Eqt Holdings Ltd. · ASX:EQT
Eqt — Investor Presentation (June 2016)
66 slides from Eqt's investor presentation, Jun 7, 2016
Slide 1: ASX Announcement: Investor presentation: Insights into Equity Trustees
EQT Holdings Limited 1a QUITY ASX Announcement Anistees 7 June 2016 Investor presentation: Insights into Equity Trustees Today in Sydney, the new Executive Director of EQT Holdings Limited, Mick O’Brien, outlines key areas the business will focus on in a presentation to investors with four members o
Slide 2: Insights into Equity Trustees
For personal use only Insights into Equity Trustees Investor Presentation 7 June 2016
Slide 3: Agenda
Agenda For personal use only Section Speaker Page 1 EQT overview Mick O’Brien 3 2 Trustee & Wealth Services Geoff Rimmer 19 3 Corporate Trustee Services Harvey H Kalman 32 4 Operations & Technology Ryan Bessemer 43 5 Financial insights Philip Gentry 52 6 Conclusion Mick O’Brien 62 7 Questions Mick O
Slide 4: 1. EQT overview
For personal use only 1. EQT overview Mick O’Brien, Executive Director
Slide 5: EQT presenters
EQT presenters For personal use only Name Position Key experience • 30+ years in financial services • Joined EQT Board in August 2014 • Director Templeton Global Growth Fund Mick O’Brien Executive Director • Former CEO Invesco Australia; Director Alliance Capital Management Australia; CIO AXA Austra
Slide 6: Key themes for today
Key themes for today For personal use only 1. Leadership team is experienced and capable 2. EQT’s market environment is favourable 3. Well positioned in the wealth management value chain 4. Recent initiatives have created a strong platform for growth 5. Bringing the Equity Trustees’ brand to life 6.
Slide 7: EQT leadership team is experienced and capable
EQT leadership team is experienced and capable For personal use only • Executive Director appointed 28 April 2016 • Appointed for a 12 month term • Chairman, Tony Killen, to continue and seek re-election in October • Well advanced in selection of another non-executive Director 6
Slide 8: The EQT leadership team
The EQT leadership team For personal use only Mick O’Brien Executive Director Philip Ryan Lance Geoff Harvey Kalman Sonya Clancy Geoff Rimmer Carmen Gentry Bessemer Pupelis Walsh Executive General Executive General Executive General Lunderstedt Chief Chief Acting Head of Chief Risk Manager, Manager,
Slide 9: EQT's market environment is favourable
EQT’s market environment is favourable For personal use only Private Client Market • Focused on most favourable demographic segment in Australia “~500,000 currently over age 85 - will double in 20 years…3.5% CAGR”¹ • Demographic segment with unprecedented financial wealth “Inter-generational wealth
Slide 10: Equity Trustees – a diversified business
Equity Trustees – a diversified business For personal use only Licences: 270 Staff Established • AFSL • RSE • AFSL – Custody 9
Slide 11: Individuals & families
Individuals & families For personal use only Total FUM1 $4.8bn Trusts $1.2bn 741 trusts 30 mandates Philanthropy $1.7bn 648 trusts Portfolio Manager $1.7bn 449 clients Estates 4 mandates $0.2bn 284 estates ¹As at 31 March 2016, FUM categorised by individual business 10
Slide 12: Corporate & institutions
Corporate & institutions For personal use only Total FUM1 $54.6bn CTS Other Trusts $0.8bn 13 schemes 13 clients TWS Superannuation $2.9bn 13 Funds CTS FUM by asset class2 90,000 members CTS Managed Investment Schemes $50.9bn 198 schemes 82 managers Australian equities: 7.1% Global equities: 44.8% Fi
Slide 13: Comprehensive wealth management and transition services
EQT provides comprehensive wealth management and transition services For personal use only Wealth transition value chain Testamentary Trusts Estate Estate “Living” Funds Will Bank Planning Management Trusts Management Philanthropic Trusts 12
Slide 14: EQT is well positioned in the Superannuation value chain
EQT is well positioned in the Superannuation value chain For personal use only Superannuation value chain Multi Internal Funds Trustee Custody Manager Administration Management Investments EQT Outsourced capability EQT is positioned in those parts of the value chain where it has strong sustainable a
Slide 15: Positioned in the centre of the Managed Investment Scheme industry structure
EQT is strategically positioned in the centre of the Managed Investment Scheme industry structure For personal use only Managed Investment Scheme industry structure Investment management Unit Registry/ Client acquisition/ transfer agency retention/servicing Responsible Entity/Trustee Fund administra
Slide 16: Recent initiatives created a strong platform for growth
Recent initiatives created a strong platform for growth For personal use only FY16 • New corporate top hat structure • Superannuation repositioned for growth • Upgrade of Business Assurance function FY17 • Group wide operating model review underway 15
Slide 17: Leveraging our brand
