Aub Group Limited · ASX:AUB
Aub — Austbrokers Holdings — FY2012 Earnings Presentation
36 slides from Aub's earnings presentation, Aug 27, 2012
Slide 1: Cover letter to ASX: Presentation on Results for Year ended 30 June 2012
For personal use only 27th August 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 Year ended 30th June 2012 Attached for immediate release is Austbrokers Holdings L
Slide 2: Financial Year 2012 Results Presentation
For personal use only AUSTBROKERS HOLDINGS LIMITED Financial Year 2012 Results Presentation Monday 27th August 2012 Lach McKeough CEO Steve Rouvray CFO
Slide 3: Agenda
Agenda For personal use only • Overview – Business Overview – FY 2012 Financial Highlights – FY 2012 Operational Highlights • FY 2012 Financial Performance • FY 2013 Outlook 1
Slide 4: Business Overview
Business Overview For personal use only Insurance Broking Network Underwriting Agencies Top 4 broking network in Australia Act on behalf of insurers Owner driver model $160 million in premium Strong regional presence Niche & general agencies – most classes SME base Presence in 5 states Corporate cap
Slide 5: Business Overview con't
Business Overview con’t For personal use only Owner Driver Model 21 50% owned 17 51% to 85% 4 100% 42 Businesses Broking Over 110 Locations Financial Services General & Specialist Insurance Broking Operations – Life & Brokers Network Superannuation Total of $1.3 billion base Over 85 Partner premium
Slide 6: FY2012 Financial Highlights
FY2012 Financial Highlights For personal use only Adjusted NPAT up 15% Reported NPAT up Total revenue up 9.7% 20% Market cap $388M at EPS up 17% Austbrokers 30th June 2012 Dividend per share up TSR for FY2012 13.5% 22% 31 cents Underwriting Agency profits up 54% 4
Slide 7: FY2012 Operational Highlights
FY2012 Operational Highlights For personal use only New arrangement for Premium Funding – Agreement to Hunter Premium continue AIMS JV with Funding for 5 years IBNA on improved terms Austbrokers Appointment of new Appointment of CIO to take IT to next General Manager to level focus on acquisitions 5
Slide 8: FY2012 Operational Highlights con't
FY2012 Operational Highlights con’t For personal use only Acquisition Taggart Associates 1st July Acquisition Dittman & 2012 Network Acquisitions Associates Gladstone 6 businesses / 1st January 2012 portfolios Acquired remaining iClose EDI platform 50% Insurics 1st July rolled out to Network 2012 In
Slide 9: FY2012 Operational Highlights con't
FY2012 Operational Highlights con’t Millennium For personal use only Underwriting transferred in 1st July 2012 Increased total income Acquired FIUA 1st 57% January 2012 Austagencies Securing New Development of Start Underwriting Underwriters for Up Businesses Agencies Products Continued to invest in
Slide 10: FY 2012 Financial Performance
FY 2012 Financial Performance $’000 FY FY % change For personal use only 2012 2011 Broker Revenue (net of commission 253,683 225,470 12.5 Paid) Brokers & Agencies Profit 48,845 42,930 13.8 (AHL share) Profit (before tax and amortisation 39,905 34,203 16.7 of intangibles and sales of businesses) NPAT
Slide 11: AUB Total Shareholder Return Performance to 30th June 2012
AUB Total Shareholder Return Performance to 30th June 2012 1 Year 3 Year 5 Year 35 For personal use only 30 25 % Annualised TSR 20 15 AUB 10 ASX All Ords ASX 200 Index 5 0 -5 -10 -15 % 13.5 (9.5) (9.0) 31.2 7.1 6.8 16.8 (4.2) (4.2) 9
Slide 12: Agenda
