INVESTOR PRESENTATION RESULTS FOR HALF-YEAR ENDING 31 DECEMBER 2019 Mick O’Brien, Managing Director Philip Gentry, Chief Financial Officer and Chief Operating Officer 26 FEBRUARY 2020
AGENDA 1 OVERVIEW 2 FINANCIALS 3 STRATEGY UPDATE AND OUTLOOK 4 QUESTIONS 2
OVERVIEW
STRONG GROWTH TRAJECTORY DELIBERATE STRATEGY TO INVEST FOR GROWTH • Funds under management, administration and supervision (FUMAS) up 43.7% to $111.1 billion • Revenue up 5.6% to $48.9 million • Expenses up 6.9% to $29.6 million - Investing for growth • Net profit after tax attributable to shareholders up 2.3% to $11.5 million • Interim dividend up 3 cents to 47 cents per share • Balance sheet remains strong • Delivering with purpose for all stakeholders Note: All comparisons above are with the prior corresponding period 4
INVESTING FOR GROWTH PEOPLE AND TECHNOLOGY INVESTMENT TO MANAGE GROWTH • Investing substantially in resources to enable Equity Trustees to capitalise on continued change in financial services – Equity Trustees’ strengths as a respected and capable trustee are being increasingly recognised – Capability is in high demand – Opportunities are considerable as the industry restructures – Investment in people and technology ensures Equity Trustees is well positioned to seize these opportunities as they arise – Involves higher costs in short-term, but still performing well and long-term benefits should be significant • Remaining true to our purpose • Strategy is delivering 5
FUMAS NOW EXCEEDS $100B, UP 43.7% TOTAL EQT FUMAS 1 • FUMAS up significantly in both $b Trustee and Wealth Services 120 (TWS) and Corporate Trustee 111.1 Services (CTS) 110 • Appointment of ETSL as 100 Trustee of AIA/CMLA super funds ~$4.5b 90 • Appointment of EQTL as 80.7 80 77.3 Trustee of AIA/CMLA 74.0 funds ~ $10.5b 70 • Appointed as ACD to suite of River and Mercantile funds 60 ~$3.9bn. 1H17 1H18 1H19 1H20 • Appointed as RE to LIT for • Major appointments secured over the last half-year total almost $19b of Partners Group funds and are expected to contribute ~$2.5m in annualised revenue 2 1 FUMAS: Funds under management, administration, advice and supervision 6 2 Annualised Revenue is measured in its first full year and increases in future years
CONSISTENT IMPROVEMENT AT ALL LEVELS $48.9M $11.5M NET PROFIT AFTER TAX $m TOTAL REVENUE $m 14 50 48.9 46.3 12 11.5 45 11.2 43.2 39.5 9.6 10 40 8 35 7.2 6 30 1H17 1H18 1H19 1H20 1H17 1H18 1H19 1H20 55.78 CENTS 47 CENTS Cents Cents EARNINGS PER SHARE DIVIDENDS 50 60 47 55.78 55.13 46 54 44 47.47 42 48 40 38 42 35 36.01 34 36 30 30 7 1H17 1H18 1H19 1H20 1H17 1H18 1H19 1H20
DELIVERING FOR ALL STAKEHOLDERS MEASUREMENT: STEADY IMPROVEMENT IN ALL TARGETS T1 Net promoter score Net loyalty score T1 T2 T2 IMPROVING LIFTING Engaged and CLIENT EMPLOYEE enabled staff SATISFACTION ENGAGEMENT T3 Earnings per share growth and T3 T4 FUMAS growth T4 GROWING DEEPENING Granting and SHAREHOLDER COMMUNITY volunteering VALUE IMPACT 8
T4 TARGETS - DELIVERING FOR ALL STAKEHOLDERS T1 T2 NET PROMOTER SCORE (NPS) NET LOYALTY SCORE (NLS) EMPLOYEE ENABLEMENT EMPLOYEE ENGAGEMENT 80 20 80 20 HP Norm 15 15 (74) 1 HP Norm(73) FS Norm 10 FS Norm 10 (69) (67) 2 60 5 60 5 - - 2017 2018 2019 2017 2018 2019 (5) (5) (10) 40 40 (10) 2016 2017 2018 2019 2016 2017 2018 2019 1 High Performing Norm 2 Financial Services Norm 9
T4 TARGETS - DELIVERING FOR ALL STAKEHOLDERS T3 T4 EARNINGS PER SHARE Cents DIVIDENDS Cents GRANTING $m 124.3 60 50 120 47.0 55.8 55.1 44.0 45 45.5 100 50 40.0 47.5 40 87.2 85.4 35.0 11.0 80 35 18.9 40 36.0 78.8 76.2 30 60 66.5 30 25 40 20 20 15 20 10 10 - Jun-17 Jun-18 Jun-19 5 - - 1H17 1H18 1H19 1H20 1H17 1H18 1H19 1H20 Granting from Granting from testamentary and estates and trusts perpetual charitable trusts 10
FINANCIALS
POSITIVE FINANCIAL PERFORMANCE 1H20 VS. 1H19 1H20 1H19 % • Solid revenue growth Total revenue ($m) 48.9 46.3 5.6 • Principally driven by organic Expenses ($m) 29.6 27.8 6.9 growth, strategic initiatives and Finance costs ($m) 0.5 0.4 16.3 markets Depreciation and amortisation ($m) 2.6 1.9 30.2 • Increased expenses reflect Net profit before tax (NPBT $m) 16.2 16.2 investment to support growth - NPBT margin (%) 33.1 34.9 (5.2) • NPBT margin slightly down to Effective tax rate (%) 31.0 32.7 (4.9) 33.1% reflecting increased investment Net profit after tax (NPAT) and non- 11.5 11.2 2.3 controlling interests ($m) • Earnings per share (EPS) (cents) 55.78 55.13 1.2 Moderate increase in NPAT, EPS and dividend Diluted EPS on NPAT (cents) 55.41 54.81 1.1 Dividends (cents per share) 47 44 6.8 Return on equity (ROE) (% p.a.) 8.5 8.7 (2.3) 12
