EQT Holdings (ASX:EQT) FY18 results


by Rachael Jones

EQT Holdings Limited (ASX:EQT) Managing Director, Mick J. O'Brien talks FY18 results, tailwinds for services and outlook for 1H19.

Rachael Jones: Hello. I'm Rachael Jones for the Finance News Network. Joining me now from EQT Holdings (ASX:EQT) is Managing Director, Mick J. O'Brien. Mick, welcome back to FNN.

Mick J. O'Brien: Thank you very much, Rachael.

Rachael Jones: Now first up, could you start by giving us an introduction to EQT?

Mick J. O'Brien: By all means. EQT Holdings (ASX:EQT) goes under the brand name of Equity Trustees and we are Australia's leading specialist trustee company. We provide trustee and fiduciary services to private clients, to corporates, to funds managers and to superannuation promoters.

Rachael Jones: Thanks, Mick. Now before we get to talk about your results, can you tell me about the market size and the opportunity for trustee services?

Mick J. O'Brien: By all means. If you look at our private client business, it's primarily focused in the aged demographic so it's really driven by the growth in the aged population in Australia and that, of course, is where most of the wealth is in Australia. One of our specialties is transitioning that wealth to future generations. If you look in the funds management side and the superannuation side, that's really underpinned by the growth in the superannuation market, and we all know that the mandated contribution level is there and it really is a solid underpinning of growth for us to provide responsible entity services to funds managers and superannuation trustee services to superannuation funds.

Rachael Jones: Now to your financial year 2018 results. What were the highlights starting with financials?

Mick J. O'Brien: The real highlight was the net profit after tax. It was up 28 per cent for the year so just under AUD$20 million. We're delighted with that. It was primarily on the back of revenue growth, 11 per cent growth in revenue and we contained the expenses to about 4 per cent, just under 4 per cent growth. We had record levels of funds under supervision reaching AUD$86 billion and that really is the key driver of the health of the business.

Rachael Jones: Excellent. What can you tell me about the operations over that period?

Mick J. O'Brien: The result was built on really sound fundamentals, but also some of the acquisitions that we've made in the last 18 months and some of the partnerships that we've entered into. The acquisition of Sandhurst business from Bendigo Bank (ASX:BEN), from the responsible entity business of OneVue (ASX:OVH) and also, a partnership that we entered into with Aon (NYSE:AON) in respect of superannuation and that really all contributed to the results.

Rachael Jones: That's great news. Now let's talk about your strategy and share price. What can you tell me about that?

Mick J. O'Brien: Sure. The strategy is going to stay the same, to focus on being a trustee and a fiduciary in every part of the market we can do that in. I think all the issues that are being ventilated in the Royal Commission in the last six months are really providing tailwinds for the company as others start to look at an outsourced independent trustee model where they normally wouldn't have possibly looked at that. In talking about the share price, we've been trading around the AUD$23 mark. That's a big increase on where we were 12 months ago and much bigger on where we were two years ago, and the market capitalisation of the organisation sits at about AUD$460 million at the moment.

Rachael Jones: That's great news. To the last question now Mick, what is the guidance for the first half of the financial year 2019?

Mick J. O'Brien: Sure. We've had a really encouraging start to the year. We've recruited some more people into our asset management function that'll really deliver great results to our clients. We had our first listed vehicle that we put to market and raised over AUD$400 million. We're certainly seeing a very favourable environment for trustee services generally in the market. People when they're looking at equity trustees and whether it should go in their portfolio, I guess they see a company that is really underpinned by growth in its core markets and we've got a very competitive position in each market in which we're operating in and that's enabled us to deliver good results and also pay out dividends that have been increasing and consistent, so sits on a portfolio in that type of position.

Rachael Jones: Mick J. O'Brien, thanks for the update.

Mick J. O'Brien: Pleasure.


Are you a 708 sophisticated investor?

A sophisticated investor is defined under Section 708 of the Corporations Act (net assets of $2.5 million or annual incomes in excess of $250,000).

They are eligible to receive information regarding wholesale investment opportunities that are not available to regular or retail investors.

Please subscribe if you would like to be alerted to these types of opportunities.