EQT Holdings Limited (EQT) Earnings Call Transcript & Summary

Good morning, and welcome to the EQT Holdings Full Year Results. [Operator Instructions] I would like to advise all participants that this call is being recorded. Thank you, and I'd like to hand the call over to Mick O'Brien, Managing Director. Mick, take it away.

Thank you very much, and good morning, everyone. I'm here today with Philip Gentry, our Chief Financial Officer and Chief Operating Officer. And it's a very exciting day for EQT trustees. So firstly, we're going to take you through our full year results for the financial year 2022, and that's an excellent set of results. But more exciting is we have announced this morning that we have entered a binding agreement to acquire Australian executives trustees from the Insignia Financial Group for $135 million. So the second part of the presentation, we will walk through that acquisition. But let me first start with the results. I'm going to give you an overview of the results, and then Philip is going to talk to you in detail about the financials. I'll then come back and talk about the strategy update and outlook. And we'll take questions at the end of the whole presentation in relation to the results and in relation to the acquisition. So let me talk about FY '22 and our results. Actually really strong earnings increase on our funds under management, administration and supervision. They increased by 3.3% to $149 billion. Now that's a great increase against the backdrop of Australian equities being down 10% year-to-year and the global equity market being down [ 5% ] year-to-year. So our funds and management administration supervision is the main driver of our revenue. Revenue was up to $111.5 million, so 10.4% on FY '21. And pleasingly, about 2/3 of that revenue growth was achieved through organic growth and related to market impact through the course of the year. Net profit after tax was up 12.5% on the prior year, and on an underlying basis, up 9%. We managed expenses tightly. They are up 5%, and on an underlying basis, about 7%. So a really positive gap between revenue growth and expenses growth and the Board decided to increase the final dividend by $0.01 to $0.49, so bringing the dividend for the total year up to $0.97. Balance sheet remains in a really healthy position and has put us in a great position to undertake the acquisition we're looking to undertake. So let me move on to our competitive position. There's no doubt we are benefiting from our focused strategy on being a specialist trustee. That's enabled us to write new business in all of the lines that we're involved in. And that fund's growth has flowed through to earnings growth. We have continued to invest in people and technology, and that is so important to underpinning this business, we've got to be capable, which means having the people to be able to undertake the different lines of trusteeship. There's no question the independent trustee model is becoming the preferred industry standard. There is so much focus on governance, on regulation, managing conflicts and having expertise and we have the people and processes to do it. It's been a real tailwind to the business. The intense regulatory environment is giving, I guess, it's a 2-way sort. In one respect, it's hard work for us, but it's actually hard work for everyone else. And that gives us a really competitive edge for people looking to outsource trusteeship. And we've continued fulfilling our purpose of trust, caring for people and enriching the broader community in these uncertain times and tough times for some. But just look at the progression of funds growth over the last 6 years. And you see the trajectory is really positive, only 1 year there where it was level, moves after 1 single $10 billion client left, and we replaced it completely. But other than that, we've continued to grow the funds in each of the years and grow them strongly. In particular, the new business in Corporate Trustee Services this year was really strong. Superannuation has continued to go throughout the course of the year. And of course, these ending result is impacted by the lower equity markets as they were at 30th of June. So a really pleasing result when you look at that growth. Turning to each of the business units. I'll start on the left-hand side there, and a little bit Corporate Trustee Services fund under supervision. You can see they've grown to $105 billion over the course of the year. We've started many new fund manager appointments through the course of the year, I think about 15 or so established something like 60 new schemes over the course of the year. We've seen a big expansion in dual registry quoted funds, so those that are unlisted and listed. We now have a portfolio of 8 listed investment trusts, active exchange [ traded ] funds and REITs, and we have 6 in set up at the moment with some really high-quality fund manager names that I'm really excited about. Finally, the growth of our Corporate Trust business, which is a small business but really growing strongly, had a fantastic year, as Phil will show you. Revenues now to $3.8 million. That's a 30% growth rate in the year, and we've got 77 appointments in place in that business that we started. I'll remind you, just on over 4 years ago. On the superannuation side, funds in a supervision were up 3.3%. We've continued securing new clients through the course of the year. Significant growth in some of our platforms that we have as clients. This portfolio now is really quite well balanced between quickly growing platforms and some, if you might call slower growth superannuation funds that we took on a couple of years ago. So the business is in great shape and handling the regulatory load really well. And finally, if I move on to trusted wealth services. The funds were down a little, mainly as a result of markets being down and also completion of a single large state. Despite that, we've continued writing net new business really well through the course of the year. Our investment performance has been first class delivering great benefits to clients and the business now is in great shape to be taking on through the acquisition. You hear us always talking about delivering for all of our stakeholders, and this is so important a part of EQT trustee's culture to be focused on our clients, our employees, our shareholders and the community. And all of these are moving in the right direction for us. Employee engagement was up from 70% to 71%. So it's above the financial services norm. It was a great result in a year impacted by COVID such so significantly. Employee [ enablement ] was up from 70% to 73%. So it's above -- it's equal to the high-performing norm. So we're really happy that our staff have come back to the office and are really feeling comfortable in Equity Trustees and delivering to clients. Client satisfaction side, we survey our clients each year and net promoter score increased from plus 17 to plus 28. The net loyalty score