Aub Group Limited · ASX:AUB
Aub — Austbrokers Holdings — FY2013 Earnings Presentation
39 slides from Aub's earnings presentation, Aug 27, 2013
Slide 1: Austbrokers Holdings Limited (AUB) FY 2013 Results Presentation
Austbrokers Holdings Limited (AUB) FY 2013 Results Presentation Tuesday 27 August, 2013 Mark Searles, CEO & MD Steve Rouvray, CFO
Slide 2: Agenda
Agenda • Overview Business Overview FY 2013 Financial Highlights FY 2013 Operational Highlights • FY 2013 Financial Performance • FY 2014 Outlook 1
Slide 3: Overview
Overview 2
Slide 4: Business Overview
Business Overview Insurance Underwriting Broking Network Agencies Leading equity-based Act on behalf of insurers broking network in Australia $220M premium Owner Driver model Niche & general agencies – most Strong regional presence classes SME base Austbrokers Presence in all states Corporate capabi
Slide 5: Insurance Broking
Insurance Broking Owner Driver Model 23 50% owned 20 51% - 90% owned Over 130 locations 46 Broking Groups 3 100% owned in Australia & New Zealand Financial Services General & Specialist Insurance Operations with funds Brokers Broking Network under management $0.75B Total of $1.7B base Over 95 Partne
Slide 6: Underwriting Agencies
Underwriting Agencies Owner driver model with 7 around 50% 15 Agencies ownership Austagencies Gross written premium Market leadership in Underwriting discrete segments e.g. $220M Agencies Bus & Coach Supporting underwriters: QBE, Suncorp, Allianz, Focus on underwriting CGU, Lloyd’s, Great expertise
Slide 7: FY 2013 Financial Highlights
FY 2013 Financial Highlights Reported NPAT Adjusted NPAT Total revenue up 61% up 17% Up 43% EPS Austbrokers Market cap $633M up 13.65% Holdings Limited At 30 June 2013 Dividend per share Underwriting Agency profits Total Shareholder up 14.5% Return for FY2013 to 35.5 cents up 23% 61.7% 6
Slide 8: FY 2013 Operational Highlights
FY 2013 Operational Highlights Successful transition to Strategic review new CEO completed Technology investment Austbrokers Strategic review delivered Holdings Limited recommendations implemented Implementation of new arrangement for Premium Funding – Most active year to date Hunter Premium for acq
Slide 9: FY2013 Operational Highlights (cont.)
FY2013 Operational Highlights (cont.) Increased equity 18.5% Adroit Profit Contribution Acquisition BGA 50% Insurics up 17.6% 30% Comsure Insurance Brokers (1 November 2012) Total Revenue Acquisition Dalby up 7.6% Insurance Brokers Insurance (1 April 2013) Broking Network Premium Funding Acquisition
Slide 10: FY13 Operational Highlights (cont.)
FY13 Operational Highlights (cont.) Acquired Lawsons Acquired Guardian Underwriting Increased total income Underwriting Agency Australasia 27% (1 May 2013) (1 May 2013) Development of start Austagencies up businesses including Underwriting Strata Underwriting Accident, Health & Agencies Agency comme
Slide 11: AUB Total Shareholder Return - 30th June 2013
AUB Total Shareholder Return - 30th June 2013 70 1 Year 3 Year 5 Year 60 50 AUB 40 ASX All Ords 30 ASX 200 Index % Annualised TSR 20 10 0 % 61.7 22.2 23.8 45.9 7.3 7.7 37.6 2.3 2.7 Notes 1 Total Shareholder Return means the pre-tax return to shareholders on shares, calculated as the increase (or dec
Slide 12: FY 2013 Financial Performance
FY 2013 Financial Performance • Income statement – as per Financial Report • Reconciliation to Adjusted NPAT • Highlights FY 2013 compared to FY 2012 • Profit Growth FY 2007 – 2013 • Earnings per share FY 2007 – 2013 • 1HY – 2HY Adjusted NPAT split • Broker Profits FY2013 movement from FY2012 • Divi
Slide 13: FY 2013 Results Financial Statement Presentation