Agenda • For personal use only Overview • FY 2012 Financial Performance: – Income statement – as per Financial Report – Reconciliation to Adjusted NPAT – Profit and loss statement – detailed – Balance sheet – Other financials – Changes to accounting standards • FY 2013 outlook 10
Slide 13: FY 2012 Results – Financial Statement Presentation
FY 2012 Results – Financial Statement Presentation For personal use only FY 2012 FY 2011 Variance $’000 $’000 % Revenue from ordinary activities 125,430 114,288 9.7 Profit from sale of interests in controlled entities & adjustments to contingent consideration 192 249 (22.9) Expenses from ordinary ac
Slide 14: FY 2012 Reconciliation of Reported NPAT to Adjusted NPAT
FY 2012 Reconciliation of Reported NPAT to Adjusted NPAT FY FY 2012 2011 $’000 $’000 For personal use only Reported Profit attributable to members 25,640 21,365 Profits on sale of interest in associates and controlled entities* - (105) Adjustment in contingent consideration on (192) - acquisition of
Slide 15: FY 2012 Compared to FY 2011 - Highlights
FY 2012 Compared to FY 2011 - Highlights • Adjusted NPAT for FY 2012 at $27.4 million (2011 $23.8 million) For personal use only – Adjusted NPAT excludes $0.2 million adjustment to contingent earn out payments, $2.6 million amortisation of intangibles expense, $0.6 million tax credit relating to pri
Slide 16: Profit Growth 2007 – 2012
Profit Growth 2007 – 2012 For personal use only 30 Reported NPAT Adjusted NPAT $M 25 $27,935 20 $25,640 15 10 5 0 2007 2008 2009 2010 2011 2012 Increase N/A 15.3% 13.7% 18.5% 11% 14.7% 11.5% 12.1% 17.5% 18.1% 15.0% 20.0% Adjusted NPAT – Net profit after tax before amortisation of intangibles and pro
Slide 17: Earnings Per Share FY 2007 - 2012
Earnings Per Share FY 2007 - 2012 Cents For personal use only 50 Reported NPAT 45 Adjusted NPAT 49.5 cents 40 46.3 cents 35 30 25 20 15 10 5 0 2007 2008 2009 2010 2011 2012 Increase N/A 15.1% 13.6% 18.4% 11.0% 14.5% 11.5% 9.2% 12.2% 12.8% 16.9% 11.9% 15
Slide 18: 2012 FY Compared to 2011 FY
2012 FY Compared to 2011 FY 25 For personal use only $M 20 15 2HY Adjusted 1HY NPAT 10 5 0 2006 2007 2008 2009 2010 2011 2012 Financial Year 2HY 64% 65% 59% 60% 61% 59% 58% 1HY 36% 35% 41% 40% 39% 41% 42% 16
Slide 19: Dividend
Dividend For personal use only Dividend • 21.5 cents per share fully franked – up from 17 cents last year • Full year dividend 31.0 cents per share up 21.6% on FY 2011 • Above eps growth of 11.9% on an adjusted NPAT basis or 16.9% on reported NPAT • Eligible for reinvestment under Dividend Reinvestm
Slide 20: Increase in Adjusted NPAT FY2012 vs FY2011
Increase in Adjusted NPAT FY2012 vs FY2011 $’000 For personal use only 28000 27000 26000 25000 24000 23000 22000 21000 20000 FY2011 Corp Exp Tax Borrowing Costs Corp Income Austagencies Broker Profits FY2012 Interest % of Adjusted 23,813 (197) (345) (127) 235 1,477 2,539 27,395 NPAT of growth (0.8)%
Slide 21: Increase in Pre-Tax Broker Profits FY2012 from FY2011
Increase in Pre-Tax Broker Profits FY2012 from FY2011 $’000 76000 For personal use only 74000 72000 70000 68000 66000 64000 62000 60000 FY2011 Profit Other Life Premium Interest Increase in FY2012 Commissions Funding Income Earnings Other inc net of exps 66,625 (940) (407) 623 2,566 860 4,624 73,951
Slide 22: Broker Profits as % of Broker Income
Broker Profits as % of Broker Income Profits (before tax) as a percentage of Broker Income For personal use only 30 Including Austagencies 29 Insurance Broking Only 28 27 26 25 24 23 22 21 20 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20.8 22.3 23.4 25.2 24.8 26.7 28.3 28.5 29.4 29.3 24.2 26.