from plus 12 to plus 41. We started surveying superannuation members in a pilot for the first time, and we've really achieved those results by focusing on some specialized client segments where beneficiaries may not be as happy generally with services, not particularly by us, but just arrangements of services. And I think that's really paid off in delivering those really positive client satisfaction results. We talked about shareholder value, but earnings per share was up $0.12, and the dividend, as I mentioned before, up $0.06 to $0.97. And community impact. We launched our fourth annual giving review during the year, distributed more than $92 million of grants to 4 purpose organizations around Australia. Our 2 purpose-built disaster trust have continued to build through the year. Unfortunately, we've had more problems with the floods across Australia, and I'm so glad we've got those trusts built so that they can actually deliver to the people who need it in those areas. I'll move on to the shareholder results and just look at earnings per share. You can see there the progression of it, up to [ $1.1594 ] on a statutory result up 11.7% and the underlying 8.1%. So it's a really healthy result, which we're delighted with. And the dividends I mentioned before, up to $0.97 in the full year. That's now 5 of the last 6 years where we have increased the dividends. And even in the COVID, we were able to maintain, which I don't think any financial services company was able to do really. And this is the highest dividend we've paid in 10 years. I'll just touch on the governance, risk and regulatory management because it is core to our business. It's really important. It is what holds us in great stead is our governance approach, our processes and people's commitment to them. We've got very productive relationships with the 2 key regulators in APRA and ASIC. No adverse actions being taken by either of those 2 regulators. We've handled all of the significant regulatory change really well through the course of the year. I see this regulatory change more as an opportunity, even though it's a lot of work for the company. But it is an opportunity because it really shows our clients where our -- where we can add value to their businesses. Our risk culture continues to strengthen. It's a really positive shape. We surveyed that each year. It's so important to us. And we've kept building platforms to help us in this governance and risk overside. I've mentioned before, our enterprise-wide compliance and risk platform cans was deployed, and we developed a proprietary member outcome assessment platform, which needed to deal with more than 0.5 million members assessments and 160 different types of assessments across the portfolio of superannuation funds that we had. So I don't think anyone would have that type of stretch that they need to do in superannuation oversight, but we handled it exceptionally well. I just want to just touch on our people and technology, 2 key drivers that enable this business. There has been pressure in the great resignation effect. We weren't immune to that. But pleasingly turnover is reducing at the moment. And we're filling the vacancies that we've had. I see that we're increasingly being seen as an employer of choice. We'll continue to manage the remuneration levels appropriately. There is some pressure particularly in some sectors such as IT and It's well known to everyone in Australia. I'm really pleased with the way we've secured to the business. These are critical appointments. Our company secretary is such an important appointment for this type of business. In Corporate Trustee Services, we employed our first business development manager, our General Manager of Business Development, that's enabled us to accelerate growth in the ROE side of the business, but also build out on the custody and the real asset side of corporate trustee services, which we've always had ambitions to do. And as I mentioned that we have appointed a Head of responsible investing into our investment team, and that's critical because we'll be focusing on that more in the future. And we manage the hybrid model, returning people to work 3 days at least in the office and 2 days on Monday and Thursday. I think that's working well for us. We were probably at the stronger end of the spectrum in doing that, but I actually think it's served us well, and our employees still in really high levels of engagement and happy with how we've managed that process. Technology front. I mentioned CAMMS before. We also deployed Zeidler, which is a third-party service oversight platform that's very important to us because we have an operating model as people will know, where we outsource many functions and retain governance, control and judgment. And so that platform is proving very effective for us. We kept evolving sales force in each of the business units. Cyber resilience is a constant war, which I think we're winning at the moment but can't declare victory. And we flagged that we are replacing our client platform in trustee wealth services and also replacing our finance system over the course of the next 12 to 18 months. I mentioned before, the sophisticated member outcomes platform that we built through the course of the year. Let me turn on to Asset Management. I just want to call out the results here. We appointed new leaders into asset management [indiscernible] 4 years ago. The performance record has been nothing short of outstanding since that point. They've kept the team intact through the whole of that period. We've launched a new global equities fund through the course of the year. I mentioned appointing a responsible investing manager. We transitioned the leadership in the fixed income team from our previous leader, Lance Pupelis, who retired after 40 years in the market and we're delighted with [indiscernible] who has taken on that role was staying to win business in the for-purpose sector, which is where we are focused with a new $150 million mandate in the end of the year. So just looking at the performance here, you can see Australian equities in the top block of 5% alpha over the last year and 3.1% per annum over the 3 years. That is enormous alpha generation with well-controlled risk. And you'll see the peer ranking there that were first quartile over 1 and 3 years, almost top decile over the 3 years. And fixed income positive alpha there and first quarter over the last year. So that's a really clear benefit to our clients and to the business overall. So well done to our team. So in summary, the funds have grown to $149 billion of a lot of strong organic growth has contributed to that. EPS, both on an underlying and statutory basis continued to grow. The Board increased the dividend to $0.97 in total for the year. We're continuing to invest in the business. So sustainable and set for the future and set for growth. We're deepening our community impact and delivering to all of our stakeholders. So I'll hand over to you, Philip.

