (0.6) TWS - Superannuation 42 • Positive markets assisting FUMAS growth, particularly in
Slide 16: Strong Operating Cash Flow
STRONG OPERATING CASH FLOW For personal use only $m CASH FLOW • Consistent, high 120 quality cash generation • Cash principally used 110 14.2 for tax payments, dividends and debt repayment 100 (7.2) 10.1 (5.3) • Negligible bad debts 90 (4.0) (0.3) 92.2 • ORFR borrowings increased to support 84.7 Sup
Slide 17: TWS - Good Momentum
TWS - GOOD MOMENTUM For personal use only $m TWS REVENUE $b TWS FUMAS1 40 38.3 33 4.4 35 32 1.9 0.6 31.8 1.9 2.2 • Headline revenue up 32 30 5.0% half on half 31 25 • Driven by good 31 21.3 20 19.3 organic growth, in 30.3 0.9 30 4.4 3.9 TWS – Superannuation 0.7 30 (0.6) 15 1.7 0.6 29.2 and positive
Slide 18: TWS Private Clients
TWS PRIVATE CLIENTS For personal use only $b CORE TRUSTEE SERVICES FUMAS1 $b EMERGING MARKETS FUMAS1 2.0 0.45 1.8 0.40 1.6 0.35 1.4 0.30 1.2 1.0 0.25 0.8 0.20 0.6 0.15 0.4 0.10 0.2 0.05 - Estate Testamentary Investment Perpetual Advice - Management Trusts Mandates Charitable Indigenous Trusts Living
Slide 19: TWS Superannuation – Rapid Growth
TWS SUPERANNUATION – RAPID GROWTH For personal use only $b SUPERANNUATION TRUSTEE OFFICE FUS1 SUPERANNUATION TRUSTEE OFFICE 35 '000 MEMBERS 800 30 700 25 600 20 500 400 15 300 10 200 5 100 - - 1H19 1H20 1H21 1H18 1H19 1H20 1H21 HUB24 AMP Major appointments new appointments include: • AMP Life added
Slide 20: Solid CTS Performance
SOLID CTS PERFORMANCE For personal use only $m CTS REVENUE 17.0 • Favourable equity markets and organic growth offset by three 16.5 large fund/mandate exits (~$3.1b) • Pipeline strong - 30-40 0.2 16.0 16.1 new funds expected in 0.5 16.0 the 6-9 months (0.2) • New clients include: 15.5 − Guardcap (0.
Slide 21: UK/Ireland Building Momentum
UK/IRELAND BUILDING MOMENTUM For personal use only NO. CLIENTS NO. FUNDS £b TOTAL FUMAS1 14 32 3.0 12 28 2.5 24 10 2.0 20 8 16 1.5 6 12 1.0 4 8 2 0.5 4 - - - 1H18 1H19 1H20 1H21 1H18 1H19 1H20 1H21 1H18 1H19 1H20 1H21 • Increased staffing from 6 to 12 across Europe to support • AllianceBernstein, Ri
Slide 22: CTS – Corporate Trust and Securitisation Division
CTS – CORPORATE TRUST AND SECURITISATION DIVISION For personal use only $m CORPORATE TRUST AND $b CORPORATE TRUST AND SECURITISATION DIVISION SECURITISATION DIVISION • Positive momentum in a REVENUE FUS1 relatively new division 1.2 1.2 6.20 • Onboarding first clients 1.1 5.70 5.58 with new credit li
Slide 23: Balance Sheet Strength Provides Security and Flexibility
BALANCE SHEET STRENGTH PROVIDES SECURITY AND FLEXIBILITY For personal use only $m 1H21 2H20 1H20 Assets • Debt/equity (excluding Cash and liquid investments 73.9 80.7 63.6 cash-backed ORFR Loans) ORFR cash 23.3 9.0 9.0 6.5% Trade receivables and accrued income 31.6 27.5 30.5 • Substantial headroom i
Slide 24: Strong Capital Position
STRONG CAPITAL POSITION For personal use only • Low gearing, healthy liquidity and net cash positive position • Transfer of former OneVue RE clients to Equity Trustees Limited is releasing ~$2-3m of capital • Comfortably meeting regulatory • Imminent consolidation of licences has potential to reduce
Slide 25: Summary: Resilient Performance with Growth Momentum
SUMMARY For personal use only RESILIENT PERFORMANCE WITH GROWTH MOMENTUM • Strong FUMAS growth in challenging environment • Solid half-on-half revenue growth • Underlying EPS and NPAT marginally down on PCP reflecting adverse markets, but materially improved half on half • Continuing investment crea
Slide 26: Strategy Update and Outlook
For personal use only STRATEGY UPDATE AND OUTLOOK
Slide 27: Our purpose is to safeguard people’s wealth
For personal use only Our purpose is to safeguard people’s wealth and support the broader community.
