Eqt Holdings Ltd. · ASX:EQT
Eqt — 1H24 Earnings Presentation
44 slides from Eqt's earnings presentation, Feb 22, 2024
Slide 1: Investor Presentation: Results for Half Year Ended 31 December 2023
INVESTOR PRESENTATION RESULTS FOR HALF YEAR ENDED 31 DECEMBER 2023 Mick O’Brien, Managing Director Philip Gentry, Chief Financial Officer and Chief Operating Officer 22 FEBRUARY 2024
Slide 2: Agenda
AGENDA 1 1H24 OVERVIEW AND AET UPDATE 2 FINANCIALS 3 STRATEGY 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.
Slide 3: 1H24 Overview & AET Update
1H24 OVERVIEW & AET UPDATE
Slide 4: Strong Revenue Increase on Continued FUMAS Growth
STRONG REVENUE INCREASE ON CONTINUED FUMAS GROWTH FUMAS* REVENUE1 NPAT DIVIDENDS $183.5b $84.0m $12.6m 51 cents Vs. 1H23 Up 18.0% Up 37.3% 65.2% (UNPAT 24.8%) Up 2 cents per share Vs. 2H23 Up 14.6% Up 8.1% 12.9% (UNPAT -1.8%) Up 1 cent per share • Strong growth in revenue reflectin
Slide 5: Significant FUMAS Increase Due to Strong Organic Growth Momentum
SIGNIFICANT FUMAS INCREASE DUE TO STRONG ORGANIC GROWTH MOMENTUM $b TOTAL EQT FUMAS1 200 183.5 180 • FUMAS up 18.0% on PCP to 160.1 $183.5b 160 155.5 151.8 148.9 • Significant new business 144.2 activity in both TWS and 140 CSTS 128.1 • Discontinued operations 120 (UK/Ireland) accounts for $5.4b 101
Slide 6: FUMAS Benefit from Organic Growth and AET
FUMAS BENEFIT FROM ORGANIC GROWTH AND AET $b CSTS – CORPORATE FUS1 CSTS – SUPERANNUATION FUS1 $b 110 106.7 105.1 106.4 70 100.2 99.0 59.8 100 60 0.7 90 50 44.8 39.9 80 40 35.4 34.7 0.8 0.9 70 30 60 20 5.4 50 10 1H22 2H22 1H23 2H23 1H24 1H22 2H22 1H23 2H23 1H24 Discontinued operations (UK/Ireland) AE
Slide 7: Transformation to Improve Competitive Edge and Drive Growth
TRANSFORMATION TO IMPROVE COMPETITIVE EDGE AND DRIVE GROWTH • Growth agenda – Expertise in an increasingly intense regulatory environment is giving us a competitive edge – FUMAS and revenue growth momentum – Focused strategy to be Australia’s leading provider of trustee services • Building the capac
Slide 8: Technology Implementations Enabling Substantial Uplift in Service Capability
TECHNOLOGY IMPLEMENTATIONS ENABLING SUBSTANTIAL UPLIFT IN SERVICE CAPABILITY CORPORATE & SUPERANNUATION TRUSTEE & WEALTH SERVICES (TWS) GROUP TRUSTEE SERVICES (CSTS) iPhi Salesforce Workday • Deployed, a leading US philanthropy • Deployed solution for full CTS client base • Workday Finance (phase 1)
Slide 9: Delivering for All Stakeholders – Positive Trends
DELIVERING FOR ALL STAKEHOLDERS – POSITIVE TRENDS CLIENTS EMPLOYEES COMMUNITY NPS ENGAGEMENT GRANTS +28 +28 75 71 70 122.8 +16 96.2 92.2 FY21 FY22 FY23 FY21 FY22 FY23 FY21 FY22 FY23 NLS ENABLEMENT +41 73 75 +36 70 • Staff Volunteering Days • Staff Giving Program +12 • Trust Management for Communitie
Slide 10: Delivering for Shareholders
DELIVERING FOR SHAREHOLDERS Cents EARNINGS PER SHARE 80 • Statutory EPS up 7.1% on 1H23 reflecting strong organic 70 69.43 67.48 growth offset by one-off 60 acquisition / transformation / 50 58.63 51.00 54.63 67.48CENTS integration costs and CSTS- 40 EU impact 36.64 30 • Underlying EPS up 15.1% on 2
Slide 11: AET Integration – Delivery on Track