Slide 23: Austagencies
Austagencies For personal use only Growth in NPBT after minorities of 54% to almost $6 million • Approximately half growth from acquisitions of FIUA and flow on from CEMAC • Increase in total income excluding acquisitions of 20% • Commission and fees income increased 18% excluding acquisitions • Pro
Slide 24: Balance Sheet (con't) – Assets
Balance Sheet (con’t) 30 June 2012 30 June 2011 For personal use only Assets $000 $000 Current Assets Cash at Bank 40,743 37,326 Cash at Bank – Trust 74,859 65,008 Receivables 117,167 102,090 Other financial assets 1,316 679 Total Current Assets 234,085 205,103 Non Current Assets Receivables 261 173
Slide 25: Balance Sheet (con't) – Liabilities and Equity
Balance Sheet (con’t) 30 June 2012 30 June 2011 For personal use only Liabilities $000 $000 Current Liabilities Payables 181,420 160,017 Tax Liabilities 3,655 4,718 Provisions 8,418 8,194 Interest bearing loans and borrowings 1,130 622 Total Current Liabilities 194,623 173,551 Non Current Liabilitie
Slide 26: Cash Flow
Cash Flow 2012 2011 $’000 $’000 For personal use only Cash flows from operations 27,357 27,127 Cash flows from investing activities - Acquisitions (7,703) (8,017) - Sales proceeds / loan repayments 184 2,214 - Plant equipment (2,111) (1,346) (9,630) (7,149) Cash flows from financing activities - Div
Slide 27: Funding
Funding • Facility from St George Bank For personal use only – limit $38 million at holding company level – $27 million drawn – $11 million undrawn • Facility term is 5 years to August 2013 • Estimated $6 million committed for future payments for completed acquisitions and acquisition since 30 June
Slide 28: Agenda
Agenda For personal use only • Business Overview • FY 2012 Financial Performance • FY 2013 Outlook – Market conditions – Strategy – Outlook 26
Slide 29: Market Conditions FY 2013
Market Conditions FY 2013 For personal use only • Premium rates – Underwriters continue to seek increases particularly property classes – Competition restrains extent of increases achievable – Premium rate movements vary across classes • Lower interest rate environment • Moderate economic growth for
Slide 30: Strategies FY 2013
Strategies FY 2013 For personal use only • Growth – acquisition activity to continue – business development – marketing strategies to expend customer base – to increase cross sell of insurance products • Expand underwriting agency capability through product and acquisition growth • Centralised servi
Slide 31: Outlook FY 2013
Outlook FY 2013 For personal use only • Premium rate increases being sought by underwriters • Economic outlook uncertain – impact on SME sector • Insurance broking industry consolidation – continuing acquisition opportunities • Organic growth expected to continue to emerge through broker network ini
Slide 32: Appendix
For personal use only Appendix 1
Slide 33: FY 2012 Results – Management Presentation
FY 2012 Results – Management Presentation FY 2012 FY 2011 VARIANCE VARIANCE For personal use only $'000 $'000 $'000 % BROKER OPERATIONS COMMISSION AND FEES 209,144 183,633 25,511 13.9% LIFE INCOME 9,243 8,620 623 7.2% PROFIT COMMISSIONS 970 1,910 (940) -49.2% PREMIUM FUNDING 18,312 15,746 2,566 16.3
Slide 34: FY 2012 Results – Management Presentation
FY 2012 Results – Management Presentation $'000 FY 2012 FY 2011 VARIANCE VARIANCE $ % For personal use only CONSOLIDATED BROKERS COMMISSION AND FEES 70,963 63,055 7,908 12.5% LIFE INCOME 5,607 4,965 642 12.9% PROFIT COMMISSIONS 453 820 (367) -44.8% PREMIUM FUNDING 5,246 4,840 406 8.4% INTEREST 3,282
Slide 35: Appendix
For personal use only Appendix 2
Slide 36: Austagencies Results
Austagencies Results For personal use only PROFIT IMPACT $’000 FY 2012 FY 2011 INCR / (DECR) INCR / (DECR) % Commission and fees 20,064 12,905 7,159 55.5 Profit commission 1,173 542 631 116.4 Claims handling fees 635 325 310 95.4 Interest 724 532 192 36.1 Other income 98 232 (134) (57.8) 22,694 14,5