EQT Holdings Limited (EQT) Earnings Call Transcript & Summary

All right, good morning everyone. I'm Mick O'Brien. I'm the Managing Director of EQT Holdings Limited. And I'm here with Philip Gentry, our Chief Financial Officer and Chief Operating Officer. Welcome to this call. We're going to take you through the results of the company to 30 June 2020. So the agenda for this morning, I'm going to talk about how the company has gone through 2020. Phil is going to walk you through all of the financials, and then I'll come back and talk about the strategy update and an outlook for the company. [Operator Instructions] So let me give you an overview of the 2020 year. I guess the first thing to note is that result was a really strong growth in funds under our management and supervision against a very challenging environment, just generally in Australia and for financial services, particularly. So our funds under management administration supervision up 19% to $101 billion. So we were just above $100 billion at the half year with the market downturning below and then back up above $100 billion. There's been a substantial investment in our capability that's been underpinning this success and this growth. There's been very noticeable new wins that we've announced to the market, particularly in recent times. And that opportunity -- those opportunities give us more momentum for growth in FY '21. We really are capitalizing on the industry trend to outsource the fiduciary role and for other companies to focus on their core capabilities. And we continue to believe we're really fulfilling our purpose as a trusted specialist fiduciary, both for our clients and what we can bring to the community. This -- take you through the highlights of the numbers. Revenue was up 3.2%. So that's notwithstanding the equity market downfall, which was obviously very severe and lasted through the last 4 months of the year. Our net profit before tax was $30.3 million compared to $31.3 million in the prior year. Net profit after tax was $19.2 million. Importantly, that includes a provision that we've made for a long-standing tax matter, and Philip will cover that in more detail in his presentation. Our underlying earnings per share was 5.5% lower to $1.027. The Board have chosen to pay a final dividend of $0.43, which brings the total dividend to the year to $0.90, so that's the same as it was in FY '19. And again, through these results, you'll see that all the businesses have been performing well and exhibiting good growth. Funds under management and supervision really is the #1 driver of the revenue of the company. So we focus on this number quite considerably. And you can see there the 19% increase on the prior year to come in at $101 billion. So the $19 billion of new appointments we made in our superannuation and our Corporate Trust area -- Corporate Trustee Services area, most of those happened in the first half of the year. And we'd already said that we've quantified the increase in annualized revenue for those appointments at $2.5 million in the first year. We'll talk more about how the other appointments look a little later in the presentation, but that is really a very significant growth. The key financial measures, just walking through those. I mentioned the revenue before, up 3.2%, to just over $95 million. Net profit after tax, if we look at the underlying numbers, $21.2 million. And as I mentioned before, with a tax provision of $19.2 million. Looking at EPS, we've come in at 102.7% (sic) [ $1.027 ]. So you can see the progression of that over the last 3 years has been very strong and consistent. And I should say there's been no real increase in gearing, producing that result over that time period at all. And as I mentioned before, the dividend has been maintained for the full year at $0.90, which is, we think, a great reward to shareholders and sets us apart from many financial services companies that have come under pressure of late. This is an important slide because it shows you the funds under management and supervision in both TWS and CTS. And I first start with TWS. Significant growth there to $19.3 million. I've also put in there 2 green-shaded blocks that show 2 new appointments that we've announced post the balance date. So being the appointment as a superannuation trustee to AMP Life and also to HUB24. So we're delighted that those companies have chosen to partner with us, and looking forward to servicing them and all of their members and investors in coming years. But with that, it brings our total superannuation business to some $26 billion of assets. This was a business that was only $2 billion 4 years ago. So we've experienced extraordinary growth there, and we're now looking after 750,000 members in the superannuation business. On the Corporate Trustee Services side, again, very strong growth and primarily off the back of 2 major appointments: one to AIA earlier in the year and the other to River & Mercantile in the United Kingdom. So it's a 19% growth in the funds that we're supervising in Corporate Trustee Services. So I think what this slide shows is there is great demand for the independent fiduciary service to fund governance, both