Thanks, Mick. And good morning, everyone. Let me just take you through the financials in a little bit more detail. Firstly, starting with some of the key ones of the P&L. Here, you can see the revenue growth is up very healthily double-digit, 10.4%, one of the strongest revenue growth years we've had for some time. Expense growth, up 5.1% on a statutory basis, but up 7.4% underlying. Let's call a healthy margin between the revenue and expense growth. If you look at the half-on-half expense growth, that's up 5.8%, relatively strong. That reflects that investment in people for CTS and a catch-up and reduction in vacancies. More broadly, you can see a healthy increase in EBITDA and net profit before tax bottom line. NPAT, up 12.5% and EPS up 11.7% on a statutory basis. Dividend up $0.06 on the prior corresponding period and $0.01 on the previous half, pretty positive set of results. Now just looking at the revenue in a little more detail here. This is the additional waterfall chart which breaks out the market impact on revenue vis-a-vis organic growth. And you can see here, the pretty good performance on an organic growth basis with good growth from all 3 business units. Naturally positive markets have also assisted albeit somewhat softer enough than the final quarter of the year. Looking at some of the broader performance metrics. On this slide, you can see the revenue, EBITDA, impaired dividends, all trending pretty positively over the last 5 years. EBITDA, in particular, second half noticeably in the last 18 months or so. Just perhaps turning in to the perspective of how leveraged we are to market and just making sure everyone understands this properly. On this slide, you can see that TWS -- these percentages change a little year-on-year. And currently, we're about 60% to 70% leverage to the average daily ASX 200 and TWS and STS about 20% to 30% leveraged to that same benchmark. And then in CTS, about 40% to 50% leverage of the average daily [indiscernible] MSCI in particular. Now July, of course, markets continue to be fairly soft, but it's been encouraging to see the markets bounce back somewhat in August related to be seeing how the rest of the financial year goes in the year ahead. Now looking into each of the BAUs and their performance in a little more detail. Firstly, TWS on here, you can see on the left-hand side, solid headline revenue growth of about 7.8% on the prior year. We've adjusted for the finalization of one particularly large estate, that's unlikely to be the case going forward. It's something of a one-off. And then you can see the FUMAS has breakdown on the right-hand chart, which reflects the market impacts, in particular, the ASX down to circa 10% year-on-year. And then looking at some of the sub business units within TWS. On the left-hand column of this chart, you can see the core trustee services business and Estate Management at the top. You can see the reduction there reflects that single large estate that I touched on previously and market impacts mainly despite some reasonable underlying growth in Perpetual Charitable Trusts, Advice and Testamentary Trusts. On the right-hand side, some reasonable growth in most of these Emerging Market trustee businesses and notwithstanding markets overall have been somewhat depressed year-on-year over the last 12 months. And then turning to our superannuation business. On this chart, you can see on the left-hand side, particularly strong organic growth mainly driven by the full year impact of the appointments to Centric and Aracon, along with significant growth in HUB24. Again, organic growth, a bigger chunk of this business because there's a lot much higher percentage of fixed fees here. On the right-hand side, you can see the funds in the superannuation up, notwithstanding markets have been down. Members, of course, are down due to low balance members transferring to the ATO. Now turning to CTS. In this business, our organic growth has been the strongest. You can see headline growth here of some 16.5% particularly strong. The large numbers of new funds continue to see good momentum, high levels of activity in this business with some 30 to 40 funds expected to be launched in the second half and the first half ahead. Long demand across most asset classes. But on the right-hand side, you can see the growth, particularly in the nontraditional asset classes. Now providing a bit more detail about our Corporate Trust and DCM business. On this chart, you can see the revenue funds under supervision and number of accounts, all trading very healthily, very good momentum in this business, consistently strong across all metrics, and we're very encouraged by the momentum that's underway. We now turn in to the U.K. and Ireland, some positive trends in this business, but it hasn't been an easy 12 to 18 months. We've been impacted by Brexit and COVID has also made it difficult to fund for fund managers to distribute. The FCA has been ahead of focus on the ACD market for the last 6 to 12 months, which has included us, but nonetheless, we're improving our position. We're certainly being considered by larger fund managers, and we're considering a range of options to further improve performance in the year ahead. Turning now to the balance sheet. It continues to be a very strong balance sheet. Our debt-to-equity ratio is quite low. You'll recall, a large chunk of our cash is required for regulatory capital purposes, and I'll turn to the breakdown of that shortly. Suffice to say, we've got good headroom in our covenants, surplus borrowing capacity and plenty of flexibility to take advantage of further opportunities. Turning to cash flow. Particularly strong cash flow generation here, you can see a very healthy increase there. Offset, of course, by the payment of dividends, tax and a small number of other activities but nonetheless, leaving a very high cash position and a healthy buffer above our regulatory requirements. Next slide. I'll just spell out how that liquidity looks. If you look at this chart and you move from left to right, you can see the total liquid assets, the reg cap required for our no CTS business, the ORFR capital required for our Super business leaving net available cash of nearly $24 million, committed undrawn facilities of $30 million and effective capacity of some circa $50 million. So again, strong liquidity position and well placed with plenty of flexibility. In summary then, particularly strong organic revenue growth, cost growth well managed, strong underlying momentum in EBITDA and a healthy increase in EBITDA margins as well. Cash generation is strong, and we're well-positioned to fund future growth. Now I'll hand back to Mick to take you through the strategy.