AET INTEGRATION – DELIVERY ON TRACK MILESTONES COMPLETED Q4 2023 EXIT OF THE PLATFORM BUSINESS MILESTONES Q1 2024 Q2 2024 NOV 2024 • SAF administration migrated to • Establish outsource SAF new administrator • Agreement to outsource administration operating model SAF administration • Custody of all
Slide 12: AET Integration Progressing Well
AET INTEGRATION PROGRESSING WELL PEOPLE & ORGANISATION STRUCTURE PRODUCT • Secured and retained key employees • TWS and AET new business pricing aligned from December 22 – producing revenue synergies • Common ‘trustee’ mindset • SAF new prices implemented in March 23 • Building cultural alignment •
Slide 13: Overall Synergies Target Increased & Implementation Costs on Track
OVERALL SYNERGIES TARGET INCREASED & IMPLEMENTATION COSTS ON TRACK NET COST SYNERGIES REVENUE SYNERGIES IMPLEMENTATION COSTS CAPITAL RELEASE Targeted amount $2.9m pa ($3.5m pa) $5.8m pa ($3.3m pa) $22m ($22m) $10m (nil) Timing Achieve run-rate in FY25 $0.4m in FY23 Across FY23, FY24 & 1H25 December
Slide 14: Summary
SUMMARY STRONG PERFORMANCE WITH CONTINUED GROWTH MOMENTUM Major technology investment creating a FUMAS increasing to $183.5 billion, driven foundation for more sustainable future by strong organic growth growth Statutory EPS well up on PCP reflecting full 6-month contribution from AET and strong Con
Slide 15: Financials
FINANCIALS
Slide 16: Robust Financial Performance
ROBUST FINANCIAL PERFORMANCE 1H24 v 1H24 v • Strong revenue growth FOR THE PERIOD 1H24 2H23 1H23 2H23 % 1H23% up 8.1% half on half Total revenue3 ($m) 84.0 77.7 61.1 8.1 37.3 • Expense growth reflecting 3 Total expenses ($m) 62.3 54.9 45.9 (13.4) (35.5) one-off integration costs, AET contribution an
Slide 17: Strong Revenue Growth
STRONG REVENUE GROWTH $m 93 4.2 84.0 85 • Strong top-line revenue growth 1.6 1.7 driven by: 16.2 77 (0.8) − Increasing AET synergies − Selective repricing 69 − Strong organic 61.1 growth across 61 both CSTS and TWS 53 − Positive equity markets 45 1H23 AET Equity market Large mandate AET synergy Orga
Slide 18: Expense Analysis
EXPENSE ANALYSIS NON-RECURRING AET UPLIFT OPEX INCREASE 65 • Underlying increase in 1.7 62.3 expenses (excluding non- 0.8 recurring and AET uplift) of 3.1 60 12.2% 1.2 • Increase in salaries and 10.8 1.1 related costs driven by: 55 − Significant reduction in vacancy levels to historic lows 50 − Infl
Slide 19: Key Financial Measures
KEY FINANCIAL MEASURES $m TOTAL REVENUE2 $84.0M $m EBITDA $31.7M 90 35 84.0 77.7 30 31.9 31.7 80 25 27.8 27.2 70 24.2 61.1 20 60 18.2 15 50 10 1H23 2H23 1H24 1H23 2H23 1H24 Underlying EBITDA1 Statutory EBITDA $m NET PROFIT AFTER TAX $17.9M Cents DIVIDENDS 51CENTS 19 55 50 51 17 18.3 17.9 49 49 50 48
Slide 20: TWS – Significant Growth in Revenue Driven by Organic Growth and Synergies
TWS – SIGNIFICANT GROWTH IN REVENUE DRIVEN BY ORGANIC GROWTH AND SYNERGIES $m TWS REVENUE $b TWS FUMAS1 56 18 17.3 0.7 16 15.4 1.8 49.5 0.5 1.7 4.1 14 48 14.7 0.5 3.6 12 10 40 6.1 4.9 8 6 1.6 2.0 32 30.8 4 1.5 1.7 2 2.9 3.1 24 - 1H23 AET Equity market AET synergy Organic growth 1H24 1H23 1H24 impact
Slide 21: TWS – Growth Across Businesses, Assisting AET
