Aub Group Limited · ASX:AUB
Aub — FY2024 Earnings Presentation
55 slides from Aub's earnings presentation, Aug 21, 2024
Slide 1: FY24 Investor Presentation
FY24 Investor Presentation 21 August 2024 Mike Emmett CEO and Managing Director Mark Shanahan CFO
Slide 2: FY24: Strengthening Our Global Footprint and Delivering Outstanding Shareholder Value
FY24: Strengthening Our Global Footprint and Delivering Outstanding Shareholder Value AUB Group’s evolution into a leading global insurance brokerage continues to drive exceptional returns for our shareholders Underlying NPAT1 and Underlying EPS Underlying Revenue2,3 Underlying NPAT CAGR 33.9% 7% Un
Slide 3: FY24 Results Overview
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Slide 4: FY24 Financial Highlights
FY24 FINANCIAL HIGHLIGHTS Revenue growth, margin expansion and accretive acquisitions delivered strong Underlying NPAT and EPS growth FY24 FY23 Performance Highlights ▪ Underlying revenue grew strongly with above-market growth in Underlying Revenue1 $1,331.7mn $1,111.4mn Agencies and New Zealand sup
Slide 5: FY24 Financial Performance
FY24 FINANCIAL PERFORMANCE Underlying NPAT grew by 32.5% with robust organic growth and accretive acquisitions FY23 to FY24 Underlying NPAT1 Breakdown AUD mn 32.5% 5.1 171.0 (3.9%) 21.9 1.9 (1.5%) 17.0% Includes 1Q24 Tysers (acquired 1 Oct’22) 27.0 129.1 20.9% Includes Tysers growth for 2Q24, 3Q24,
Slide 6: Divisional Performance
Divisional Performance
Slide 7: FY24 Divisional Performance
FY24 DIVISIONAL PERFORMANCE Growth, margin expansion and profit improvement across all divisions Vs. FY23 comparative AUSTRALIAN TYSERS / OPERATING BIZCOVER AGENCIES NEW ZEALAND period BROKING INTERNATIONAL5,6 BUSINESSES1,2 Underlying1 $563.7mn $92.0mn $176.2mn $88.7mn $411.0mn $1,331.7mn Revenue (£
Slide 8: Australian Broking
AUSTRALIAN BROKING Network optimisation, disciplined acquisitions and favourable market conditions have enabled continuing revenue growth & margin expansion EBIT Margin Key Metrics AUD 563.7mn Revenue1 36.8% EBIT Margin1 AUD 207.4mn EBIT1 Target FY24 Performance +8.5% on FY23 +170bps on FY23 +13.8%
Slide 9: BizCover
BIZCOVER Continued growth and margin expansion with Intermediary channels growing at pace. Ongoing enhancement of technology, products and insurer panel EBIT Margin Key Metrics AUD 92.0mn Revenue 42.0% EBIT Margin AUD 38.6mn EBIT Target FY24 Performance +15.0% on FY23 +190bps on FY23 +20.5% on FY23
Slide 10: Agencies
AGENCIES Strong growth and profit improvement, $1bn premium target exceeded with increased binder capacity for further growth EBIT Margin Key Metrics AUD 176.2mn Revenue1 42.6% EBIT Margin1 AUD 75.1mn EBIT1 Target +220bps Ex. Profit Comms2 FY24 Performance +26.5% on FY23 +420bps on FY23 +40.3% on FY
Slide 11: Pacific Indemnity
PACIFIC INDEMNITY On 1 July 2024, AUB Group successfully completed a 70% investment in Pacific Indemnity. This is performing to plan since acquisition Overview of Pacific Indemnity Gaining scale in Agencies2 AUB Agencies Pacific Indemnity • Underwriting agency established in 2015 with operations acr
Slide 12: New Zealand
NEW ZEALAND Revenue and profit growth in all businesses. Lola technology platform roll-out recommenced with an additional two brokerages now live Key Metrics AUD 88.7mn Revenue1 36.5% EBIT Margin1 AUD 32.4mn EBIT1 EBIT Margin 40.0% Excl. NZ Tech Inv6 AUD 35.5mn Excl. NZ Tech Inv6 Target FY24 Perform
Slide 13: Tysers / International
