Trust reveals new plan of attack

TrustCompany of Australia is narrowing its strategic focus after announcing the sale of its equity custody arm to ANZ and plans to offload its Permanent Business Advisers (PBA) subsidiary.

Trust, which was borne out of the merger of Permanent Trustees Company and the Trust Company of Australia in October 2002, will now realign and reshape its various business units in a bid to consolidate the company’s products and provide a foundation for future growth, according to group managing director Jonathan Sweeney.

The firm will now concentrate on its areas of expertise, which Sweeney says are in the trustee, fiduciary and client relationship areas, and adds it will look to achieve this through Trust’s own product offering, or by partnering with other groups.

As for the businesses to be sold, Sweeney says a novation agreement for the equity custody business has been entered into with ANZ, with the exit expected to deliver a one-off profit of around $2.5 million.

“Custody is about scale and capable platforms. To deliver a competitive product with value-added services to clients you need sound economies of scale and expanded platforms,” Sweeney says.

Despite the sale, Trust will retain its property, mortgage and infrastructure custody capabilities.

Meanwhile, the PBA accounting business, which the group inherited following the merger in late 2002, will be written off ahead of plans to exit the business later this year.

Commenting on the exit, Sweeney says PBA is not a good strategic fit with the company.

“It’s a flawed business model. Operating accounting practices is not a core business for us,” he says.

It is anticipated that Trust will incur a one-off write-off of between $1 million and $2 million this financial year for exiting the PBA business.

The new strategic direction was outlined at the firm’s annual general meeting in Sydney last week.

A special unfranked interim dividend to shareholders of 10 cents per share — to be paid on September 23 this year — was also announced at the meeting.

Trust chairman Bruce Corlett says the special dividend brings the amount distributed to shareholders since the merger to 84 cents per share — in excess of 10 per cent of the current share price.

“Trust has always held the firm view that excess funds belong to shareholders, and any excess capital should be distributed,” Corlett says.