TWS – –AET TWTH GROWTH ACROSS ASSISTING ALL BUSINESSES MOMENTUM CORE TRUSTEE SERVICES FUMAS1 EMERGING MARKETS FUMAS1 All graphs in Millions All graphs in Millions Estate Management 1,000 Active Philanthropy 600 • Consistent number of new • iPhi platform launched 400 estates 500 • Strong new business
Slide 22: CSTS – Strong Growth Momentum
CSTS – STRONG GROWTH MOMENTUM $m REVENUE $b CSTS FUS 36 180 160.8 2.4 34.5 160 137.9 101.0 34 140 135.5 134.1 134.7 1.1 100.1 99.4 94.8 93.1 120 1.5 32 (0.8) 100 30.3 80 30 60 59.8 28 40 44.8 35.4 39.9 34.7 20 26 - 1H23 AET Equity market Large mandate Organic growth 1H24 1H22 2H22 1H23 2H23 1H24 SAF
Slide 23: CSTS Super – Continuing Growth Trajectory
CSTS SUPER – CONTINUING GROWTH TRAJECTORY REVENUE MEMBERS FUS1 $m '000 $b 16 1.4 15.0 800 65 59.8 700 60 14 1.5 0.1 0.7 600 55 12.0 500 12 50 400 44.8 45 300 0.8 39.9 10 40 200 0.9 35.4 34.7 100 35 8 - 30 1H23 AET Equity market Organic growth 1H24 1H23 1H24 1H22 2H22 1H23 2H23 1H24 impact on FUS¹ an
Slide 24: CSTS – Corporate: Strengthened Market Leadership
CSTS – CORPORATE STRENGTHENED MARKET LEADERSHIP $m REVENUE $b FUS¹ 20.0 120 19.5 106.4 1.0 99.0 19.5 1.0 100 27.2 19.0 27.9 80 18.5 18.3 17.5 (0.8) 60 17.5 7.0 18.0 6.2 40 32.3 17.5 30.1 17.0 20 5.0 5.0 12.3 17.4 16.5 - 1H23 Equity market impact Large mandate loss Organic growth 1H24 FY23 1H24 on FU
Slide 25: CSTS – Corporate: Servicing the Global Fund Manager Industry
CSTS – CORPORATE SERVICING THE GLOBAL FUND MANAGER INDUSTRY FUND MOVEMENTS 450 31 FUND MANAGER LOCATION 400 375 363 350 (19) Other 300 Asia 4% 250 5% 200 Europe 150 12% FY23 New Funds Funds Closed 1H24 Australia FUND MANAGER MOVEMENTS US 59% 20% 150 10 140 134 135 130 (9) 120 110 100 FY23 New Manage
Slide 26: CSTS – Corporate: Custody, Debt and Securitisation Services
CSTS – CORPORATE CUSTODY, DEBT AND SECURITISATION SERVICES REVENUE FUS1 NO. OF ACCOUNTS $m $b 2.5 2.2 2.3 20 100 93 18 17.5 17.5 90 86 16.5 2.0 16 14.7 80 75 1.6 1.5 14 70 1.2 12 10.9 60 1.0 10 50 8 40 0.5 6 30 - 4 20 1H21 1H22 1H23 1H24 1H22 FY22 1H23 FY23 1H24 1H22 1H23 1H24 • Continued growth in
Slide 27: CSTS – UK/Ireland – Exit Underway
CSTS – UK/IRELAND – EXIT UNDERWAY EXITING INVESTMENT – WELL ADVANCED NO. CLIENTS NO. FUNDS £b TOTAL AUM 12 34 4.0 3.5 10 32 3.0 8 30 2.5 6 2.0 28 1.5 4 1.0 26 2 0.5 - 24 - 1H22 1H23 1H24 1H22 1H23 1H24 1H22 1H23 1H24 • Ireland business sold subject to Central Bank of Ireland approval and customary c
Slide 28: Investing in Technology
INVESTING IN TECHNOLOGY CONTINUING TO DRIVE EFFICIENCIES AND ENHANCE THE CLIENT EXPERIENCE ONE-OFF OPEX ~$1.5M - $2.0M AND CAPEX ~$2.5M - $3.0M FOR FY24 PROJECTS CORPORATE & TRUSTEE WEALTH SERVICES INFRASTRUCTURE & FINANCE & PEOPLE SUPERANNUATION TRUSTEE • Operational efficiency using TECHNOLOGY SER
Slide 29: Strong Balance Sheet
STRONG BALANCE SHEET $M 1H24 FY23 Assets Cash and liquid investments 101.9 96.5 • Debt/equity 11.5% (excluding ORFR cash 14.3 13.2 cash backed ORFR facilities) Trade receivables and accrued income 46.3 37.6 • Majority of cash and liquid assets Goodwill and intangible assets 330.1 330.5 supports regu
Slide 30: Solid Operating Cash Flow