TYSERS / INTERNATIONAL2 Revenue and profit on track with changes to operating model and portfolio mix underway to position Tysers for future growth and margin expansion Key Metrics EBIT Margin Target FY24 AUD 411.0mn Revenue1 24.2% EBIT Margin1 AUD 99.4mn EBIT1 Performance 32% FY23 (9M to 30 Jun’23)
Slide 14: Tysers Synergies
TYSERS SYNERGIES1 Revenue and Cost Synergy targets announced in May 2022 have been exceeded Revenue Synergies Cost Synergies EBIT Margin Target: Target: 24.2% FY24 (up 550bps since AUD $10mn run-rate by FY24 AUD $15mn run-rate by FY24 acquisition2) FY24 run-rate delivered FY24 run-rate delivered >$1
Slide 15: UK Retail (part of the International Division)
UK RETAIL (part of the International Division) Two strategically important equity investments together with existing retail operations create a platform for growth in the UK Retail broking market UK Retail Broking Highlights ~£300mn in Premium across ~200 broking partner businesses ▪ Momentum invest
Slide 16: Group Funding, FX, Shareholder Returns & ESG
Group Funding, FX, Shareholder Returns & ESG
Slide 17: Group Funding & Interest Update
GROUP FUNDING & INTEREST UPDATE Balance Sheet strength to support growth strategy Equity Funding Interest Earning Assets vs Look through share AUD 471.3mn AUD 337.0mn of Debt at 30 Jun’24 (AUD mn)4 Cash & Undrawn Debt Cash & Undrawn Debt2 • AUD 225mn raised in May / June’24 30 Jun’24 31 Jul’24 to fu
Slide 18: Tysers Transactional Forex Exposure
TYSERS TRANSACTIONAL FOREX EXPOSURE No material change in makeup of FX flows USD revenue hedging using monthly forwards Portfolio by FX Currency1 Earn Revenue 22% 8% 4% 2% 60% 4% Operational Hedging ▪ 22% of revenue earned in GBP 4% earned in AUD ▪ 14% of revenue earned in EUR + CAD + ’Other’ – remi
Slide 19: Shareholder Returns
SHAREHOLDER RETURNS 21.2% uplift in Underlying EPS and FY24 final dividend of 59.0 cents Underlying Earnings Per Share1, 2 (Cents) 21.2% 33.7% 156.78 12.3% 129.32 86.12 96.70 FY21 FY22 FY23 FY24 Dividend Per Share (Cents) Return on Invested Capital (ROIC) (%) 23.4% 3 Year Trailing Average 16.4% 79.0
Slide 20: Environmental, Social and Governance
ENVIRONMENTAL, SOCIAL AND GOVERNANCE Maintained MSCI AA rating and recertified as “Great Place to Work” ▪ AUB Group is in Group 1 of Australian Sustainability Reporting Standard (ASRS) 1 ASRS 1 ▪ Independent consultant engaged to develop a plan of action ▪ AUB Group is committed to reducing scope 1
Slide 21: Ambition & Outlook
Ambition & Outlook
Slide 22: Medium-term Margin Ambitions Remain On-Track
MEDIUM-TERM MARGIN AMBITIONS REMAIN ON-TRACK Margin improvement is a significant opportunity with further potential to upgrade medium-term targets based on progress FY24 Actual EBIT Margin EBIT Target Approach to deliver (∆ to FY19 or acquisition) Margin Ongoing portfolio optimisation, equity step-
Slide 23: Our Long-term Levers for Earnings Growth
OUR LONG-TERM LEVERS FOR EARNINGS GROWTH There are multiple long-term earnings drivers across our global portfolio, with significant potential for further profit growth Improved Earning driver Consolidation / New Business Premium Rate M&A Commercial Cost Reduction Technology priorities Specialisatio
Slide 24: FY25 Outlook
FY25 OUTLOOK Underlying NPAT for FY25 is forecast to be between AUD 190.0 - 200.0mn, representing growth of 11.1% - 16.9% over FY24 FY24 to FY25 Underlying NPAT1 Breakdown (AUD mn) Assumptions 11.1% - 16.9% ▪ No account is made for acquisitions not currently known about (0.6) ▪ Renewal periods and i
Slide 25: Questions?