for investment products and for superannuation products. Just -- I've touched on a couple of these things, but just expand on why this is happening. I think the Royal Commission of a couple of years ago, indicated financial services companies were looking to, I guess, improve and upgrade their governance for their investment schemes in their superannuation funds, and that really has been our core capability. That has drawn a lot of the change as well as some of the divestments that diversified financial services companies have been making. And when those divestments have occurred, we will have reconsidered their operating models and consider our independent trusted proposition. I've talked through those appointments in superannuation on the previous slide and also on the Corporate Trustee Services slide. I'll just mention one other thing, and that was the appointment to our third listed investment trust, the Partners Group at just over $0.5 billion, that was earlier in the year. Now these are very large-scale appointments, the ones that happened in FY '20, as well as in the last months to AMP Life and Hub. And we sized up for it, you there the collective additional revenue that we expect in FY '21 of $5 million to $6 million from those appointments. We've been positioning for this growth. We certainly flagged it to the market 6 months ago and 12 months ago that we would continue investing in our people and our technology because we do expect this type of growth. We've continued emphasizing our governance and risk management. So it's absolutely core to what we do and why people point us into these roles. I'm going to come back to talk about some of the key Board appointments and executive appointments later in the presentation. And we remain active looking at M&A opportunities. We expanded our business in Ireland out of the U.K. at the start of the financial year. So we've got a direct license with the Central Bank of Ireland and established offices in Dublin. And I think we're very well positioned for future opportunities, the way we stand here at the moment. And we've talked to the market before about our T4 measures. This is what drives our focus internally to make sure that we are delivering to all of our stakeholders. I think it's held us in good stead, particularly in these times that we have got to focus on all of our stakeholders, our clients, that's our purpose for being; our employees, which is really the key to our success, obviously; so shareholder support and growing the value for shareholders. And this unique position we have and being able to make an enormous impact on the community throughout profit granting. I'm just going to walk through each of those, starting with client satisfaction. We serve our clients every year. And these 2 scores indicate the likelihood of clients recommending Equity Trustees to other people and utilizing our other services and products and had a really significant uplift on both those measures in the course of the year. We extended this survey this year to our superannuation members as well as indigenous community members of our trust. And I'm really delighted with those results. This is a multiyear journey for us, but we're going to keep investing in our digital processes. And also, we've had a major uplift in our client communication through the course of the year. I think that's been important in these very challenging times. I move on to employee engagement. People are key to our success. Again, we survey our employees each year. This year, we did it in June. So it was at the height of the lockdown. And I'll just remind people, about 220 of our people are situated in Melbourne, 220 of our 250, so primarily northern based and been working remotely since March. These results compare to the industry, which is the industry data pre the lockdown. So we're really happy that we're above the norm on enablement and at the financial services norm on employee engagement. And our focus here is on competitive benefits for our people, training them to be the best they can and our work structures and processes and the resourcing of our different areas. I talked before about growing shareholder value. And there, you can see on the left-hand side, earnings per share, which is the primary measure we're using to measure our success. And I mentioned before, the Board is leaning to maintain the dividend for FY '20 at $0.90. And finally on these T4 part is deepening our community impact. On the left-hand side, you can see the granting, the extraordinary granting that we do into the community. We have a team of 18 people that are responsible for doing this work. I guess it's been more important than ever, you can see on the pie graph there, the major amount of this granting going to medical research and the like that's been very important through the course of this year. I'll talk more about that in a sec. We've dedicated 1,200 hours of pro bono service from some of their most senior people to establish the bushfire trust that we established in February of this year and 40 volunteering days through the course of the year. So I'm going to stop there and hand over to Philip to talk you through the financials.