Leveraging our brand For personal use only Equity Trustees is one of Australia’s largest independent trustee companies “ Bringing the brand to life ” • Powerful two words = Equity + Trustees • Unmatched history and reputation • Trusted partner 16
Slide 18: Strong growth opportunities across all businesses
Strong growth opportunities across all businesses For personal use only Individuals and Superannuation Corporate families • Building distribution • Accelerating growth • Building on market networks and via new streamlined leading position in capability platform and market Australia RE services posit
Slide 19: Summary
Summary For personal use only 1. Leadership team is experienced and capable 2. EQT’s market environment is favourable 3. Well positioned in the wealth management value chain 4. Recent initiatives have created a strong platform for growth 5. Bringing the Equity Trustees’ brand to life 6. Good growth
Slide 20: 2. TWS
For personal use only 2. TWS Geoff Rimmer, Executive General Manager, Trustee & Wealth Services
Slide 21: TWS agenda
TWS agenda For personal use only 1. Overview of TWS 2. Repositioned superannuation business 3. TWS revenue profile 4. ANZ Trustee acquisition update 5. Our unique asset management capability 6. The value of the Will Bank 7. A case study showing how our services connect 8. Relationship between servic
Slide 22: TWS business overview
TWS business overview For personal use only Superannuation Private Clients & Philanthropic Services Superannuation Philanthropic Services Portfolio Services • Perpetual charitable trusts • Trustee for Partner (TFP) • Living donors strategy • NFP investment mandates • High barriers to entry Private C
Slide 23: Repositioned Superannuation business
Repositioned Superannuation business For personal use only Improved member outcome ❶ Where do we add ❷ ❸ ❹ value Created scale Now more - Superannuation Leveraged the through the competitive and trustee services administration integration of 2 positioned for skills of KPMG funds to $2bn - Custody gr
Slide 24: Superannuation – Growth initiatives
Superannuation – Growth initiatives For personal use only Key drivers for growth in FY17 Superannuation • Seek to dominate the existing $10bn+ trustee for partner market Trustee Services • Be the preferred independent supplier of RE trust services • Leverage our trusted brand and strong balance shee
Slide 25: High quality revenue
High quality revenue For personal use only TWS enjoys strong and growing revenue streams supported by high client retention Revenue type Enduring Maintainable Fixed-fee Revenue term1 10 years to everlasting 10+ years Transactional % TWS revenue 65% 32% 3% Comments • Philanthropic trusts, • Wealth •
Slide 26: ANZ Trustees – value adding acquisition
ANZ Trustees – value adding acquisition For personal use only The acquisition and successful integration of ANZ Trustees has positioned EQT as a leading independent trustee in Australia We are now: • A leader in the ~$7bn1 provision of philanthropic services • Top 3 in the ~$500m p.a. in compensatio
Slide 27: Outcome focussed asset management capability
Outcome focussed asset management capability For personal use only EQT’s Australian Equities Flagship Fund outperformed the benchmark by 2% p.a. since inception (July 2003) • Unique capability focused on long term preservation and growth of capital to protect the perpetual income needs of our client
Slide 28: The Will Bank drives enduring revenues
The Will Bank drives enduring revenues For personal use only B2B Trusted Partner Alliance Strategy IFAs & Banks (Aon, ANZ) Referral Source Retirement Villages Estate Planning and Aged Care Facilities Aged Care Advice & Placement Superannuation Funds (TFP) Solicitors Will Bank of ~$20bn assets1 Testa
Slide 29: Will Bank is a core value driver for TWS
Will Bank is a core value driver for TWS For personal use only • Our high quality estate planning capability and role as a trusted partner protects and grows the Will Bank which in turn protects and grows enduring revenues • Positions EQT to take advantage of mass wealth transfer The Will Bank FY16
Slide 30: TWS case study
TWS case study For personal use only Phyllis 1. First became an Estate Planning client of EQT in 1963, aged 52 2. Received advice in relation to management of her real estate and share portfolios 3. Then as she entered her 90s she requested EQT take on greater management with the ongoing administrat
Slide 31: TWS – the trusted partner
TWS – the trusted partner For personal use only Our client centric service and trusted brand makes us more referrable • 66% of estate management beneficiaries seek financial advice Internal cross selling • 50%+ of last 20 new perpetual charitable trusts from private advice clients • Financial adviso
Slide 32: TWS has a strong future
TWS has a strong future For personal use only Poised for growth at good margins • Grow our long term, enduring revenue base through targeted initiatives • Top 1 or 2 positioning in the markets we have identified as growth opportunities, including: ‒ Living donors for our Philanthropic business ‒ Com
