Aub Group Limited · ASX:AUB
Aub — Austbrokers Holdings — FY2014 Earnings Presentation
27 slides from Aub's earnings presentation, Aug 28, 2014
Slide 1: Cover letter to ASX: Presentation on Results
For personal use only 28th August 2014 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 2014 Attached for immediate release is Austbrokers Holdings L
Slide 2: Austbrokers Holdings Ltd FY2014 Results
For personal use only AUSTBROKERS HOLDINGS LTD FY2014 RESULTS THURSDAY 28 AUGUST 2014
Slide 3: Group Strongly Positioned
GROUP STRONGLY POSITIONED For personal use only Adjusted NPAT Achieved double-digit Up 10.5% Adjusted NPAT growth Operating revenue For 9th Year Up 18% Underlying EPS Share of broker Up 6.5% AUSTBROKERS profits HOLDINGS LTD. Up 4.2% Dividend per share Underwriting Up 8.5% Agency profits to 38.5 cent
Slide 4: Who We Are
WHO WE ARE Australia’s leading equity based insurance broking, underwriting agency and For personal use only risk services group. Pioneers of the ‘Owner-Driver’ model. • JV with IBNA • 48 broking groups • 21 agency groups • Leading support • Australia’s largest • 50+ specialised services • Australia
Slide 5: Growth Across All Business Divisions
GROWTH ACROSS ALL BUSINESS DIVISIONS For personal use only • Commission / fee income • Revenue growth 40% • New division established up 12.1% • 33% net profit growth • Complementary risk • 6.2% profit growth • Significant growth from start-up services and support • Profit commissions up 18.5% agenci
Slide 6: Group Services Investment Delivering Results
GROUP SERVICES INVESTMENT DELIVERING RESULTS AUSTBROKERS HOLDINGS LTD For personal use only BUSINESS TECHNOLOGY • 80% of operating businesses utilizing common Data Centre • CBS broking system & Citrix environment upgraded • 99.9% system availability • Business Intelligence tools rolled out across al
Slide 7: Income to Expense Ratio Held Below Rolling Average
INCOME TO EXPENSE RATIO HELD BELOW 10 YEAR AUSTBROKERS HOLDINGS LTD ROLLING AVERAGE For personal use only 30.0 28.0 26.0 Actual/Projected 24.0 Average 22.0 20.0 18.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 • Corporate expenses as % of income (share pre-tax profits from business operations)
Slide 8: Financial Performance
For personal use only FINANCIAL PERFORMANCE 6
Slide 9: Consistent Profitable Growth Since Listing
CONSISTENT PROFITABLE GROWTH SINCE LISTING AUSTBROKERS HOLDINGS LTD For personal use only $M 45 Reported NPAT Adjusted NPAT 40 35 $35.450 30 $34.655 25 20 15 10 5 0 2007 2008 2009 2010 2011 2012 2013 2014 Increase YoY N/A 15.3% 13.7% 8.5% 11% 14.7% 11.5% 12.1% 17.5% 18.1% 20.0% 15.0% 60.7% 17.1% (18
Slide 10: Earnings Per Share Up 6.5%
EARNINGS PER SHARE UP 6.5% AUSTBROKERS HOLDINGS LTD For personal use only Cents 80 Reported NPAT Adjusted NPAT 70 58.5 60 cents 50 60.0 cents 40 30 20 10 0 2007 2008 2009 2010 2011 2012 2013 2014 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% (19.0)% 6.