Thank you, Mick. Let me now take you through the financials in a bit more detail. Firstly, just turning to the P&L. Here we go. And perhaps if we just step through this P&L from top to bottom. You can see the revenue growth there of about 3.2%, which is pretty good given the impact from markets, particularly in the second half, pared that back somewhat. You can see the expenses, the operating expenses there of 4.1% growth, reasonably well contained, given there was a fair bit of investment in the superannuation business in particular. And to -- and as part of that, there was a fair bit of cost containment everywhere else. You can see the net profit before tax line, down slightly from $31.3 million to $30.3 million. And of note here, you can see there's a much higher effective tax rate. Mick talked earlier on about the tax provision we've made. This is in relation to the contingent liability we've had in the accounts for a couple of years now, relates to an acquisition that the group made 10 years ago now in FY 2011 and the provisions for around the $2 million mark. So the effect of that is the net profit after tax is down about 13% to $19.2 million. Although on an underlying basis, it's quite a bit stronger. You can see the EPS on both bases here down 14% on a statutory level and then down the bottom of the chart there on an underlying basis, it's only down 5.5% when you exclude that tax provision. Now moving to the half-on-half performance, just to give you a bit more flavor here. And as you can expect, the second half was somewhat slower than the first half, reflecting, in particular, the impact of equity market volatility from the COVID-19 pandemic, particularly through March and April. On the expense front. Expense is actually slightly lower in the second half, notwithstanding the increased investment that reflects the cost containment in other areas. There's also some seasonality in our revenues, and that's reflected in the slightly set -- softer second half in the TWS business as well. The lower interest rate environment also impacted some of the earnings in our cash management trust. Let's now take a look at the revenue for the group in a bit more detail. So on this bridge here, you can see we strip out some of the one-offs, fund closure fees and the client exit from a fund consolidation, which we previously announced in prior results, the equity market impact on FUMAS and unsurprisingly, that's hurt us a little, and I'll show you just the difference between CTS and TWS shortly. But actually, the organic growth was pretty good at underlying 3.7%, and we achieved growth in revenue in all of our key businesses. Let's now see how that's reflected in the cash flow. You first look at the left-hand bar here, $54.4 million of cash and cash equivalents. And then on the right-hand side, you can see a very significant increase of about $30-odd million improvement in liquidity and cash equivalents here. We continue to have pretty strong cash flow generated from operations. There was some additional borrowings to improve liquidity and also to assess with some of these new superannuation appointments when we're funding some of the operational risk financial reserve. And I'll talk a little bit more about that shortly. Let's now look at TWS in a bit more detail. In this bridge here, you can see the equity market impact on the TWS business. Unsurprisingly, the ASX 200 was well down through March, April and still not back to its high. So that had a reasonably significant impact on the business. But underlying organic growth, again, is pretty strong. On the right-hand side, you can see the increase in FUMAS, principally driven by the appointment of the CMLA superannuation trustee appointment. And looking in a bit more detail at some of the TWS sub-businesses. In here, you can see some of those, both on the left-hand side, some of the more traditional trustee services; on the right-hand side, some of our newer markets. You can see there, there's a fair bit of good growth in pipeline activity, but the impact of markets is also clear. And on the right-hand side, some good momentum emerging in these new markets, which we're building quite significantly, particularly compensation trusts, indigenous trusts and living donors. Turning now to superannuation in a bit more detail. Here, you can see the pretty significant rise in funds under supervision on the left and likewise, the increase in members on the right. The 2 green bars are the post-balance state appointments of AMP Life and HUB24, respectively, which help underpin the growth in FY '21 for this business in particular, as we look ahead. Now to CTS. Again, the bridge on the left just showing the -- splitting out some of the one-offs and the equity market impact. The equity market impact from the world MSCI is actually slightly positive. It's been quite volatile during the year, but you'll be aware it's come back a lot in recent months. It's actually slightly positive. Nonetheless, a pretty good organic growth, particularly from U.K. and Ireland and also from our corporate trust and securitization business. But all parts of the CTS business had growth over the last year. Again, you can see the improvement in funds under supervision on the right. Let's now look a bit more closer at Corporate Trust. This is one of our newer businesses. Still coming off a