Slide 1: Austbrokers
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Slide 2: First Half Year 2014 Results Presentation
Austbrokers Holdings Limited First Half Year 2014 Results Presentation Tuesday 25th February 2014 Mark Searles CEO & Managing Director Steve Rouvray CFO
Slide 3: Agenda
Agenda • Overview – Market & AUB Overview – Business Overview – 1HY 2014 Financial Highlights – 1HY 2014 Operational Highlights • 1HY 2014 Financial Performance • FY 2014 Outlook 1
Slide 4: Market & AUB Overview
Market & AUB Overview Market • Flat premium growth in Commercial Lines GI market* • Uncertain economic environment – impact on SME sector • Highly competitive market across all sectors AUB • Pleasing underlying growth across all constituencies • Good progress in building ‘bench-strength’ to underpin
Slide 5: Business Overview
Business Overview Insurance Broking Network Underwriting Agencies Leading equity based network in Act on behalf of insurers Australia $230 million in premium Owner driver model Niche & general agencies – most classes Strong regional presence – all states Presence in five states Diverse client base N
Slide 6: Business Overview
Business Overview Owner Driver Model 47 Broking Groups Over 120 locations 26 50% owned in Australia & 1 Financial Services 19 51% - 90% owned Operation New Zealand 3 100% owned Financial Services Insurance Operations – Life & General & Specialist Superannuation Broking Network Diverse type & size FU
Slide 7: 1HY2014 Financial Highlights
1HY2014 Financial Highlights Adjusted NPAT up 6.2% Reported NPAT down Operating revenue up 48% (due to fair value 15% adjustment in HY13) Austbrokers Market cap $673M at EPS up 2% Holdings 31st January 2014 Interim dividend per AUB share of broker share up 9% to 12 cents profits up 3.5% Underwriting
Slide 8: 1HY2014 Operational Highlights
1HY2014 Operational Highlights Roll out of DataCentre New Exec Management Acquisitions totaling $14 & investment in ‘bench- million strength’ Austbrokers Holdings Diversification of income FY13 acquisitions generation - Procare integrated acquisition Further investment in technology capabilities 6
Slide 9: 1HY2014 Operational Highlights con’t
1HY2014 Operational Highlights con’t Acquisition of WRI Insurance Brokers 1 July Acquired further 25% in Network Acquisitions 5 Austbrokers Coast to businesses / portfolios Coast 1 January Reduced equity in 2 Austbrokers brokers – owner/driver Broker Life income up 5.3% core philosophy Network Commi
Slide 10: 1HY2014 Operational Highlights con’t
1HY2014 Operational Highlights con’t Growth in Strata Agency grown 3 x Surety Agency Increased total income commenced 37% Austagencies Securing new Development of start up Underwriting underwriters for businesses Agencies products Continued to invest in Profit growth 20% resources for future growth
Slide 11: Agenda
Agenda • Overview • 1HY 2014 Financial Performance: – Income statement – as per Financial Report – Reconciliation to Adjusted NPAT – NPAT Growth – EPS Growth & Interim Dividend – 1HY vs 2HY – Increase in Adjusted NPAT – Increase in Pre Tax Broker Profits – Broker Profits as % of Broker Income – Aust
Slide 12: 1HY 2014 Financial Performance
1HY 2014 Financial Performance $’000 1HY 1HY % change 2014 2013 Broker Revenue (net of commission 147,425 131,216 12.4 paid) Brokers & Agencies Profit 26,605 25,168 5.7 Profit (before tax and amortisation of 20,730 19,833 4.5 intangibles and sale of businesses) NPAT Reported 12,791 24,489 (47.8) NPA
Slide 13: 1HY2014 Results
1HY2014 Results Financial Statement Presentation 1HY2014 1HY2013 Variance % $’000 $’000 Revenue from ordinary activities 92,184 80,690 Expenses from ordinary activities (70,551) (58,700) Borrowing costs (1,476) (1,547) 20,157 20,443 (1.4) Fair value adjustment to the carrying - 12,630 value of assoc
Slide 14: 1HY2014 Results
1HY2014 Results Financial Statements Comments • Fair value adjustment to carrying value and adjustments to contingent consideration did not occur in current half year • Before these items profit before non operating tax reduced by 1.4% due to: − Equity accounted investment that was previously a trus
Slide 15: Reported NPAT Reconciled to Adjusted NPAT
1HY 2014 Reported NPAT Reconciled to Adjusted NPAT 1HY 2014 1HY 2013 $’000 $’000 Reported Profit attributable to members (NPAT) 12,791 24,489 Fair value adjustments to the carrying value of - (12,630) associates at the date at which they became controlled entities* Adjustment in contingent considera
Slide 16: 1HY 2014 Compared to 1HY 2013