Questions? Mike Emmett CEO and Managing Director Mark Shanahan CFO
Slide 26: Closing
Closing Mike Emmett CEO and Managing Director
Slide 27: Appendices
APPENDICES A FY24 Detailed Financial Results Appendices B AUB Group Business Overview C AUB Group Portfolio Overview 27
Slide 28: A. FY24 – Detailed Financial Results
Appendices A. FY24 – Detailed Financial Results
Slide 29: FY24 Divisional Performance Breakdown
FY24 DIVISIONAL PERFORMANCE BREAKDOWN FY23 to FY24 Underlying NPAT1 (AUD mn) 32.5% 7.2 19.8 17.4 171.0 8.4 20.3 2.6 15.4 129.1 Pre-Tax FY23 Australian BizCover Agencies New Zealand International2 Net Corporate Tax FY24 Broking Broking Result3 1. Underlying NPAT is the key measure used by management
Slide 30: Australian Broking
AUSTRALIAN BROKING Profit contribution to AUB Group – Pre-tax ▪ Underlying pre-tax profit increased 14.7% to AUD 120.2mn (FY23: AUD 104.8mn). FY24 FY23 Movement Movement (%) (AUD mn) Commission and fee income (net) 490.2 456.2 34.0 7.4% ▪ EBIT Margin of 36.8% up 170bps from FY23. Premium Funding 29.
Slide 31: BizCover
BIZCOVER Profit contribution to AUB Group – Pre-tax Movement ▪ Revenue up 15.0% from FY23. FY24 FY23 Movement (AUD mn) (%) ▪ Underlying pre-tax profit increased 20.9% to AUD 15.1mn (FY23: AUD Underlying Revenue1 92.0 80.0 12.0 15.0% 12.5mn). Underlying Expenses1 (53.4) (48.0) (5.4) 11.3% ▪ Increase
Slide 32: Agencies
AGENCIES Profit contribution to AUB Group – Pre-tax ▪ Underlying pre-tax profit increased by 57.9% to AUD 55.4mn (FY23: AUD FY24 FY23 Movement Movement (%) (AUD mn) 35.1mn). Commission and fee income (net) 156.4 130.1 26.3 20.2% Interest 6.8 3.5 3.3 94.5% ▪ EBIT margin of 42.6%. Excluding profit com
Slide 33: New Zealand Broking
NEW ZEALAND BROKING Profit contribution to AUB Group – Pre-tax ▪ Underlying pre-tax profit increased 59.2% to AUD 22.7mn (FY23: AUD 14.3mn). FY24 FY23 Movement Movement (%) (AUD mn) Commission and fee income (net) 81.2 64.5 16.7 26.0% ▪ EBIT Margin of 36.5% up 740bps from FY23. Premium Funding 3.9 3
Slide 34: Tysers / International
TYSERS / INTERNATIONAL3 Profit contribution to AUB Group – Pre-tax ▪ Underlying pre-tax profit contributed by International for the 12 months to 30 June FY24 FY23 Movement Movement (%) (AUD mn) (9 months since acq only) 2024 was AUD 96.8mn vs 9 months for FY23 of AUD 76.9mn. Commission and fee incom
Slide 35: Balance Sheet and Capital Position
BALANCE SHEET AND CAPITAL POSITION Consolidated Balance Sheet Overview (AUD mn) FY24 FY23 Movement Cash – incl subs 377.4 260.4 117.0 Leverage Ratio Cash – Trust Accounts 909.0 936.4 (27.4) 30 Jun’24 Investment in Associates 250.9 238.5 12.4 1.28x Intangible assets and goodwill 2,042.9 1,956.8 86.1
Slide 36: Reconciliation of Reported NPAT to Underlying NPAT
A1.0 RECONCILIATION OF REPORTED NPAT TO UNDERLYING NPAT1 FY24 FY23 Movement (AUD $’000) (AUD $’000) (AUD $’000) Net Profit after tax attributable to equity holders of the parent 137,072 65,253 71,819 Add back/(less): (net of NCI and income tax) Amortisation of broking registers8 39,604 30,352 9,252