Slide 28: A Clear Purpose
A CLEAR PURPOSE For personal use only SAFEGUARDING PEOPLE’S WEALTH AND SUPPORTING THE BROADER COMMUNITY As Australia’s leading fiduciary specialist, Equity Trustees cares for and improves the lives of people and supports the community, usually when they are least able to do so themselves. We do that
Slide 29: Trust Is in Demand
TRUST IS IN DEMAND For personal use only BENEFITING FROM OUR FOCUS ON INDEPENDENCE AND EXPERTISE • The financial services environment is increasingly demanding an independent fiduciary model, driven by – A shift from in-house to outsourced models in Australia’s superannuation system – Royal Commissi
Slide 30: Capturing the Opportunities
CAPTURING THE OPPORTUNITIES For personal use only OUR INVESTMENT IN PEOPLE AND TECHNOLOGY IS PAYING OFF • Equity Trustees’ expertise cannot be replicated overnight • Substantial investment in people and technology has enabled us to manage strong growth • Early investment has allowed us to maintain h
Slide 31: Enhanced Risk Management in Less Certain Environment
ENHANCED RISK MANAGEMENT IN LESS CERTAIN ENVIRONMENT For personal use only RISK CULTURE - PROPORTION OF OPERATIONAL RESPONSE POSITIVE RESPONSES1 100% • No material interruption to operations or client service through working remotely 80% RISK & COMPLIANCE PRIORITIES • Elevated focus on fraud and cyb
Slide 32: Investing in Governance and Capability
INVESTING IN GOVERNANCE AND CAPABILITY For personal use only RESPONDING TO THE HIGHER RISK ENVIRONMENT • Carol Schwartz AO appointed chair of EQT Holdings Ltd • New roles for key leaders to target Superannuation Trustee and Corporate Trustee growth in Australia and Europe • Expanded corporate trust
Slide 33: Investing in Technology
INVESTING IN TECHNOLOGY PROVIDING A FIRST-CLASS CUSTOMER EXPERIENCE For personal use only FOCUS FOR FY21-22 • Continuing investment in information and cyber security • Increased process digitisation and automation • Investment in critical client management systems to enable an enhanced client experi
Slide 34: TWS Private Client Focus
TWS PRIVATE CLIENT FOCUS For personal use only IMPROVED CLIENT ENGAGEMENT, CROSS-SELLING AND BUSINESS DEVELOPMENT • Targeted business development through strategic partners (legal industry, planners, HNW advisors) • Increasing focus on non-wealth transition market segments • Cross-selling services t
Slide 35: TWS Superannuation Focus
TWS SUPERANNUATION FOCUS For personal use only LEVERAGING OUR INDEPENDENT TRUSTEE MODEL • Industry changes and potential conflicts of interest continue to drive strong demand for independent governance capability • Super FUS1 boosted to over $29b after appointment to AMP Life ($7.5b) and HUB24 ($7.9
Slide 36: Empowering Indigenous Communities
EMPOWERING INDIGENOUS COMMUNITIES For personal use only GOOD PIPELINE OF CONTRIBUTE TO GREATER SOCIAL AND ECONOMIC PARITY OPPORTUNITIES BETWEEN OUR FIRST AUSTRALIANS AND THE BROADER COMMUNITY • Innovate Reconciliation Action Plan INDIGENOUS TRUSTS – Endorsed by Reconciliation Australia $m FUMAS 1 10
Slide 37: CTS Focus
CTS FOCUS For personal use only PROVIDING INDEPENDENT, SPECIALIST TRUSTEE AND FIDUCIARY SERVICES • Growing existing business – Continuing promotion of core Responsible Entity service to existing and new fund managers – Capitalising on trend for quality fund managers to enter Australian retail market
Slide 38: Positive Outlook
POSITIVE OUTLOOK For personal use only STRATEGY CONFIRMED AND MOMENTUM CONTINUES • Ongoing FUMAS growth and earnings resilience confirm strategy • Trend to outsource fiduciary services continues to transform industry and benefit Equity Trustees • Stabilising equity markets positive for earnings • Gr
Slide 39: Questions
For personal use only QUESTIONS
Slide 40: Thank You
For personal use only THANK YOU
Slide 41: Disclaimer
DISCLAIMER For personal use only 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 provided for information purposes. It is not intended to take the place of professional advice and