Thank you, Philip. So let me take you through the strategy update and also an outlook for the business. Firstly, I'll be quick on this, but Equity Trustee is a company founded on trust, and we help people take care of the future. Our values underpin everything that we do, and we are focusing on fiduciary and trustee responsibility protecting interest and growing people's wealth for generations to come. And when we look at Australian executives trustees in a minute, I think you'll find very similar objectives and characteristics of that organization. Let me move on to the business unit strategies. In Trustee Wealth Services, on the left-hand side there, you can see the first part of our strategy, and this has been the same over the last couple of years is to achieve leadership in multiple states and more lines of business and hold that thought when it come to AET. Enhance our client experience, and that means more technology to enable our employees to deliver better service to clients, build a presence in the for-purpose market, both on the [indiscernible] side and the investment side, and continue to invest in our platforms to improve the client experience. In superannuation, it's to build that business as that industry undergoes ownership changes and APRA's intensity continues to increase. Increasingly, we're seeing new funds start-up from distribution groups as well as existing superannuation promoters looking to exit out of trusteeship given the difficulties of it. And we'll obviously have an increasing focus on delivering to member outcomes. The Corporate Trustee Services side, continued building a leadership position that we have in the funds management sector for providing responsible entity services, accelerate that growth in our corporate trust business. It's been a really pleasing start over the last 4 years or so, and the team is well set to keep building in that business and achieve greater scale and improve profitability in the U.K. and Ireland. I move on to the particular initiatives. I'm just going to touch on a few of these here. On Trustee & Wealth Services, we'll be focusing on building the business development through our partners, both the legal industry and financial planners and also the private banks. With 2 major developments on the technology side. One is a new leading platform for our active philanthropies called iPhi, and we'll be looking to put that out in the next couple of months. It's an exciting development. We've brought that technology across from the U.S., and I think we'll get a great experience to our clients. building a new platform for all of our client base in Trustee Wealth Services that will be a 2-year build, and sort of a once in a 10-year type of activity, and we're well set up to do that. We're reengineering our processes, we've been streamlining trustee ship and advice model for our health and personal injury clients. And then the last 2 points there are around our asset management business in terms of building their responsible, investing capability on the back of our appointment and then capitalizing on the [ rating ] on our products and the high performance of the funds and the stability of the investment team, particularly in the for-purpose sector. The Superannuation side, the industry changes are helping us. There are tailwinds to people considering outsourcing superannuation trusteeship. There are new start-ups increasingly coming to market that have significant scale already in some cases. We are digitizing this business significantly because it's a complex portfolio. And I think we are well set up for APRA's next stage of data transformation and what they're planning to do on member outcomes. We've got a great team that's been built over the last 3 to 4 years and this business has grown really significantly, and it's really well placed to undertake what it's trying to do at this point. Corporate Trustee Services side, continue working with the funds management industry, both global players coming to Australia and Australian start-ups. Our position as [indiscernible] RE provider is really strong, keep building innovative solutions for super funds, larger scale opportunities as some managers look to outsource what they might already have a trustee or an RE role in-house and keep building the listed vehicle -- dual listed vehicle part of the business. As I said before, we have currently 8 of those vehicles, there's another 6 in [ being built ] at the moment. That's expanding our funds managers distribution, which is insignificant. On the Corporate Trust side, continue the focus on the debt side of the business and securitizations as well as really putting more resource into Bespoke custody and MITs for real estate assets and continue building the momentum in the U.K. and Ireland. If I just move now to technology. I think I've touched on most of these points. But obviously, we need to keep abreast of everything on the cybersecurity side. We're digitizing more and more of our business and using more data analytics across it. We've got significant projects in train in each of the areas of the business in Corporate Trustee Services, Superannuation and Trustee Wealth Services as well a finance system. So there's an investment going in FY '23 of $2.5 million to $3 million for these projects and another $1 million to $1.5 million for FY '24 that we flagged previously. So it's a significant investment in technology, and we're continuing to build on the people front as well. Our vacancy levels were higher in FY '22 than what we would have ordinarily like. We've been able to fill some of those. So we go into FY '23, a little bit more resource than what we were in FY '22. There is inflationary pressures, but we feel we are managing those on the remuneration side generally. But we expect expense growth in FY '23 to be elevated and then moderating in FY '24 as the benefits from that investment flow through to productivity improvement and improved enhanced client propositions. Just look at each of the 3 businesses also to comment on where our current momentum is. So on Trustee Wealth Services, I mentioned before, we won a large client, the AFL Players Association on the investment front. 