Slide 11: Shareholders Benefiting From Success
SHAREHOLDERS BENEFITING FROM SUCCESS AUSTBROKERS HOLDINGS LTD Cents For personal use only 40 35 30 25 20 Dividend per Share 15 10 5 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 • Dividend per share FY14 38.5 cents up 8.5% • DRP will remain in place. Proposed to fully underwrite DRP • Payout ratio
Slide 12: Reported NPAT Needs Reconciliation
REPORTED NPAT NEEDS RECONCILIATION AUSTBROKERS HOLDINGS LTD For personal use only FY14 FY13 Variance $’000 $’000 % Revenue from ordinary activities 198,745 168,040 18.3 Income arising from sale of interests in Associates and controlled entities and adjustments to carrying values of associates and to
Slide 13: Underlying NPAT Remains Robust
UNDERLYING NPAT REMAINS ROBUST AUSTBROKERS HOLDINGS LTD For personal use only FY14 FY13 Variance $’000 $’000 % Reported Profit attributable to members 34,655 41,203 (15.9) Add (Less) Net Loss (Profit) after tax on sale of interests in associates and controlled entities and contingent consideration a
Slide 14: Balanced Contribution to Growth Over FY13
BALANCED CONTRIBUTION TO GROWTH OVER FY13 AUSTBROKERS HOLDINGS LTD $’000 For personal use only $36,000 $35,000 $34,000 $33,000 $32,000 $31,000 $30,000 $29,000 FY2013 Corp Exp Tax Other Insurance & Risk Underwriting Broker Profits FY2014 Services Agencies 32,075 (747) 128 384 421 1,696 1,493 35,450 %
Slide 15: Insurance Broker Profits Up 6.2%
INSURANCE BROKER PROFITS UP 6.2% SPECIALIST INSURANCE BROKING UNDERWRITTING & RISK NETWORK AGENCIES SERVICES For personal use only $’000 $90,000 $89,000 $88,000 $87,000 $86,000 $85,000 $84,000 $83,000 $82,000 $81,000 $80,000 FY2013 Interest Life Premium Profit Increase in FY2014 Funding Income Commi
Slide 16: Insurance Broking Margin Impact
INSURANCE INSURANCE BROKING MARGIN* IMPACT SPECIALIST INSURANCE BROKING UNDERWRITTING & RISK NETWORK AGENCIES SERVICES For personal use only 32 30 28 26 24 22 20 2007 2008 2009 2010 2011 2012 2013 2014 % 24.2 26.8 28.4 28.6 29.5 29.2 30.8 29.4 * Profits as a percentage of income • Decline due to low
Slide 17: Specialist Underwriting Agencies
SPECIALIST UNDERWRITING AGENCIES INSURANCE INSURANCE BROKING UNDERWRITTING & RISK NETWORK SERVICES AGENCIES For personal use only 33% growth in NPBT after profit attributable to other parties to $9.778 million • Approximately one third growth from acquisitions and start up businesses • Increase in t
Slide 18: Insurance & Risk Services – A First
INSURANCE INSURANCE & RISK SERVICES – A FIRST INSURANCE SPECIALIST BROKING UNDERWRITTING & RISK NETWORK AGENCIES SERVICES For personal use only Contributed 1.3% to overall growth of 10.5% (adjusted NPAT) • Commenced February 2014 with acquisition of 50% of Procare group • Early in development of opp
Slide 19: Funding Costs Reduced & Gearing Remains Low
FUNDING COSTS REDUCED & GEARING REMAINS LOW AUSTBROKERS HOLDINGS LTD For personal use only • Total consolidated entities debt $54 million – includes subsidiaries which have separate facilities • Austbrokers Holdings facility from St George Bank - $15 million available (term to 30/05/16) • Estimated
Slide 20: Outlook
For personal use only 18 OUTLOOK
Slide 21: Market Conditions FY15
MARKET CONDITIONS FY15 AUSTBROKERS HOLDINGS LTD For personal use only • Premium rates Stable to soft premium rate environment in commercial lines Competition maintains pressure on rates • Lower interest rate environment likely to continue • Moderate economic growth forecast but patchy economic outlo
Slide 22: Strategies FY15
STRATEGIES FY15 AUSTBROKERS HOLDINGS LTD For personal use only Growth across all 3 divisions • Continue acquisitions across all divisions, as well as start-up opportunities in Underwriting and Insurance & Risk Services pillars • Increased central support for growth opportunities at local level • Uti
Slide 23: Well Positioned for FY15
WELL POSITIONED FOR FY15 AUSTBROKERS HOLDINGS LTD For personal use only FY15 will benefit from • Groundwork undertaken in FY14 in developing systems and processes • Organic growth expected to continue to emerge through broker network initiatives • Insurance broking industry consolidation – continuin
Slide 24: Appendices
For personal use only 22 APPENDICES
Slide 25: Appendix – FY14 Results
APPENDIX 1 – FY14 RESULTS: AUSTBROKERS HOLDINGS LTD MANAGEMENT PRESENTATION For personal use only FY 2014 FY 2013 VARIANCE VARIANCE $'000 $'000 $'000 % BROKER OPERATIONS COMMISSION AND FEES 248,883 222,113 26,770 12.1% LIFE INCOME 11,939 11,721 218 1.9% PROFIT COMMISSIONS 3,431 2,895 536 18.5% PREMI
Slide 26: Appendix – FY14 Results: Consolidated and Equity Accounted Brokers
APPENDIX 1 – FY14 RESULTS: AUSTBROKERS HOLDINGS LTD MANAGEMENT PRESENTATION For personal use only $'000 FY 2014 FY 2013 VARIANCE VARIANCE $ % CONSOLIDATED BROKERS COMMISSION AND FEES 115,164 96,977 18,187 18.8% LIFE INCOME 7,966 8,003 (37) -0.5% PROFIT COMMISSIONS 1,299 533 766 143.7% PREMIUM FUNDIN
Slide 27: Appendix – Cash Flow
APPENDIX 2 – CASH FLOW AUSTBROKERS HOLDINGS LTD For personal use only 2014 2013 $’000 $’000 Cash flows from operations 36,455 27,940 Cash flows from investing activities - Acquisitions* (13,477) (2,350) - Sales proceeds / loan repayments 7,594 4,197 - Plant equipment / other (2,500) (1,816) (8,383)