low base, but you can see on the left-hand side, some pretty healthy revenue growth. On the right-hand side, a significant improvement in funds under supervision. This business has a healthy pipeline, and we're -- we expect to see further improvements in the period ahead. Now let's just have an update on the U.K. and Ireland. You'll recall we established this business a couple of years ago. Now Ireland, some 18 months ago, and you can see we're starting to get some real momentum here in terms of clients, funds and assets under management. A couple of highlights there are the River & Mercantile appointment, which is about AUD 3.9 billion and the Alliance Bernstein appointments, which is starting to generate some momentum for this business. And there's a healthy pipeline of opportunities for the year ahead. Let's now turn to the balance sheet. First, on the top line, the cash and liquid investments, I've touched on this earlier. You can see quite a strong increase there, reflecting partially a desire to improve the liquidity, make sure the balance sheet's rock solid and also to support the superannuation appointments I referred to before. The debt then increased from $12 million to $29 million over the year, reflects some partner borrowings to improve liquidity and also to capitalize our superannuation entity, which supports the appointment of CMLA with some operational risk reserve funding. This funding is cash backed. And Equity Trustees effectively doesn't bear the burden of the interest on that. It's effectively cash flow neutral. So it's carved down our financial covenants in relation to our core banking facility. You can see the balance sheet remains in very good shape. Let's look at capital in a little bit more detail now. I've referred earlier in previous presentations to the potential to release $2 million or $3 million of capital and from the consolidation of the OneVue RE acquisition license. That's now being completed, and that capital has been released. There is some further potential from further consolidation of licenses in the next 12 months. And you can see, we still have plenty of flexibility under our core borrowing facility of $40 million, which is currently drawn to $20 million today. So summary, the capital position is strong. Now just providing a brief summary overall. We've had very good FUMAS growth in what's characterized as a more challenging environment. Good organic revenue growth despite the market downturn. Underlying EPS and NPAT are marginally down, reflecting the adverse markets in the second half. We're still investing in the business to create a foundation for more sustainable future growth, particularly in super, and that's evidenced by the successful appointments to AMP Life and HUB24. Our balance sheet is strong. We've got the capacity to support our growth plans, continuing to deliver for all our stakeholders. So I'll pass it back to Mick to talk through the strategy and the outlook in more detail.

Thanks very much, Philip. Well, let me talk to you about the strategy and the outlook for the company. Firstly, our vision hasn't changed. It's simple, and it's clear, and that's to be Australia's leading trustee company. And we never lose sight of this purpose, and it's probably been more important than ever in this challenging year. We've supported our clients as best we can through these times, and we'll continue to do so. So we're looking for all opportunities where we can deliver on their needs. And that goes also on our philanthropy side, where we've changed some of our granting and pivoted to more immediate needs for that sector, which has been very hard hit in recent months. I think clearly, the strategy is working, and we don't intend to change it. So representing the interest of clients and beneficiaries first. It's our core business. And we're increasingly being able to market that to other players who can focus in their core businesses and leave the governance and the aspect of investing -- protecting investors and members to specialists. The industry upheaval is also working in our favor because it put an increased focus on independence. And I think the strategy is proving to be working and has been very resilient throughout this period. Just a bit of a look at the industry as a whole. The industry is going through a massive change with many of the companies being divested from the banks and other big wealth groups. Technology playing an increasing part. The intense focus of the regulators, both APRA and ASIC, is causing many organizations to rethink the way they go about their business. And I think Equity Trustees is really well positioned in terms of that outsourcing of governance that is happening on the investment side as well as the superannuation side. And the reality is most of the assets in Australian superannuation and investments are running an in-house type of model. So we see plenty of opportunity as the industry develops. And also, we just talked about Australia, but of course, the markets in the U.K. and Europe are considerably larger than in Australia. And so we've built a good start for the business there, and we're starting to secure some very blue-chip type of clients who will increase our reputation in those markets. Key for us is our people, and this is a people business that's technology-enabled. And we've put a lot of