2 new clients in the indigenous trust space in July, and we've got a good pipeline of health and personal injury clients. We've onboarded 60 new clients for Advice where we were previously just providing health and personal injury needs. The Superannuation side, there's good success with platform superannuation clients, and we've got increasingly some prospective larger trustee opportunities where we're well advanced on particular projects. That portfolio now is becoming much more balanced between higher growth platforms and some of what you might describe as legacy older style superannuation products. Corporate Trustee Services, the pipeline is strong. We're currently establish about 30 to 40 new funds. I mentioned a number of those are listed vehicles. And there's some highly prospective clients of larger opportunities coming through. On the DCM and custody side that is growing rapidly. We've put new people into each of those businesses, and I think we're really well set for that growth. And as I mentioned, keen interest in exchange traded funds and listed-unlisted prices. So in summary, we say our strategy has been clear. I think it's really -- we have benefited from that strategy as the industry transforms. Equity Trustees is in a great position with our specialized approach. We are growing in each of the parts of the business well. We continue to attract the people that we need to undertake this business. We've got an exciting IT development plan ahead of us over the next 18 to 24 months. Obviously, the equity markets has started at a lower level for FY '23 than what they averaged for FY '22. So that obviously has consequential impacts on our revenue. This balance sheet, as Philip said, is in a really solid position and we've got the flexibility to fund growth as we need and its positive momentum for FY '23 and beyond. So I'll finish there on the results for the financial year '22. And now, we will move to the presentation. We lay into the acquisition of Australian Executive Trustees and the associated equity raising [indiscernible] that transaction. So firstly, let me say I am delighted and excited to let you know that we have reached a binding agreement to acquire Australian Executor Trustees Limited from Insignia Financial for $135 million. It's a business well known to us because we've seen them in the market and admired them for a long time, and it's an asset, frankly, that we have covered for a long-term. The acquisition is strategically compelling. It's a transformative acquisition for the group and particularly for our private client business, scale increase alone provides increased revenue and increased EBITDA that is very material. It absolutely aligns to our strategy to be Australia's leading trustee company. And you walk through this pack, you'll see it's exceptionally complementary to our private client business, both by business lines and by geography. There are synergies to be achieved, and the acquisition will be high single-digit cash earnings accretive in FY '24 and on a pro forma basis, when additional investment revenue [ factored in ] will be mid-teens being accretive. So the agenda, as I walk through this, is to just give you a summary of the transaction. We'll give you an overview of Australian Executor Trustees Limited, the strategic rationale behind it, the financial impacts. Phil will go through the transaction funding and also thought we'll go through -- I'll come back to conclude, and then we will take questions. So let me go through a summary of the transaction. So the acquisition is $135 million. The implied acquisition multiple is around 12x. Their stand-alone EBITDA of $11.2 million. The implied acquisition model will assuming fully realized synergies from the restructure of the Platform Services business, which we intend to undertake but not including additional investment revenue is 9.2x the FY '23 pro forma EBITDA of $14.7 million. The acquisition is going to be funded by a combination of new equity and additional debt facility. To give you an idea of the size of the business, the total funds under management administration supervision of $6.9 billion. And then FY '22 stand-alone revenue was $38.1 million. Our Trustee Services business will bring new business to Equity Trustees in terms of small APRA funds, which I'll cover shortly and that the strategic rationale of the business is really clear in terms of enhancing our ability to invest more in our private client business, strengthening our product and service offers and expanding our footprint around Australia, and it does provide transformative scale, which will allow significant investment in the business. We move on to the financial impacts. The acquisition is expected to deliver mid- to high single-digit EPS accretion and in FY '24 on a cash pro forma basis and double-digit accretion when additional investment revenues of $3.3 million included. We'll be undertaking an equity raising of $125 million and is fully underwritten. It's comprising a $40.4 million institutional placement to new and existing investments and a 1 for 6 $84.6 million raise on a pro rata accelerated non-renounceable entitlement offer for investors. The equity raise that we conducted at a fixed price of $24 per share. That's a 5.7% discount to the last close on Thursday of $25.46, a 4.7% discount to the theoretical ex-rights price of $25.17 on Thursday. It's important to note that new shares will be entitled to the final dividend for FY '22 of $0.49 per share. [indiscernible] of consideration for the transaction will be funded by an additional debt facility of $40 million that will leave our leverage ratio at 0.8x EBITDA on a pro forma FY '22 basis, which is conservative as you might expect for a trustee company. Completion of the acquisition is subject to ministerial approval to acquire AET's trustee license, and we target the acquisition to close at the end of November of 2022. Now let me give you an overview of AET. So AET is a 140-year-old company, headquartered in Adelaide, providing full range of trustee services to private clients and communities. It's in 2 parts of this business, Trustee Services on the left-hand side and Platform Services on the right-hand side. From a trustee side, you see all traditional trustee services, the biggest line of business that they have is health and personal injury where they've been very successful over a long period of time and also acquired National Australia Bank's trustee business 5 years ago, which had a significant presence in that space as well. They also have a good great footprint in community trusts. I'll come to the other parts of the business shortly. On the right-hand side, you'll see the Platform Services business with 3 lines of business [ SAF ] or small APRA funds at the top of about $1 billion and self-managed superfunds and portfolio management services at the bottom 2. So we intend to exit out of those 2 businesses over time because they do not involved fiduciary or trustee role, but the small APRA funds, I think, will be ideally placed in our business because our Trustee Wealth Services will have the relationship management skills to look after those clients and our Superannuation business will have superannuation trusteeship experience to look after that portfolio of business. If I just look at the national presence of AET, it's incredibly complementary to Equity Trustees. You can see the size of those bubbles there represents an indicative size of the business. You can see that Equity Trustees primarily centered here. I'm not here in Melbourne, but they are centered in Melbourne