SOLID OPERATING CASH FLOW $m 130 23.4 120 110 9.0 • Healthy cash (10.9) generation (0.8) 101.9 100 96.5 (4.6) • Working capital 10.0 (10.7) position expected to 10.0 90 91.9 further improve in 86.5 the second half 80 70 60 FY23 Net cash flow from Payment of Income tax paid Net proceeds from Other UK
Slide 31: Strong Liquidity Position
STRONG LIQUIDITY POSITION $m 160 140 141.0 • Low gearing and healthy liquidity • $91.7m regulatory capital requirement 120 consisting of: $77.4m in net 100 tangible assets 34.0 83.3 (largely held as 80 cash) 60 $14.3m of ORFR (77.4) 49.3 related cash (14.3) 40 • Debt facility provides additional fle
Slide 32: Summary
SUMMARY STRONG EARNINGS PERFORMANCE ON CONTINUED FUNDS GROWTH AET performing as expected, integration Strong organic revenue growth and synergies on track Higher expenses largely due to one-off integration / transformation costs and higher Strong cash generation people costs to support growth and tr
Slide 33: Strategy Update and Outlook
STRATEGY UPDATE AND OUTLOOK
Slide 34: A Company Founded on Trust
A COMPANY FOUNDED ON TRUST PURPOSE: HELP PEOPLE TAKE CARE OF THE FUTURE Safeguard people’s wealth now and for Provide trustee services to help clients protect generations to come members’ and investors’ interests Act as a trusted, independent partner to grow Empower clients to improve the lives of o
Slide 35: 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 market • Deliver se
Slide 36: Strengthened Market Leadership
STRENGTHENED MARKET LEADERSHIP TRUSTEE & WEALTH SERVICES CORPORATE & SUPERANNUATION TRUSTEE SERVICES • Philanthropy – Leading provider • Responsible Entity Services – long term clear leader • Health & Personal Injury – Leading provider • Custody & Real Assets – building a strong new • Estate Managem
Slide 37: Business Unit Initiatives in FY 2024
BUSINESS UNIT INITIATIVES IN FY 2024 TRUSTEE & WEALTH SERVICES CORPORATE & SUPERANNUATION TRUSTEE SERVICES (CSTS) SUPERANNUATION CORPORATE • AET Integration • Platform divestment • Capitalise on demand for • Digitise/streamline workflows to increase • Capitalise on market leading professional truste
Slide 38: Governance, Risk and Regulatory Management Are Core to Our Business
GOVERNANCE, RISK AND REGULATORY MANAGEMENT ARE CORE TO OUR BUSINESS PRODUCTIVE REGULATOR RELATIONSHIPS RISK CULTURE IS FUNDAMENTAL • Broad and deep relationships with APRA, ASIC, AUSTRAC, • Risk culture survey – 84% positive response ACNC, OAIC and AFCA • Reflective of intensive programme of work in
Slide 39: Summary and Outlook
SUMMARY AND OUTLOOK STRATEGY REINFORCED WHILE DRIVING TRANSFORMATION • Strategy on track driven by organic growth and business transformation • Revenue and funds continue to rise, while net profit reflects investment for growth • AET acquisition provides market leadership position – integration on t
Slide 40: Appendix
APPENDIX
Slide 41: 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 1H24 TOTAL FUMAS LEVERAGE REVENUE1 AS AT 1H24 • World MSCI positive for TWS $48.7m $17.3b 60%-70% to average daily ASX200 CSTS during the period CSTS - SUPER $13.4m $59.8b 15%-25% to average daily ASX200 • Equity markets for
Slide 42: Questions
QUESTIONS
Slide 43: Thank You
THANK YOU
Slide 44: EQT Holdings Limited
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