Equity Trustees half year result

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Equity Trustees Limited (EQT) today confirmed a lift in half year revenue of 10.5% and a 3.6% increase in operating profit after tax for the six months ending 31 December 2010 compared with the prior corresponding period.

Equity Trustees Limited (EQT) today confirmed a lift in half year revenue of 10.5% and a 3.6% increase in operating profit after tax for the six months ending 31 December 2010 compared with the prior corresponding period.

The Board has declared an interim, fully franked dividend of 50 cents per share – maintaining the same level as the prior corresponding period.

6 months to 31 Dec 10 – $m

6 months to 31 Dec 09 – $m

Variance

Operating Revenue 18.7 16.9 10.5%
Operating Expenses (13.7) (12.0) 13.3%
Operating profit before tax 5.0 4.9 3.3%
Income Tax Expense (1.5) (1.5)
Operating profit after tax 3.5 3.4 3.6%
Non-operating items (net of tax) 0.2 0.3
Net profit after tax 3.7 3.7
Earnings Per Share (cents) 43.85 44.23 (0.9%)

 

EQT chairman Mr Tony Killen said, “The first half has seen some improvements in investment markets, resulting in a lift in revenues and adding to the company’s bottom line. It is pleasing that all business units have seen revenue gains, and particularly so in some of our more ‘traditional’ trustee services, but market conditions are still significantly affecting new business flows and our margin mix.

“We have also implemented a number of long term business strategies. During the half year EQT completed the acquisition of the OSL Super Fund – a fund with approximately 27,000 members and $265mil in funds under management.”

Mr Robin Burns, EQT Managing Director, confirmed that the acquisition was fully funded from internal resources and was earnings accretive from the acquisition date of 1 November 2010.

“We expect that the OSL fund will be transitioned into our existing superannuation platform before year end, at which time we expect to see the full flow of synergy benefits begin to emerge.

“Our operating margin remains solid, especially given the continuing challenging business conditions faced in some of our revenue lines and one-off acquisition expenses. The 13.3% increase in operating expenses, apart from the one-off costs referred to above and the direct operating costs of the OSL business for 2 months, arises mainly from the Group’s re-instatement of normal remuneration reviews in 2010, the costs associated with completing the transition to a new core IT system and the investment in new sales focused roles.”

Mr Burns also said that a number of changes to the business structure were in the process of being implemented.

These are intended to facilitate greater focus on core service delivery, primarily in corporate relationships, and improve co-ordination and communication within support activities. In addition a more centralised approach to legal, risk management and compliance responsibilities across the different business units is being adopted.

“One example of this strategy is to strengthen areas where we can provide additional services to other financial services organisations, or where we expect demand for such services to increase.

“In early February, we therefore strengthened and renamed our funds distribution and corporate trustee services business to capitalise on our long standing reputation and expertise in fiduciary services,” Mr Burns said.

Mr Killen added: “Assuming continuing favourable investment markets, the full integration of the super fund acquisition, and efficiencies arising from the structural changes, results for the second half of the financial year should be ahead of the first half.”

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For more information please contact:
Robin Burns – 03 8623 5201

24 February 2011