investment into recruiting people in the superannuation area as that has grown in our asset management area, and that is absolutely delivering results for us, and also in the U.K. and Ireland as we've been building those businesses. And I'm pleased to say here, we really are being regarded as an employer of choice. So we've been able to find the key people that we've needed when we've needed them, which has been great. Technology is very important as the business scales in size, and we've got -- we've just established what we see as our long-term 3- to 5-year technology plan. We'll bring all parts of the business up to the standard that will really deliver on the client service that we're seeking to provide to our clients. So I slipped back on a page there. And as Philip talked to you before, the financial capacity organization is really strong. We've continued to manage expenses really well. So I think we have a lean business that it has the ability to grow, and we're recruiting and putting the people on where we need to. And the balance sheet is in a really strong position that gives us flexibility should we need and opportunities arise. Let me just talk briefly about the technology focus for the next year or 2 years. Obviously, we need to -- more of in the cybersecurity, and the team are well and truly on top of that. And I'm pleased to say we've had a pretty clean year in FY '21. The government's new superannuation early release scheme has put some risk into the system, but I think we're on top of that now. And we're from the start to just change the processes, so we've got to be aware of those things, obviously, for the whole business. We're increasingly digitizing all the business. I've talked before about what we've done with the will bank and using data and analytics in there increasingly. Many of our new platforms are Software-as-a-Service type platforms. And we're planning to upgrade what we're doing in enterprise risk, in human resources and the finance functions. And at least one of the major developments is ensuring that we've got the right client portals for our business-to-business clients and our straight-to-live service. So clients can increasingly self-serve. And the source of all data and information is in one spot for those clients. So it's a reasonable investment that we're going to be putting in, in FY '21, but it's focused on enriching the client experience and improving our efficiency, which will enhance our value creation. Now my favorite slide are the people in this business. And I'm going to start on the left-hand side with the areas of governance. And you may have noticed in our announcement that our Chairman, Jeff Kennett, has announced that he'll be stepping down at the AGM, conclusion of the AGM in October, after 12 years of service and 3 years as the Chair of the company. And also, Alice Williams, our longest-serving director, will also be stepping down at the conclusion of the AGM in October. And needless to say, after 12 and 13 years of service has been an incredible contribution by both of those directors to this company. And I personally want to thank them both to their guidance and advice and support that they've given at the time that I've been here. I'm pleased to announce, and we've put in the announcement this morning, Jeff announced that the Board has resolved to appoint Carol Schwartz as the next Chairman of the company. Carol joined our Board in -- just earlier this year. She has an incredible CV that is so fit for purpose for this organization. She'll have obviously a different style to Jeff. And -- but her areas of experience are going to be an enormous contribution to the company, and I'm really looking forward to working with her as the Chair of the company. Catherine Robson joined our Board in February of this year. Catherine has been serving on our Superannuation Subsidiary Board and been overseeing the growth in that business for the previous 6 years. So she's well known to us and already making an incredible contribution on the holding company board. We brought on 2 new appointments to our Superannuation Board. We have Paul Rogan, who has a really diverse experience in financial services and gives us just a different dimension in that superannuation space. And just recently, George Zielinski has joined us. George was previously the Chief Investment Officer at the Rest superannuation fund. So he brings enormous investment capability to the Board. And I'll put a new Chair in placing to our Irish company, Deirdre O'Reilly. You might have pictured he's from the Irish company. And Vincent Camerlynck has joined us. He's a very experienced European funds manager, joined us on our U.K. Board, where we do need to have independence on those licensed subsidiary boards. A new company secretary, Jennifer Currie and Tina Ooi has joined as Deputy Company Secretary. So really strengthen the governance. And look, on the right-hand side, I won't go through all of these roles, but we needed to recruit some very senior experienced people into the Superannuation Trustee Office, and we've been able to do that with the head of transformation, senior client account managers and new superannuation lawyer. We put a very important role into place in head of business development for Trustee and Wealth Services. And of course, in the U.K. and Ireland, we've continued putting