Slide 33: 3. CTS
For personal use only 3. CTS Harvey H Kalman, Executive General Manager, Corporate Trustee Services
Slide 34: CTS agenda
CTS agenda For personal use only 1. Overview of CTS 2. Experienced management team 3. Consistent growth track record 4. Competitive advantage 5. Substantial growth opportunities 6. Setting the agenda 7. Summary 33
Slide 35: CTS overview
CTS overview For personal use only Corporate Trustee Services (CTS) provide • Largest Australian Responsible Entity (RE) and Trustee Services independent RE services for managed investment trusts (MIT) on behalf provider of local and international investment managers • Well positioned in the value a
Slide 36: Deeply experienced management team
Deeply experienced management team For personal use only CTS product team - average tenure at EQT is ~7 years1 • Experienced and established management team ‒ Continuity of team members ‒ Average tenure at EQT CTS team: ~7 years ‒ Top 3 CTS team members: ~13 years • Strong and experienced team appro
Slide 37: Consistent growth track record
Consistent growth track record For personal use only Fiduciary for 95 clients and 211 funds1 • Number of clients CTS (number of client and funds) – RE/Trustee 82 211 – Corporate Trust 13 199 185 • Number of funds 158 – RE/Trustee 198 139 – Corporate Trust 13 95 82 • Compound annualised growth rate 6
Slide 38: Consistent growth track record
Consistent growth track record For personal use only $51.7bn FUM/A1 • Focus on core fiduciary CTS FUM/A • FUM $51.7bn – RE/Trustee $50.9bn $45.4bn $9.5bn – Corporate Trust $0.8bn $9.2bn – TWS $2.5bn $35.6bn $29.0bn $8.3bn • 27% CAGR2 $8.3bn $21.1bn $42.2bn $6.9bn $36.2bn $27.3bn $20.7bn $14.2bn 2011
Slide 39: Competitive advantages of CTS
Competitive advantages of CTS For personal use only Largest Australian independent RE services provider ❶ True independence, not competing with our partners ❷ Tested and proven processes/operational compliance framework ❸ Proven experience in successfully transitioning from other REs ❹ Centre of inf
Slide 40: CTS has substantial growth opportunities
CTS has substantial growth opportunities For personal use only Aim to grow its position as the largest independent provider of RE/Trustee services in Australia, and expand client proposition regionally Growth opportunity Strategy • Attribution Managed Investment Trust (AMIT): Implementation plan for
Slide 41: CTS has substantial growth opportunities
CTS has substantial growth opportunities For personal use only Aim to grow its position as the largest independent provider of RE/Trustee services in Australia, and expand client proposition regionally Growth opportunity Strategy • Leverage off CTS’ experience and existing relationships with a large
Slide 42: Setting the agenda
Setting the agenda For personal use only Year Action 2000 • EQT establishes new business unit that offers independent RE/Trustee and retail distribution 2014 • First foundation member of the ASX’s mFunds Settlement Service • EQT, as product issuer, has the most funds on this platform 2016 • Exited r
Slide 43: Summary
Summary For personal use only • Targeting to more than double FUM over the next 5 years • Expanding into growth markets in Corporate Trust and “RE” in Asia • Specialist independent fiduciary, not conflicted with our Fund Managers in distribution and external focus funds management • Significant expo
Slide 44: 4. Operations & Technology
For personal use only 4. Operations & Technology Ryan Bessemer, Chief Operations Officer
Slide 45: Operations & Technology agenda
Operations & Technology agenda For personal use only 1. Operating structure 2. Single platform 3. Delivery of major initiatives on time and budget 4. Our philosophy of operations 5. Advanced cloud & digital environment 6. Looking forward 44
Slide 46: Aligned operating structure
Ensure boxes Aligned operating structure For personal use only Operations & Technology Execution. Enablement. Development. We partner with the business to enable quality client outcomes and facilitate growth through structured change, technology and optimisation Project Technology Portfolio Strategy
Slide 47: Streamlined single platform
Streamlined single platform For personal use only EQT use Garradin as a core platform for all functions, investments and client reporting Single IT platform Equity Trustees Platform • Products Fully featured Services Direct Managed MDA/IDPS Pension & Investments Funds • Modern platform Direct Wholes
Slide 48: Well executed ANZ Trustees integration
Well executed ANZ Trustees integration For personal use only Successful integration; ahead of time and budget • Integrated ANZT into EQT centralised Target Realised operating model Synergies $4m • State of the art systems migration from Integration 1.5x 1960’s technology onto EQTs single costs s
Slide 49: Successful delivery of Superannuation restructure