Slide 37: Management Presentation of Results A2.1
A2.1 MANAGEMENT PRESENTATION OF RESULTS1,3 FY24 (AUD $’000) FY23 (AUD $’000) Movement (AUD $’000) Movement (%) Australian Broking revenue 563,669 519,706 43,963 8.5% Australian Broking expenses (356,239) (337,397) (18,842) 5.6% EBIT - Australian Broking 207,430 182,309 25,121 13.8% International rev
Slide 38: Management Presentation of Results A2.2
A2.2 MANAGEMENT PRESENTATION OF RESULTS1 FY24 (AUD $’000) FY23 (AUD $’000) Movement (AUD $’000) Movement (%) Australian Broking revenue 563,669 519,706 43,963 8.5% Australian Broking expenses (363,634) (342,082) (21,552) 6.3% Net profit - Australian Broking 200,035 177,624 22,411 12.6% Profit attrib
Slide 39: Management Presentation of Results A2.3
A2.3 MANAGEMENT PRESENTATION OF RESULTS1,4 FY24 ($’000) 2H24 ($’000) 1H24 ($’000) FY23 ($’000) 2H23 ($’000) 1H23 ($’000) FY22 ($’000) 2H22 ($’000) 1H22 ($’000) FY21 ($’000) 2H21 ($’000) 1H21 ($’000) FY20 ($’000) 2H20 ($’000) 1H20 ($’000) Australian Broking revenue 563,669 288,892 274,777 519,706 270
Slide 40: Management Presentation of Results A2.4
A2.4 MANAGEMENT PRESENTATION OF RESULTS1 FY24 ($’000) 2H24 ($’000) 1H24 ($’000) FY23 ($’000) 2H23 ($’000) 1H23 ($’000) FY22 ($’000) 2H22 ($’000) 1H22 ($’000) FY21 ($’000) 2H21 ($’000) 1H21 ($’000) FY20 ($’000) 2H20 ($’000) 1H20 ($’000) Australian Broking revenue 563,669 288,892 274,777 519,706 270,0
Slide 41: Consolidated Cash Flow Statement
A3.0 CONSOLIDATED CASH FLOW STATEMENT FY24 FY23 (AUD $’000) (AUD $’000) Cash flows from operations 129,210 113,376 Cash flows from investing activities Acquisitions and portfolio purchases (68,033) (171,713) Sales proceeds (net of cash reduced on deconsolidation) 16,787 51,845 Plant equipment / Othe
Slide 42: Full Conversion of Profits to Cash
A3.1 FULL CONVERSION OF PROFITS TO CASH Cash Flow Summary FY24 FY23 Statutory Operating Cash Flow1 AUD 129.2mn AUD 113.4mn AUD 113.5mn Add back: Acquisition and other one off costs2 AUD 38.8mn (incl. DoJ payment) Less: Lease Obligation Payments (AUD 14.3mn) (AUD 10.2mn) Adjusted Operating Cashflow A
Slide 43: B. AUB Group Business Overview
Appendices B. AUB Group Business Overview
Slide 44: AUB Group – An Overview
AUB GROUP – AN OVERVIEW AUB Group Limited is an ASX200 listed group comprising insurance brokers and underwriting agencies, helping our clients to safeguard a stronger, protected future ▪ Full complement of services and technology supporting the Austbrokers AUSTRALIAN network of 40 brokerages ▪ Comp
Slide 45: Overview: Australian Broking
OVERVIEW: AUSTRALIAN BROKING OVERVIEW ▪ Our Australian broking businesses encompass some of Australia’s largest and most reputable brokerages, with specialist expertise, market penetration and quality client portfolios ▪ The portfolio consists of ~2,500 staff with 42% 40 capabilities across a broad
