Equity Trustees 2009 Full Year Result
28/08/2009
Equity Trustees Limited today confirmed its full year financial results, which are in line with the company’s previous guidance. Net profit after tax decreased 24.2% to $8.0m. This reflects a 13.7% fall in operating revenue, moderated by a 7.2% decrease in operating expenses. The company recorded an operating margin of 32.4%.
The Board today announced a fully-franked final dividend of 60 cents per share, making a full-year dividend of 110 cents per share, fully franked. This is the same full-year dividend as declared in the preceding financial year. In summary:
Equity Trustees’ Chairman, Mr Tony Killen, confirmed that the result is in line with the forecast provided to the market in May 2009, indeed at the upper end of expectations.
“Given the severity of market conditions we anticipated some deterioration in financial performance. During the year the S&P/ASX 200 Index declined by 38.9% from its peak to its low. Given that all of our business units are directly exposed to investment market conditions, a 13.7% decline in operating revenue is a reflection of the hard work that the company has undertaken in exploring new revenue opportunities.”
“The Board has made the decision to maintain the full-year dividend at 110¢ per share, the same level as last year. This reflects our confidence in the underlying fundamentals of the business. Despite a fall in profitability, Equity Trustees continues to operate with healthy margins and to generate strong operating cash flows. We have a strong balance sheet with no debt. We are therefore in a position to reward our shareholders during a tough economic period. It should be noted for the longer term that our dividend policy (paying 70-90% of after-tax profit, including gains on the sale of investments) remains unchanged.”
“The Board maintains confidence in the company’s strategic platform, which produced outstanding results in stronger markets and has weathered the storm of recent volatility. We are confident in our management team’s capacity to execute the strategy effectively and as such the company did not cut its investment in its core resources – people and systems.”
“Despite the market downturn we have maintained staff numbers and tightly managed remuneration at all levels. We will soon be completing the upgrade to our systems infrastructure announced in 2008. The underlying strength of the business enabled us to take a longer-term outlook and this will serve the company well when markets return to a more stable setting.”
Mr Peter Williams, Equity Trustees’ Managing Director, added that the company’s response to the financial crisis was to work harder at uncovering new revenue opportunities while containing discretionary costs.
“All of our business units added new clients during the year. The strength of our brand and our reputation has enabled us to expand our sales and marketing efforts at a time when many others are contracting. In the second half of the year we combined our sales focus with a strict policy on discretionary expenditure. Our operating margin (net of depreciation) was stronger in the latter half of the year, which is a credit to all staff.”
“Importantly we retain a strong operational base that will enable us to respond effectively to a changing environment. In addition to the various regulatory inquiries already underway, we anticipate a transition to a Federal regulation of Trustee Companies in 2010. Each of our business unit heads is actively monitoring market changes and we are confident in our ability to respond proactively.”
Mr Killen confirmed that the company has commenced its search for a new Managing Director following Mr Williams’ announcement of his intention to retire towards the end of 2009.
“Peter has been an outstanding Managing Director and the business has gone from strength to strength under his tenure. We are undertaking an extensive search for a replacement.”
“Peter’s successor will inherit a business that is very strongly positioned for the next phase of its growth.”