in Sydney. And we've got a good strong presence in Sydney and Brisbane. But AET is headquartered in Adelaide and has a really strong position in the Adelaide market, it has a leading position also in the Perth market. So it means that we will have the whole Southern part of Australia, a leading position in each of these geographies and it will add to our presence in Sydney, where we've been building in recent years and also our presence in Brisbane. So geographically, it couldn't be a better fit for Equity Trustees. Let me talk about the strategic rationale of the business. I'll just go through the key investment highlights here. So it really will strengthen our Trustee Wealth Services business and adds scale across the board in every line of business we have. And as I said, it diversifies our geography. It's important to note that it is long-term enduring revenue. Key parts of this business, a multi-decade type of appointments and longer than that in many circumstances. So very similar to our own Trustee Wealth Services business. The business on a stone-alone basis at the moment has a very healthy profit margin at 29% at EBITDA margin but with the synergies achieved, we'll improve that close to our levels of near 40%. It's an accretive transaction with synergy potential. I mentioned before how much we expect EPS accretion to be, and I'll just talk about the 2 areas where we expect to achieve those synergies. So firstly, on restructuring the Platform Services business. We expect to generate synergies of $3.5 million once that is fully realized over a course of about 18 months. And then secondly, additional investment revenues in relation to Trustee Services business, the $3.3 million expected in FY '24 with some potential for that to increase in subsequent years. Importantly, will provide us access to experienced staff. We admire the EQT staff that we've seen in the market over the years. [indiscernible] recruit many of them over time not so successfully. But we're really looking forward to welcoming their staff on board. Trusteeship is about judgment, professionalism, expertise. It's not a deep broad market where we can find our people. So to bring in so many talented experienced people and trusteeship is going to be a real boost to this company, and I'm really looking forward to welcoming them to Equity Trustees. And I mentioned before, the nationwide distribution footprint that it will give across all the major cities. Let's now turn to how it transforms Trustee Wealth Services for us. So you can see there, it increases our funds under supervision scale from $9.1 billion to $14.5 billion, so a really material increase of 49 -- a 59% increase. So it's -- the scale will really help us in that business. And you see the mix of business changes, and I'll comment on how that mix of business changes, but it becomes more diversified as a result of this acquisition. Returning to the lines of business. If I just start on the philanthropy side, we sit there at about $2.4 billion and AET will add another $0.4 billion so that bring us to $2.8 billion. On the health and personal injury side, the magnitudes are the other way around with our business on $0.5 billion and their business on $2.7 billion taking us to over $3 billion. So we have a really leading position in Australia in both philanthropy and health and personal injury. And just the revenues in those 2 areas are very enduring in nature and our Advice business will build to $1 billion. Our Testamentary Trust business will build to $1.2 billion with similar sized businesses in that space. I'm really excited that their community trust business, they've had great success across the country, but particularly in [ WA ], and that will build as has been a small business that we've been very passionate at $100 million, but the fair size of their business at $400 million, we'll build to $0.5 billion and put us in a really strong position against the other players in the market. And finally, a mistake management, that will go over $0.5 billion now. So it's incredibly complementary by lines of business just as it is by geography. Move on to just looking at from the group's perspective. You can see our revenue will go from $111 million, up to $151 million, so a 35% increase. So it's very material to the group. And EBITDA will go from $44 million up to $62 million with the acquisition on a pro forma basis. So up 41% increase. So it is significant scale for the group, which will really help us continue to invest. Combination of the analysis, you can see on the left-hand side, the mix of our business at the moment, over time, I guess, has been becoming more diversified with an equal contribution from each of our 3 business units because AET is all in the private client space. So on the right-hand side, you can see now that our private client business, which has our longer and more enduring revenue and perhaps more stable revenue will now move up to 60% over the $151 million revenue, but still a really solid contribution from all lines of our business. If I move to the next slide, significant value creation. I've commented on the platform services restructure, and I've commented on the additional investment revenues. And we just focus on the integration and one-off costs. We allow integration costs of $22 million expected to be incurred over the financial year '23, financial year '24. We've been about a bit over 1/3 of that in the first and 2/3 in the second part of the year. So we'll be employing resources to ensure a really smooth transition this business. We've been into a transition services agreement with Insignia, which I'm delighted to have their support in doing that. So before I move on to the next slide, this is really a compelling strategic rationale for Equity Trustees undertaking this acquisition. It's an incredibly complementary business. It will provide us with great scale allowing us to invest more significantly than what we have been able to do. The complementary nature goes across geography and business line, and it just puts us in an incredibly strong position going forward. I'd just like to comment on strategic alliance that we have entered into within Insignia and I'm delighted that we've been able to do that. It will enable both the parties to leverage their best-of-breed products services. So Insignia's best-of-breed products in Advice and platform and asset administration and investments and Equity Trustees, the best-of-breed products in terms of trusteeship. I think it's a really great opportunity for Equity Trustees given the enormous footprint of the Insignia group in terms of their adviser network and their enormous client base. So I believe we can both leverage our market-leading capabilities in these areas. And the initial term on this alliance is for 5 years. So I'll stop there, and now I will hand over to Philip to talk about the financial impacts.