Slide 46: Overview: Tysers / International
OVERVIEW: TYSERS / INTERNATIONAL OVERVIEW ▪ Tysers is a leading specialist international insurance broker and the 6th largest wholesale broker in the Lloyd’s marketplace with 200 years of expertise ▪ AUD 4.1bn Premium, ~1,040 employees, ~AUD 4.1bn 31% Tysers Wholesale Tysers Retail ~32,000 across of
Slide 47: Overview: BizCover
OVERVIEW: BIZCOVER BizCover Channel Multi-channel market penetration leverages market leading platform while investment in brand drives operational leverage Intermediated BizCover Direct White-label BizCover for Brokers ExpressCover Leading full lifecycle SME insurance platform in AU and NZ – operat
Slide 48: Overview: Agencies
OVERVIEW: AGENCIES OVERVIEW ▪ Our Agencies comprise some of Australia’s leading specialist underwriters who distribute and manage insurance products on behalf of domestic and internationally licensed insurers, including Lloyd’s ▪ The business includes 29 agencies, driving ~$1.0bn ~AUD 1.0bn 13% 29 ~
Slide 49: Overview: New Zealand
OVERVIEW: NEW ZEALAND OVERVIEW ▪ 4 Broking groups and Insurance Advisernet NZ broker network o Selective investments in high-performing broking businesses 4 Brokers ▪ 2 underwriting agencies ~AUD 1.3bn 7% 2 Agencies ~205,000 in premium contribution to 2 broker o Expansion of 360 in New Zealand throu
Slide 50: C. AUB Group Portfolio Overview
Appendices C. AUB Group Portfolio Overview
Slide 51: Insurance Portfolio Mix, by Product and Insurer
AUB GROUP EX INTERNATIONAL: INSURANCE PORTFOLIO MIX, BY PRODUCT AND INSURER Portfolio Mix – Premium by Product / Risk Line Portfolio Mix – Premium by Insurer 18% 18% 18% 2% 3% 42% 4% 11% 13% 4% 5% 10% 7% 6% 10% 2% 9% 2% 7% 3% 6% Business Farm Liability PI ISR Workers Comp CGU/IAG Vero National Trans
Slide 52: Australian Broking Portfolio Mix by Client Segment, Product, Geography & Insurer
AUSTRALIAN BROKING PORTFOLIO MIX BY CLIENT SEGMENT, PRODUCT, GEOGRAPHY & INSURER Client Segment Mix Product Line Mix Geography Mix Insurer Mix Corporate 30% Business Workers Comp NSW WA QBE Zurich 20% 6% 39% 7% 11% 3% Medium Enterprise 27% ISR Farm VIC ACT Allianz SURA | Millennium 14% 4% 19% 3% 10%
Slide 53: Insurance Portfolio Mix, by Product Category and Geography
AUB GROUP EX INTERNATIONAL: INSURANCE PORTFOLIO MIX, BY PRODUCT CATEGORY AND GEOGRAPHY Portfolio Mix – by Category (%) Portfolio Mix – by Geography (%) 11% 13% NT 1% QLD 13% WA 6% NSW SA 32% 8% ACT 2% 87% 89% VIC 15% Commercial Personal TAS NZ 1% 22% 53 Portfolio mix is based on available data from
Slide 54: Notice
NOTICE SUMMARY INFORMATION This document has been prepared by AUB Group Limited (ABN 60 000 000 715) (AUB). It is a presentation of general background information about AUB’s activities current at the date of the presentation. It is information in a summary form and does not purport to be complete.
Slide 55: Thank You
Thank You