FY 2013 Results Financial Statement Presentation FY 2013 FY 2012 Variance $’000 $’000 % Revenue from ordinary activities 168,040 125,430 34.0 Income arising from sale of interests in Associates and controlled entities & adjustments to contingent consideration 12,413 192 Expenses from ordinary activi
Slide 14: Reconciliation of Reported NPAT to Adjusted NPAT
Reconciliation of Reported NPAT to Adjusted NPAT FY FY 2013 2012 Variance $’000 $’000 % Reported Profit attributable to members 41,203 25,640 61 Less Net Profit after tax on sale of interests in associates, associates & controlled entities & contingent consideration adjustments * (276) - Less adjust
Slide 15: Highlights FY 2013 compared to FY 2012
Highlights FY 2013 compared to FY 2012 Adjusted NPAT for FY 2013 at $32.1 million (2012 $27.4 million) – Adjusted NPAT excludes $12.413 million adjustment arising from acquisition and sale of interests in associates and controlled entities, $3.149 million amortisation of intangible expenses – Exceed
Slide 16: Profit Growth 2007 – 2013
Profit Growth 2007 – 2013 $M 45 Reported NPAT Adjusted NPAT 40 $32,075 35 $41,203 30 25 20 15 10 5 0 2007 2008 2009 2010 2011 2012 2013 Increase YoY N/A 15.3% 13.7% 18.5% 11% 14.7% 11.5% 12.1% 17.5% 18.1% 20.0% 15.0% 60.7% 17.1% Adjusted NPAT – Net profit after tax before amortisation of intangibles
Slide 17: Earnings Per Share FY 2007 - 2013
Earnings Per Share FY 2007 - 2013 Cents 80 Reported NPAT Adjusted NPAT 70 56.2 cents 72.2 cents 60 50 40 30 20 10 0 2007 2008 2009 2010 2011 2012 2013 Increase YoY N/A 15.1% 13.6% 18.4% 11.0% 14.5% 11.5% 9.2% 12.2% 12.8% 16.9% 11.9% 56.0% 13.7% 16
Slide 18: 1HY – 2HY Adjusted NPAT Split
1HY – 2HY Adjusted NPAT Split 35 2HY 1HY 30 $M 25 20 Adjusted NPAT 15 10 5 0 2006 2007 2008 2009 2010 2011 2012 2013 Financial Year 2HY 64% 65% 59% 60% 61% 59% 58% 59% 1HY 36% 35% 41% 40% 39% 41% 42% 41% 17
Slide 19: Dividend
Dividend • 24.5 cents final dividend per share fully franked – up from 21.5 cents last year • Full year dividend 35.5 cents per share up 14.5% on FY 2012 which is above eps growth of 13.7% on an adjusted NPAT basis • Eligible for reinvestment under Dividend Reinvestment Plan • Dividend Reinvestment
Slide 20: Adjusted NPAT FY2013 movement from FY2012
Adjusted NPAT FY2013 movement from FY2012 $’000 $33,000 $31,000 $29,000 $27,000 $25,000 $23,000 $21,000 FY2012 Corp Exp Tax Other Austagencies Broker Profits FY2013 27,395 (1,432) 606 8 954 4,544 32,075 % of Adjusted NPAT of growth (5.2)% 2.2% 0% 3.5% 16.6% 17.1% 19
Slide 21: Broker Profits FY2013 movement from FY2012
Broker Profits FY2013 movement from FY2012 $’000 $86,000 $84,000 $82,000 $80,000 $78,000 $76,000 $74,000 $72,000 $70,000 $68,000 $66,000 FY2012 Interest Other Life Premium Profit Increase in FY2013 Funding Commissions Other inc net Income of exps 73,951 (1,822) 206 2,478 3,528 1,925 3,678 83,944 Not
Slide 22: Broker Profits as % of Broker Income
Broker Profits as % of Broker Income 32 30 28 26 24 22 20 2007 2008 2009 2010 2011 2012 2013 % 24.2 26.8 28.4 28.6 29.5 29.2 30.8 Base commission and fees represented 17.9% of base premiums (2012 17.9%) Commission and fee split 65% / 35% (2012 65% / 35%) Commission and fee increase across the networ
Slide 23: Austagencies
Austagencies Growth in NPBT after minorities of 23% to $7.355 million • Approximately two thirds growth from acquisitions and start up businesses • Increase in total income excluding start ups and acquisitions of 11% • Commission and fees income increased 14.9% excluding acquisitions • Profit commis
Slide 24: Balance Sheet