people on operations, compliance and portfolio risk. So we have, I guess, been increasingly viewed as an employer of choice, and people are critical to the success of our business and looking after our clients. I'll just touch on risk for a time and we -- until we have a really solid risk culture. And you can see it there in the survey results that we've achieved when we survey all of our employees and their focus on risk. We've managed to touch [ or ] avoid any of the issues that have been prevalent in the industry in recent years. Our #1 risk issue at the moment is looking after the health and safety of our employees. And I'm pleased that none of our employees so far have contracted the COVID virus. And our focus going forward, particularly for the people in Melbourne, who have been locked down for a longer period and probably most likely continue to be, is to look after their mental health as well as their physical well-being. And so we're doing everything we can to ensure that happens. Obviously, when the market downturned in March, it's a very significant downturn, more than 30% in both Australian and global economies. That caused a lot of workload for [indiscernible] entities, superannuation trustee and just with Trustee of trust [indiscernible]. And our focus was on liquidity. It was on valuations, fair valuations, ensuring equitable treatment of all investors, members and beneficiaries through those trusts and continue with very transparent communication as to how we were looking at the assets and the spreads on unit prices and the like to ensure we did produce that equity for our unitholders. And I'm glad that we've come through that period very strongly. Just move on to the focus for Trustee Wealth Services. There's a lot on this slide, so I'm just going to cherry-pick a couple of key points. The philanthropy side, we obviously have a great team there, leading the market in ensuring that our philanthropy makes the biggest impact it can on the community. They pivoted through this crisis to ensure that the not-the-profit sector was really well supported. And I'm really proud of the work that they've been able to do over that period. We published our second Giving Review in February of this year, and it really showcases the impact that we're trying to make on the community. On estate management, we rolled out a new platform through the course of the year. It's really important to deliver a great service to the beneficiaries of estates because it's the first interaction they have with our company. And that has really improved the way our clients have rated us in estate management. In trust management, our focus has been growing the indigenous trust area and also in compensatory trusts and also other specialist trusts in TWS. And it's been a good year in the past year, and our focus will continue to be on improving the client experience for those beneficiaries. Funds management, as you know, we put in place a new team headed by Darren Thompson and Chris Haynes 18 months ago. They're delivering excellent investment performance through FY '20, and have really set the team up for success going forward to be able to deliver performance above market performance. So the Australian equity market performance was 2% up on benchmarks through the course of the year; and fixed income, some 40 basis points up. And in this low interest rate environment and volatile markets, every percent of return is so important to our clients. On the estate planning side, we've rolled out a new digital platform on the website that effectively collects our data. Our focus is on complex estates and estate plans. There's perhaps never been more need for that than what we've seen over the last 4 or 5 months. So people have focused on that. And the team have been doing a great job in terms of -- in this difficult circumstances, getting to clients that are going through an estate, important estate planning discussions. Advice business continues to be rated really strongly by our clients. So TWS has a lot on, but it's had a really good year in FY '20, is well set up for FY '21. Now we've talked quite a bit about superannuation, but there continues to be a strong pipeline of opportunities as different financial services providers focus on their core and also look to address the vertical integration and potential conflicts of interest that are embedded in many models. And we've been well set to do that. Clearly, these are complex types of arrangements. They take a long time to come to a final appointment, but we've got the team and capability that's proven to be able to do that in very large-scale appointments. Look, I just want to stop here. Obviously, Australia's gone through a really difficult time with the bushfires and then the COVID pandemic of late. We set up 2 dedicated trusts following the bushfires, have been both listed in the Tax Act in record time, one set up to look out to the families or the fallen volunteers. That's the Australian Volunteer Support Trust and the other the Community Rebuilding Trust. We've raised more than $10 million in those trusts with the help of the Business Council of Australia. And we're putting that funding out to the community already. Jeff has often -- is chairing the Volunteer Support Trust. He's so passionate about looking after those families. And so Peter Cosgrove is chairing