Aub Group Limited · ASX:AUB
Aub — Austbrokers Holdings — H1 2012 Earnings Presentation
33 slides from Aub's earnings presentation, Feb 27, 2012
Slide 1: Cover letter to ASX
For personal use only 27th February 2012 The Manager Company Announcements Australian Securities Exchange Level 6, Exchange Centre, 20 Bridge Street Sydney, NSW 2000 Dear Sir / Madam, Re: Presentation on Results for the Half Year Ended 31 December 2011 Attached for immediate release is Austbrokers H
Slide 2: First Half Year 2012 Results Presentation
For personal use only AUSTBROKERS HOLDINGS LIMITED First Half Year 2012 Results Presentation Monday 27th February 2012 Lach McKeough CEO Steve Rouvray CFO
Slide 3: Agenda
Agenda For personal use only • Overview – Business Overview – 1HY 2012 Business Highlights – 1HY 2012 Financial Highlights • 1HY 2012 Financial Performance • FY 2012 Outlook 1
Slide 4: Business Overview
Business Overview For personal use only • Austbrokers is one of top four insurance broking networks in Australia – Over $1.5 billion in gross written premiums (including charges) placed – Over 1,600 personnel engaged in the business – Wide geographical spread over 110 locations – Regional presence –
Slide 5: Business Overview: Insurance Broking owner-driver model
Business Overview For personal use only • Insurance Broking owner-driver model – 42 member broker firms • 22 50% owned • 17 51% - 90% owned • 3 100% owned – 2 stand alone financial services firms • 1 100% owned • 1 75% owned • Underwriting agency business – Entities are authorised to write business
Slide 6: Business Overview (con't): Joint Venture with IBNA
Business Overview (con’t) For personal use only • Joint Venture with IBNA – A&I Member Services (AIMS) – Approximately $2.8 billion premium and over 120 businesses (combined Austbrokers / IBNA) – AIMS value proposition to underwriters to develop products and closer relationships – Quality products –
Slide 7: 1HY2012 Highlights
1HY2012 Highlights • For personal use only Broking Business – Increase in premium rates – property classes – Achieving organic growth • Acquisitions – Acquired general insurance broking and life insurance agency business based in Gladstone QLD effective 1st January 2012 with income of $1.2 million •
Slide 8: 1HY2011 Highlights
1HY2011 Highlights For personal use only • Equity Movements – Divested 10% in Austbrokers City State (now 90% owned) to reinstate owner driver • Underwriting Agencies – Increased commission and fees income by 55% (17% excluding acquisitions) – Developed new agencies – Acquired Film Insurance Underwr
Slide 9: 1HY 2012 Financial Performance Highlights
1HY 2012 Financial Performance Highlights $’000 1HY 2012 1HY2011 Change For personal use only Net Profit after Tax attributable to members 11,214 8,695 29% Underlying 11,461 9,799 17% Net Profit after Tax after adjusting for profit on sale of equity interests, profit on adjustment of contingent cons
Slide 10: 1HY 2012 Financial Performance Highlights
1HY 2012 Financial Performance Highlights $’000 1HY 1HY % change For personal use only 2012 2011 Broker Revenue (net of commission 121,213 107,392 12.9 Paid) Brokers & Agencies Profit 21,295 18,501 15.1 (AHL share) Profit (before tax and amortisation 16,539 14,128 17.1 of intangibles and sales of bu
Slide 11: Agenda
Agenda For personal use only • Overview • 1HY2012 Financial Performance: – Income statement – as per ASX reporting – Reconciliation to Adjusted NPAT – Profit and loss statement – detailed – Balance sheet – Funding • FY 2012 outlook 9
Slide 12: Income Statement 1HY2012
Income Statement 1HY2012 For personal use only 1HY2012 1HY2011 Variance % $’000 $’000 Revenue from ordinary activities 58,988 53,477 10.3 Expenses from ordinary activities (42,432) (39,520) 7.4 Borrowing costs (1,241) (1,224) 1.4 15,315 12,733 20.3 Profit from sale of interests in - 249 subsidiaries
Slide 13: 1HY2012 Reconciliation of Reported NPAT to Adjusted NPAT
1HY2012 Reconciliation of Reported NPAT to Adjusted NPAT 1HY 1HY 2012 2011 $’000 $’000 For personal use only Reported Profit attributable to members 11,214 8,695 Profits on sale of interest in associates and controlled entities* - (165) Adjustment in contingent consideration on (398) - acquisition o
Slide 14: NPAT Growth 1HY 2007 - 2012
NPAT Growth 1HY 2007 - 2012 For personal use only 12000 10000 8000 NPAT 6000 Adjusted NPAT 4000 2000 0 2007 2008 2009 2010 2011 2012 % increase NPAT 28.3% 25.1% 14.3% 7.2% 21.3% 29% % increase Adjusted 14.6% 38% 12.6% 7.1% 25.9% 17% NPAT Adjusted NPAT – Net Profit after tax attributable to members N
Slide 15: Earnings Per Share 1HY2007 - 2012
Earnings Per Share 1HY2007 - 2012 For personal use only 25 20 15 NPAT cents per share Adjusted NPAT cents per share 10 5 0 2007 2008 2009 2010 2011 2012 NPAT cents per share 9.3 11.7 13.3 14.1 16.3 20.4 Adjusted NPAT cents per share 9.3 12.9 14.5 15.3 18.4 20.8 Adjusted NPAT calculated on same basis
Slide 16: 1HY Compared to 2HY