Successful delivery of Superannuation restructure For personal use only Superannuation simplification – on time and on budget • Super fund consolidation and From To simplification Superannuation Funds 4 1 ̶ Successor Fund Transfers of 4 RSE Licenses 2 1 super funds into 1 Investment options 85 10 ̶
Slide 50: Operating philosophy
Operating philosophy For personal use only Philosophy Action Benefit to EQT Shared Services: Centralised Cost efficiency: Reduce cost Optimum operational support functions for and risk for processes that processes scalability, simplicity & remain internal efficiency Cost efficiency / Avoid Outsource
Slide 51: Advanced cloud & digital environment
Advanced cloud & digital environment For personal use only EQT runs a simplified but highly scalable IT environment Digital Cloud • EQT commenced digital adoption in 2012 • Hybrid Cloud is used • Tailoring and personalising client – Where regulation and privacy experiences legislation allow • EQT ha
Slide 52: Unlocking value
Unlocking value For personal use only Foundation for growth established Capacity • Single back-office and shared services support mechanism • Simplified IT systems with one core platform • Business operations are structured for scale Capability • Proven integration capability Capability Capacity • R
Slide 53: 5. Financial insights
For personal use only 5. Financial insights Philip Gentry, Chief Financial Officer
Slide 54: Financial insights agenda
Financial insights agenda For personal use only 1. Revenue and cash flow 2. Initiatives and one-off costs update 3. Impact of recent restructures in superannuation and CTS 4. Operating model review 5. Capital – Licence requirements – Funding strategy 6. Summary 53
Slide 55: Diversified and enduring revenue base
Diversified and enduring revenue base For personal use only Revenue 6 months to 31 Dec 2015 $m Corporate Trustee • On average 90% + of Superannuation Services 19% debtors are received within 30% 30 days 8.0 12.9 - negligible bad debts • Approximately 60% of revenue is direct debited, the remainder i
Slide 56: Key initiatives are on track to create a platform for growth
Key initiatives are on track to create a platform for growth For personal use only Corporate restructure and superannuation restructure largely complete; business assurance progressing well Actual Forecast Forecast One-off Key Projects ($'m) 1H FY16 2H FY16 1H FY17 Total Corporate Restructure 0.75 0
Slide 57: CTS restructure – supporting strong organic growth
CTS restructure – supporting strong organic growth For personal use only • Exited Retail Funds Distribution in November 2015 and January 2016 – Annualised negative contribution impact of net ~ $3m • New business already secured to replace most of the revenue and expect to fully replace within 12 mon
Slide 58: Superannuation restructure has a short term earnings impact
Superannuation restructure has a short term earnings impact but now growing profitably For personal use only • Restructure largely effective from April 2016 and will be completed by 30 June 2016 – Annualised net contribution decrease of ~ $2.0m • Pricing and products significantly enhanced • Focus o
Slide 59: Group wide operating model review underway
Group wide operating model review underway For personal use only Objectives • Optimise combination of roles, skills, structures, processes, assets and technologies to deliver maximum value – both in terms of customers and organisation Scope • All end to end operational processes and activities that
Slide 60: Strong capital position
Strong capital position For personal use only Equity Trustees has ~$47m regulatory capital in key licenced entities and can comfortably meet its expected regulatory capital needs EQT Holdings Limited ($20m debt facility - $8m drawn) Regulatory capital $47m Equity ~$43m AFSL NTA holding Trustees Requ
Slide 61: Capital management opportunities
Capital management opportunities For personal use only • Capital requirement of ~$43m to be held 50% in cash and 100% liquid assets (ASIC requirement) – Buffer also held in liquid assets • Additional streamlining of structures and consolidation of licences has the potential to reduce capital require
Slide 62: Summary
Summary For personal use only • High percentage of enduring revenues and sustainable cash flow • Current one-off key initiatives on track to be completed ‒ Strengthening corporate structure, risk management framework and enhancing superannuation business • CTS focused on core fiduciary activities en
Slide 63: 6. Conclusion
For personal use only 6. Conclusion Mick O’Brien, Executive Director
Slide 64: Conclusion
Conclusion For personal use only 1. Leadership team is experienced and capable 2. EQT’s market environment is favourable 3. Well positioned in the wealth management value chain 4. Recent initiatives have created a strong platform for growth 5. Bringing the Equity Trustees’ brand to life 6. Good grow
Slide 65: 7. Questions
For personal use only 7. Questions
Slide 66: Disclaimer
Disclaimer For personal use only 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 maximum extent perm