SOLID REVENUE GROWTH REVENUE $m 50 0.8 1.9 48.9 5.8% revenue growth driven by: 48 • Good organic revenue growth, especially in TWS 46 46.2 • Positive markets assisting FUMAS growth, particularly 44 in CTS 42 40 2H19 Equity market impact on Organic growth 1H20 FUMAS¹ 1 FUMAS: Funds under management, administration, advice and supervision -Market impact on FUMAS links 50% of TWS revenue to the average ASX200 and approx. 50% of CTS revenue to the average MSCI World and ASX200 index. 13 -Exchange rates are not considered
STRONG OPERATING CASH FLOW $m CASH FLOW • Consistent, high 75 quality cash generation 1.3 7.0 70 • Cash principally used for tax payments and 65 9.7 dividends (7.1) • Negligible bad debts 60 (7.4) • Borrowings modestly (0.6) 57.3 55 increased to support 54.4 Superannuation Trustee activity 50 45 40 FY19 Net cash flow from Proceeds from Proceeds from Payment of Income tax paid Other 1H20 operations borrowings issues of equity dividends investing/financing securities activities 14
TWS - GOOD MOMENTUM TWS FUMAS 1 TWS REVENUE $b $m 21.3 • Revenue up 6.8% 34 20 34 • Driven by good 4.4 organic growth and 0.9 33 0.7 positive equity 14.2 1.7 32.8 15 33 markets 2.2 1.2 32 4.0 • Material increase in 10 32 FUMAS, especially 0.6 1.2 superannuation 31 1.9 12.3 31 30.7 5 6.5 30 30 - 1H19 1H20 29 Super Philanthropy 2H19 Equity market impact Organic growth 1H20 on FUMAS¹ Trusts & Estates Wealth Advice Asset Management² 1 FUMAS: Funds under management, administration, advice and supervision 2 Asset Management includes TWS Investment Mandates, Superannuation Mandates and Common Funds 15
TWS PRIVATE CLIENT BUSINESS – STRONG GROWTH CORE TRUSTEE SERVICES FUMAS 1 EMERGING MARKETS FUMAS 1 $b $b 2.0 0.45 1.8 0.40 1.6 0.35 1.4 0.30 1.2 0.25 1H18 1.0 1H18 1H19 0.20 1H19 0.8 1H20 0.15 1H20 0.6 0.10 0.4 0.05 0.2 - - Indigenous Trusts Living Donors Compensation Trusts Testamentary Investment Perpetual Advice Trusts Mandates Charitable Trusts • Focus on high value, complex estates • Indigenous trusts – FUM up 60% on pcp - • Good investment management performance good growth and significant opportunities • 5 new Perpetual Charitable Trusts 2 • Living donor clients FUM up 28% on pcp - • Steady growth in Advice FUMAS recent investment showing promise • 21 new compensation trusts and FUM up 29% 1 FUMAS: Funds under management, administration, advice and supervision on pcp 16 2 during the year to 31 December 19
TWS SUPERANNUATION BUSINESS – STEADY GROWTH SUPERANNUATION TRUSTEE OFFICE FUS 1 SUPERANNUATION TRUSTEE OFFICE MEMBERS $b '000 14 450 400 12 350 10 300 8 250 200 6 150 4 100 2 50 - - 1H18 1H19 1H20 1H19 1H20 • Major appointments over the last 12 months include: AIA/CMLA added ~750K members to our existing membership of ~240k members • Zurich Superannuation Master Fund ~$1.0b • ~ 600k of those new members from the Eligible • AIA/CMLA ~$4.5b (now $3.9b post transfers to Rollover Fund transferred to the ATO. ATO). 17 1 FUS: Funds under supervision
CTS – SOLID PERFORMANCE • CTS REVENUE CTS FUS 1 Headline half on half revenue $m $b growth of 4.2% 16.0 • Underlying organic revenue 100 0.2 89.8 growth positive 15.5 90 0.7 15.5 15.2 80 • Growth supported by strong 15.0 70 global equity markets 14.9 12.7 63.1 14.5 60 14.6 (0.3) • New Clients include: 14.8 50 14.0 9.6 • 39.8 In Australia 40 30 13.5 • CMLA, DMP , Ethical 28.2 20 Partners, Fawkner, 11.6 13.0 10 Longreach and Spitfire 2.3 10.5 8.2 - 12.5 • In The United Kingdom 1H19 1H20 Other (Property, Multi-Strategy, Alternatives) 12.0 • River and Mercantile 2H19 Fund closure Adjusted Equity Organic 1H20 Global Fixed Interest fees revenue market growth Global Equities • Alliance Bernstein 2H19 impact on Australian Fixed Interest FUS¹ 1 FUS: Funds under supervision Australian Equities 18
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