our Community Rebuilding Trust for us. So -- and as I said before, we pivoted our philanthropic grant into the areas that are most needed at the moment in terms of medical research and health supplies and mental health initiatives. And so pleased that the team have been able to switch focus to really meet the need of the community. Indigenous trust is an area of increasing importance to us. We picked up 2 new trusts through the course of the year, 1 in Western Australia and 1 in Queensland, and our first client in Queensland. Our goal here is to contribute to the social and economic parity for our first Australians. And we believe the trustee can play a really important role in protecting indigenous communities' wealth and ensuring it's distributed in the best way possible and empowering those communities to take control of their own future. We have established the first joint co-trustee arrangement on the Aboriginal Housing Foundation in Western Australia for the Noongar people. Added -- once that is finalized, we expect we'll be providing homes for 150 people, providing support on domestic violence and support on age care. So it will be a whole community solution for the Noongar community just outside of Western Australia, outside of Perth. So we're really proud of the work that we're doing there, and we see great opportunities going forward. The focus for CTS is, it's been a great business, and it's going to continue focusing here in Australia on new start-up fund managers and global entrants that are coming to Australia. We see increasing use for our services for people who have got an internal RE, looking at potentially using our expertise to be able to develop their fund ranges. There's a -- we wrote 3 new listed investment trusts through the course of the last year. And whilst the government has changed the stamping rules in relation to those, there are other very innovative developments happening on the listed vehicles space in connection with unlisted managed investment schemes, which will widen distribution for funds managers, and we want to be at the forefront of helping fund managers make the most of that development. We're building a structured fund in this area, in the debt area and securitizations. Philip mentioned the progress that's been made there. We're seeing really encouraging wins. We've got a great team set up in Sydney as well as in Melbourne. And then finally, continuing to grow in the U.K. and Ireland. So I think the blue-chip clients that we've been able to bring on in the course of the last 12 months is really going to hold us in good stead as we prove ourselves to those markets. And those markets are starting to free up again. And again, there's an increased focus on great governance and internal fiduciary-type roles being externalized in that market. So let me summarize. We've obviously experienced really strong funds under management but in a very challenging environment. Solid revenue growth. The underlying earnings per share and net profit after tax, marginally down, reflecting that market movement. We've kept investing in the business through the course of last year, and it really does give us a foundation for growth. The new appointments that we've had really give us good momentum going into FY '21. Our first month on FY '21 has been a very good start. The balance sheet's in great shape. And we believe we're delivering for all of our stakeholders. The industry is going through a significant transformation, and that is providing us opportunities. We'll keep investing in our people and technology to capitalize on those opportunities while they present themselves. We're looking how we grow organically but also inorganically in this environment. Our strengths, I think, as a respected and specialists capable [indiscernible], increasingly being recognized by the industry. We expect the benefits of the investments we've made in FY '20 to continue to flow into the year ahead. Market volatility will always be an impact on our revenue given it's so linked to asset values, and that will continue to influence the outcomes through FY '21. We can't control that. But we believe we've got an encouraging outlook for FY '21 and beyond. So thank you for listening. I'll stop there and happy to take any questions that anyone has.

I refer to Slide 9. The revenue margin on the new business based on the disclosure appears to be around 2 basis points. Could you please outline the revenue dynamics for each of the business lines? Secondly, is 2 basis points a fair assumption for new business moving forward? Well, someone's done some quick calculations, which is good. I think, look, each line of business has a different pricing model. Typically, it's priced in basis points. But in some cases, we have minimum floors put in place based on the actual resources we've put in place to take on an appointment. The prices vary, our fees vary anywhere between low single-digit type basis points like that up to 5, 6, 7 basis points, depending on the type of the appointment that we're taking on. Obviously, when large-scale appointments come on that are already established, much of the work is already done, and we're moving into BAU. So it's a different -- slightly different type of pricing for existing funds versus ones that are starting from establishment. Philip, do you want to add anything?