1HY Compared to 2HY For personal use only 25 $M 20 Adjusted 15 NPAT 2HY 1HY 10 5 0 2007 2008 2009 2010 2011 2012 Financial Year 2HY 65% 59% 60% 61% 59% 1HY 35% 41% 40% 39% 41% 13 14
Slide 17: Dividend
Dividend For personal use only Interim Dividend • 9.5 cents per share fully franked – up from 8.5 cents last year (11.8%) • In line with adjusted NPAT eps growth of 13.3% • Eligible for DRP • DRP shortfall not proposed to be underwritten • Shares will be issued at 2.5% discount to five day VWAP • Cl
Slide 18: Increase in NPAT 1HY2012 vs 1HY2011
Increase in NPAT 1HY2012 vs 1HY2011 $’000 For personal use only 12000 11500 11000 10500 10000 9500 9000 8500 8000 1HY2011 Corp Exp Tax Borrowing Costs Corp Income Austagencies Broker Profits 1HY2012 Interest 9,799 (333) (26) (43) 108 518 1,438 11,461 16
Slide 19: Increase in Pre-Tax Share of Broker Profits
Increase in Pre-Tax Share of Broker Profits 1HY2012 from 1HY2011 $’000 19500 For personal use only 19000 18500 18000 17500 17000 16500 16000 15500 FY2011 Other Premium Funding Interest Earnings Increase in Other inc FY2012 Income net of exps 17,242 (170) 372 382 1,470 19,296 17
Slide 20: Insurance Broking Results
Insurance Broking Results For personal use only • Commission and fee growth is 15.6% (12.7% excluding direct acquisitions) • Expenses up 12.8% (9.6% excluding direct acquisitions) • Total income up 12.9% (10.2% excluding direct acquisitions) • Other income reduced due to trauma insurance receipt in
Slide 21: Broker Profits as % of Broker Income
Broker Profits as % of Broker Income Brokers Profits (before tax) as a percentage of Broker Income For personal use only Including Austagencies Insurance Broking 1HY12 27.3% 27.7% 1HY11 27.3% 27.6% 1HY10 25.2% 25.1% 1HY09 25.6% 25.4% 1HY08 25.2% 25.0% 1HY07 20.7% 1HY06 19.2% • Commission and fee spl
Slide 22: Underwriting Agencies Results
Underwriting Agencies Results For personal use only • NPBT up 59% (25% excluding acquisitions) to $1.999 million • Commission and fee income up 55% (17% excluding acquisitions) to $8.913 million • Expenses up 46% (10% excluding acquisitions) Refer Appendix 2 for detailed Underwriting Agency Results
Slide 23: Funding
• Funding Facility from St George Bank– limit $44.3 million including subsidiaries $6.4 million For personal use only • Facilities utilised at December 2011 – $27.3 million at holding company level – $5.7 million in subsidiaries • Facility term is 5 years to August 2013 • Estimated $4million committ
Slide 24: Agenda
Agenda For personal use only • Business Overview • 1HY 2012 Financial Performance • FY 2012 Outlook – Market conditions – Strategy – Outlook 22
Slide 25: Market conditions
Market conditions For personal use only • Premium rates increases evident in market but only moderate overall • Interest rate reductions have put 2HY2012 cash rate below average rate for 2HY2011, likelihood of further reductions • Timing of acquisition activity is remaining unpredictable • Age demog
Slide 26: Strategy
Strategy For personal use only • Growth – acquisition activity to continue – business development – marketing strategies – acquire skilled account executives • Continue to expand underwriting agency capability • Continue to leverage owner driver model to bring in capability in both broking and under
Slide 27: FY2012 Outlook
FY2012 Outlook For personal use only • Premium rate increases are likely to continue but it now appears that these will be moderate except where claims experience or type of risk dictates higher rates • Insurance broking industry consolidation – continuing acquisition opportunities but any new acqui
Slide 28: For personal use only
For personal use only ______________________________________________________________________________________________ This presentation may contain forward looking statements relating to future matters, which are subject to known and unknown risks, uncertainties and other important factors which coul
Slide 29: Appendix
For personal use only 28 Appendix 1
Slide 30: 1HY2012 Compared to 1HY2011
1HY2012 Compared to 1HY2011 1HY 2012 1HY 2011 VARIANCE VARIANCE $'000 $'000 $'000 % For personal use only BROKER OPERATIONS COMMISSION AND FEES 98,746 85,393 13,353 15.6% LIFE INCOME 4,488 4,539 (51) -1.1% PROFIT COMMISSIONS 202 114 88 77.2% PREMIUM FUNDING 9,707 9,058 649 7.2% INTEREST 6,014 5,347
Slide 31: 1HY2012 Compared to 1HY2011
1HY2012 Compared to 1HY2011 $'000 1HY 2012 1HY 2011 VARIANCE VARIANCE $ % For personal use only CONSOLIDATED BROKERS COMMISSION AND FEES 30,852 28,666 2,186 7.6% LIFE INCOME 2,468 2,465 3 0.1% PROFIT COMMISSIONS 166 27 139 514.8% PREMIUM FUNDING 2,684 2,630 54 2.1% INTEREST 1,769 1,608 161 10.0% OTH
Slide 32: Appendix
For personal use only 30 Appendix 2
Slide 33: Austagencies Underwriting Agencies
Austagencies Underwriting Agencies For personal use only $’000 1HY 2012 1HY 2011 INCR / (DECR) Commission and fees 8,913 5,759 3,154 Profit commission 30 118 (88) Claims handling fee 45 - 45 Interest 402 247 155 Other income - 16 16 9,390 6,140 3,250 Expenses 7,037 4,848 2,189 Net Profit before inco