Thanks, Mick. Let me just take you through some of the key points on the financials here. On this slide, I think Mick touched on how it will enhance our private client business. On the synergy front, really 2 key sources of synergies. Cost synergies from the platform restructure and [indiscernible] businesses of around $3.5 million in revenue synergies from additional investment revenues in FY '24 and beyond. Like I said, EPS accretive mid- to high single digits, accretion on FY '21 on a pro forma basis, double digit when the additional investment revenues are taken into account as well. From a dividend standpoint, our current policy remains in place of paying out 70% to 90% of statutory NPAT but the Board will give consideration to any adjustments for one-offs and the like that may be appropriate or on a cash basis over FY '23 and '24, noting there will be some significant integration costs over that time. Balance sheet remains relatively strong. We still have at least $30 million of committed undrawn facilities and the gearing levels remain relatively modest. Next slide here, you can see the pro forma FY '22 financial profile. Moving from left to right, the EQT numbers, the stand-alone AET numbers, the combination, the net synergies, which include both those costs and revenue synergies I touched on and then the pro forma. Now moving on to some of the transaction funding and offer details. Total of $165 million being raised through a combination of $125 million of equity and $40 million of debt. Of the equity, 40.4 institutional placements to new and existing investors and 94.6 and 1 for 6 accelerated pro rata non-renounceable entitlement offer. 4.7% discount -- I mean how the sources and uses of this particular funding on the next slide here, you can see the consideration of $135 million, transaction cost of about $8 million and integration costs of around $22 million. Around half of those integration costs were associated with the platform restructure A decent chunk of them are associated with the technology integration. And of course, some of them will be associated with the costs associated with the TSA. Finally some of the equity raising details and a bit more -- with a bit more detail there. You can see the offer size and structure, the price, the record date and the like. I won't go through all of that. I'll leave that for you to review on your leisure. Likewise, on the time table, they are relatively self-explanatory. I think for completion and on 30 November. I'll pass it to Mick just conclude the presentation.