Perhaps just to say, Mick, that that's a good characterization on the CTS and superannuation side. Obviously, the private client side of the business, it's a higher-touch business. And the revenue there, actually, the basis points are much higher and reflect the trust management workload associated with those. So there can be 50 basis points or 100 basis points or more, depending on the actual services provided.

I've got another question here about the regulators and the relationship that we have with ASIC and APRA. So look, obviously, the regulators have a very tough job to do in these circumstances. And following the Royal Commission program that's been put in place by both APRA and ASIC, and they are pursuing those actions and initiatives, and we encourage them to do so and looking forward to changes in terms of the regulation as that unfolds. Our relationship with both regulators is really sound. We take an approach of being transparent and being active with the regulators. Obviously, when they're looking at the growth of the business, they need to be taking that into account with us. And we're looking to have a collaborative relationship as much as we can. But obviously, we are being regulated by both APRA and ASIC and welcome that. In many cases, we look as if -- we feel we are standing in the shoes of regulators. So it's a very important part of the way we operate the business and the governance. So in the course of the last 12 months, I think we've had a good relationship and position in working with them. The next question is, going on from the pricing question, what are you seeing in terms of competition in the market? Is there more pressure on price versus 12 months ago? Well, I think in the private client side, on the market, there is some pressure on [ crop ] price because investment market returns are reducing, the interest rates have come back. So yes, that's causing margin compression in different parts of the private client area. In terms of the 2 corporate lines of business, the superannuation and Corporate Trustee Services, there hasn't been a lot of change. I think it's a competitive market with multiple players. But the onus on the providers is increasing all the time with the regulation. So our position is, we would like to maintain the fees where they are. And if we can do that while coping with some of the regulatory change that goes on, that'd be an excellent results for clients. And we have been managing to do that over the course of the last couple of years as there's been significant regulatory change. Comment on the slides, there is a focus on larger-scale opportunities as managers consider specialist outsourced model. What are asset class types of managers are considering outsourced -- outsourcing that have not previously? Good question. The funds managers, really, it's an issue of them wanting to focus on their core strengths, delivering investment returns and distributing to clients and keeping their clients. There's increasing sophistication in vehicle structures. And as that happens, I think many managers are thinking more maybe some of that complexity is better done by a specialist with them being able to focus on their core business. So it's really those managers that are looking to utilize different collective investment vehicle structures going forward, and we see there's going to be quite a lot of innovation in that front over the course of the next number of years. And that's where we can assist. So they might have had an internal responsible entity position before, but when they think about it that way, come up with a different conclusion as to how they should move forward. Now the next question is, you obviously had a very big month of July with the 2 big appointments, but can you comment on how significant the pipeline of new opportunities is at the moment? Well, that is right. It has been a big month in July, and I'm not saying that we can replicate those type of results going forward if you look through the whole course of the last 13 months. But the pipeline is very sound. As I said, the industry transformation that's going on is favoring our model, and we're having plenty of conversations with some larger-scale opportunities around their fund governance, both the superannuation and on the investment front. I'm not sure there's any other...

One more question there, Mick.

Oh, sorry, sorry, my apologies. Can you be cost competitive versus the internal option for these fund managers, considering outsourcing is more driven by governance? That's an excellent question. The reality is we can be more cost effective, but that really isn't the pitch. The pitch is get the best governance model in place for your investors and your clients and your members and reduce your risk and allow itself to focus on your core capabilities of investment management or superannuation provision and securing clients and maintain those clients. So that is how we pitch. It's considerably reduced risk because you're removing the conflicts, you're removing the vertical integration, you're focusing on your own core services. But the reality is because of our scale, we can actually be more efficient as well, but that's really not the way we would go into a discussion about an outsourcing of our current internal model. It's about our capabilities and delivering a better result for them and for their investors. Well, I think that's the end of the questions. Thank you, everyone, for those. We're at the end of the allotted time, and we will be on the -- not on the road, on the road, virtually over the coming weeks talking to investors and very much looking forward to it. And appreciate you joining the webinar this morning. Thank you.