Balance Sheet • Increase in following balance sheet items Cash at Bank Trust $37.7M Receivables $39.5M Payables $72.0M results from associates becoming controlled entities and acquisitions made during the year • Increase in intangibles of $75.8M is the result of recognition of 100% of intangibles re
Slide 25: Funding
Funding • Total consolidated entities debt $53 million – includes subsidiaries who have separate facilities • Austbrokers Holdings bank facility from St George Bank – limit $40 million at holding company level – $35 million drawn – $5 million undrawn – Facility term is three years to 30th May 2016 •
Slide 26: FY 2014 Outlook
FY 2014 Outlook • Market Conditions • Strategy • Outlook 25
Slide 27: Market Conditions FY 2014
Market Conditions FY 2014 • 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 continuing • Moderate economic growth forecast but p
Slide 28: Strategies FY 2014
Strategies FY 2014 • Optimisation of operating model to continue to underpin future growth across the group • Growth: – focus on 3 key pillars: organic; acquisition; Austagencies – focus on increased support for broker growth at a local level – acquisitions activity to continue – expand underwriting
Slide 29: Outlook FY 2014
Outlook FY 2014 FY 2014 WILL BENEFIT FROM • Additional contributions from FY 2013 acquisitions • Organic growth expected to continue to emerge through broker network initiatives • Insurance broking industry consolidation – continuing acquisition opportunities BUT • Following good insurer underwritin
Slide 30: Appendix 1
Appendix 1 FY 2013 Results: Management Presentation
Slide 31: FY 2013 Results: Management Presentation
FY 2013 Results: Management Presentation FY 2013 FY 2012 VARIANCE VARIANCE $'000 $'000 $'000 % BROKER OPERATIONS COMMISSION AND FEES 222,113 209,144 12,969 6.2% LIFE INCOME 11,721 9,243 2,478 26.8% PROFIT COMMISSIONS 2,895 970 1,925 198.5% PREMIUM FUNDING 21,840 18,312 3,528 19.3% INTEREST 9,719 11,
Slide 32: FY 2013 Results: Management Presentation
FY 2013 Results: Management Presentation $'000 FY 2013 FY 2012 VARIANCE VARIANCE $ % CONSOLIDATED BROKERS COMMISSION AND FEES 96,977 70,963 26,014 36.7% LIFE INCOME 8,003 5,607 2,396 42.7% PROFIT COMMISSIONS 533 453 80 17.7% PREMIUM FUNDING 6,967 5,246 1,721 32.8% INTEREST 3,260 3,282 (22) -0.7% OTH
Slide 33: Appendix 2
Appendix 2 Austagencies Results
Slide 34: Austagencies Results
Austagencies Results $'000 FY 2013 FY 2012 INCR/(DECR) INCR/(DECR)% Commission and Fees 26,580 20,064 6,516 32.5% Profit Commission 797 1,173 (376) (32.1)% Claims Handling Fee 766 635 131 20.6% Interest 655 724 (69) (9.5)% Other Income 16 98 (82) (83.7)% 28,814 22,694 6,120 27.0% Expenses 19,368 15,
Slide 35: Appendix 3
Appendix 3 Balance Sheet
Slide 36: Balance Sheet
Balance Sheet 30 June 2013 30 June 2012 Assets $000 $000 Current Assets Cash at Bank 38,083 40,743 Cash at Bank – Trust 112,610 74,859 Receivables 156,698 117,167 Other financial assets 1,716 1,316 Total Current Assets 309,107 234,085 Non Current Assets Receivables 264 261 Plant Equipment 7,455 5,05
Slide 37: Balance Sheet (cont.)
Balance Sheet (cont.) 30 June 2013 30 June 2012 Liabilities $000 $000 Current Liabilities Payables 253,395 181,420 Tax Liabilities 6,071 3,655 Provisions 9,963 8,418 Interest bearing loans and borrowings 10,132 1,130 Total Current Liabilities 279,561 194,623 Non Current Liabilities Provisions 2,469
Slide 38: Appendix 4
Appendix 4 Cash Flow
Slide 39: Cash Flow
Cash Flow 2013 2012 $’000 $’000 Cash flows from operations 28,338 27,357 Cash flows from investing activities - Acquisitions * (2,350) (7,703) - Sales proceeds / loan repayments 4,197 184 - Plant equipment / other (1,816) (2,111) (31) (9,630) Cash flows from financing activities - Dividends (13,420)