Okay thank you, Philip. I'll be 30 seconds. This is a transformative acquisition for Equity Trustees and it's going to deliver for all of our stakeholders. It is a unique opportunity. We're delighted to have reached agreement within Insignia to buy Australian Executor Trustees. It's going to be earnings accretive, really complementary business to ours, and we're really looking forward to taking the business on. We're happy to take any questions.

[Operator Instructions] Your first question comes from the line of Nick McGarrigle from Barronjoey.

Maybe just on the result itself before touching on the acquisition. Can you talk through the margin in TWS that obviously seems to have gone up quite a bit, but was there some reallocation between TWS and STS because the margins there seem to have gone in different directions.

No, there wasn't any reallocation. TWS has had a pretty good year as revenues have been strong, and these costs have been particularly well controlled so low single digits increase there. So it's really take some opportunity to expand margin. SGS conversely, in a fair bit of continued investment to make sure we can start off all regulatory requirements there. So that simply reflects the relative performance of the businesses.

And just in terms of the technology investment. You've flagged the expected expense for next year and the year after, but was there much of that embedded in the FY '22 results already around the big hiring people to undertake that work?

No, there wasn't a lot embedded in FY '22. We've made some progress filling vacancies, including in technology, but there's still more work to be done there now.

And then maybe if you can just make some comments on CTS that seem so had good result in terms of its margin there and securitization has added a number of the cost. Can you give us a sense of the pipeline on new growth for that business?

Yes. CTS had a really great year in FY '22. And it's started FY '23 for a similar vein. I think funds management industry is dynamic, and there's new managers coming to Australia all the time. We're winning more than our fair share, I think. And I think also these new asset classes being developed, I mean, not new asset classes, but a change in asset class going on to alternatives and more fixed income type of strategies. And so we've got, at the moment, 30 to 40 funds in the process of being established of which I said I think 8 of the -- 6 of those are listed vehicles. So there are obviously long-term structures that are being put in place here and looking to secure more retail flow, which is stickier. So it's in good shape. And we've continued securing people into our Corporate Trust business. I'm really happy with the General Manager for Business Development. He's got a custody and real asset background that is helping us. And you saw more than 30% revenue growth in that Corporate Trust business. So that was our plan 4 years ago. It's starting to come to fruition.

And just -- I'm not sure if you can elaborate a bit further on the comments about consequential impacts on revenue, but maybe it's the daily average FUMAS is different to what we can calculate externally looking at spot averages, but just how you're thinking that has an impact on revenue for '23.

Look, that's something that [indiscernible] making sure everyone understands how it works. And obviously, the average data is important rather than the spot and obviously, if the markets are either up or down in a sustained way that has a consequent follow-on through -- consequent flow and impact to our revenues.

And I mean you haven't sort of given us enough detail there to work out what the average daily FUMAS was, but I'm assuming you're sort of saying that between the ASX and the [ MSCI ] that gives us enough to run with in terms of that mark-to-market on a sort of day-or-month basis?

That's right. Yes.

And I think in the results presentation, you indicated $54 million of available liquidity, and I presume that's before the $40 million being taken on as part of the transaction?

That's right.

And then I guess an extension of that, you're also raising money to undertake the transaction. So there's going to be a significant amount of available liquidity in dollar terms. Are there further opportunities that you're looking at beyond the AET acquisition?

Well, look, we said before, we're interested in businesses that are trustee businesses. And there's nothing we are sitting there looking at right now, but we always have out for trustee businesses that would be complementary to our trustees.

Mick, just like to add to that, probably fair to say there's nothing imminent, but there's certainly possibilities which have potential.

Yes. Okay. Great. And then just on the transaction itself, can you just run us through in terms of business lines, the overlap and where you're acquiring new capabilities, particularly health and personal injury and just giving us a sense on how that business works functionally.

Sure. Okay. Well, I guess the 1 area we're acquiring or 2 areas, we're acquiring capability. I think the small APRA funds. So we don't have that line of business. It's a new line of business for us. I think also, I'd say we're doing -- adding capability in the Community Trust side, they've got a much bigger business. And these are quite complex, a lot of these trusts. And so we're looking forward to having that team onboard. On the health and personal injury side, probably, I wouldn't say we're adding capability because we've got solid presence in Sydney and Brisbane. We're adding a lot of scale to it, but how that business works is through court awards being made to individuals who have suffered injury and the court is putting in place a trustee to look after their interests. And so it's a business that doesn't really change between the trustees once the court is appointed, the only way to change to go back to court, which is a costly exercise. And so most of the businesses referred through the legal industry to the trustees, and clients make their own choices generally as who they want us the trustee at the start when I say clients, I mean the individuals and their [ carers ] and representatives, yes.

So in terms of on the spectrum of stickiness across that TWS business, it's sort of at the sticker end of business?