1HY 2014 Compared to 1HY 2013 Highlights 1HY14 1HY13 Change Earnings per share (NPAT) 21.8 cents 43.4 cents (49.8)% Earnings per share (Adjusted NPAT) 24.9 cents 24.4 cents 2.1% Dividend per share 12.0 cents 11.0 cents 9.1% • Eligible for reinvestment under Dividend Reinvestment Plan • DRP not propo
Slide 17: NPAT Growth 1HY 2007 - 2014
NPAT Growth 1HY 2007 - 2014 25000 NPAT $’000 20000 Adjusted NPAT 15000 10000 5000 0 2007 2008 2009 2010 2011 2012 2013 2014 % increase NPAT 28.3% 25.1% 14.3% 7.2% 21.3% 29% 118% (47.8)% % increase Adjusted NPAT 14.6% 38.0% 12.6% 7.1% 25.9% 17% 20% 6.2% NPAT - Net Profit after tax attributable to mem
Slide 18: Earnings Per Share 1HY 2007 - 2014
Earnings Per Share 1HY 2007 - 2014 45 NPAT cents per share 40 Adjusted NPAT cents per share Cents per share 35 30 25 20 15 10 5 0 2007 2008 2009 2010 2011 2012 2013 2014 NPAT cents per share 9.3 11.7 13.3 14.1 16.3 20.4 43.4 21.8 Adjusted NPAT cents per share 9.3 12.9 14.5 15.3 18.4 20.8 24.4 24.9 A
Slide 19: 1HY Compared to 2HY
1HY Compared to 2HY $M 35 30 Adjusted 25 NPAT 20 2HY 1HY 15 10 5 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 Financial Year 2HY 64% 65% 59% 60% 61% 59% 58% 57% 1HY 36% 35% 41% 40% 39% 41% 42% 43% 17
Slide 20: Increase in Adjusted NPAT 1HY2014 vs 1HY2013
Increase in Adjusted NPAT 1HY2014 vs 1HY2013 15,000 $’000 14,500 14,000 13,500 13,000 12,500 12,000 11,500 11,000 10,500 10,000 1HY 2013 Corp Exp Tax Borrowing Costs Austagencies Broker Profits 1HY 2014 Adjusted NPAT 13,759 (446) 220 67 465 542 14,607 % Growth (3.2)% 1.6% 0.5% 3.4% 3.9% 6.2% 18
Slide 21: Income : Expense Ratio
Income : Expense Ratio 31.0 % 29.0 27.0 25.0 Corp Corp Exp/Broker Exp / Broker &Inc ratio Inc ratio Agency 23.0 Ave corp Ave Corp Exp Exp// Broker Broker&Inc Agency RatioInc ratio 21.0 19.0 17.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 (forecast) Year 19
Slide 22: Increase in Pre-Tax Broker Profits 1HY 2014 from 1HY 2013
Increase in Pre-Tax Broker Profits 1HY 2014 from 1HY 2013 $’000 40000 39000 38000 37000 36000 35000 34000 1HY 2013 Interest Profit Other Life Premium Increase in c&f 1HY 2014 Earnings Commissions Funding inc net of exps Profit 37,096 (460) 25 136 319 880 1,565 39,561 Contrib to growth (1.3)% 0.1% 0.
Slide 23: Increase in Broker Profits
Increase in Broker Profits • Increase in commission and fees less expenses make up 4.2% of total 6.6% growth in broker profits − Direct acquisitions contributed 22% − 78% came from organic growth and bolt on acquisitions − Good growth despite market pressures in discreet areas specifically mining se
Slide 24: Broker Profits as % of Broker Income
Broker Profits as % of Broker Income Profits (before tax) as a percentage of Broker Income 29 % 28 27 26 25 Including Austagencies 24 Insurance Broking Only 23 22 21 20 1HY06 1HY07 1HY08 1HY09 1HY10 1HY11 1HY12 1HY13 1HY14 Total 19.2 20.7 25.2 25.6 25.2 27.3 27.3 28.5 27.7 Broking 25.0 25.4 25.1 27.
Slide 25: Austagencies - 1HY 2014
Austagencies - 1HY 2014 • NPAT up 20.5% (22% excluding acquisitions) to $3.904 million • Commission and fee income up 39% (27% excluding prior year acquisitions) to $17 million • Expenses up 39.5% (22.9% excluding acquisitions) • Profit margin from 28.9 compared to 29.9% impacted by acquisitions in
Slide 26: Funding
Funding • Facility from St George Bank – limit $50 million at holding company level (including $10 million increase approved but still subject to completion of legal documentation) – $30 million drawn – $15 million available including $10 million increase – $5 million allocated to other financing ar
Slide 27: Agenda
Agenda • Overview • 1HY 2014 Financial Performance • FY 2014 Outlook – Market conditions – Strategy – Outlook 25
Slide 28: Market Conditions FY 2014
Market Conditions FY 2014 • Premium rates • Flat premium rates over period • Competition restrains extent of increases achievable • Continued low interest rate environment • Moderate economic growth forecast but patchy economic outlook may have impact on SME • Age demographics in insurance broking i
Slide 29: Strategies FY2014
Strategies FY2014 • Growth: − acquisition activity to continue − focus on increasing cross sell of insurance products − opportunities presented by Procare Services via cross sell − continue to expand Underwriting Agency capability through product and acquisition growth − underwriter relationship / p
Slide 30: Outlook FY2014
Outlook FY2014 • Austbrokers’ further growth and development in underwriting agency business with continued investment in capability in specific market segments • Organic growth expected to continue to emerge through broker network initiatives • Profit commissions for year depends on 2013 underwriti
Slide 31: Appendix 1
Appendix 1
Slide 32: 1HY 2014 Results
1HY 2014 Results Appendix 1 Management Presentation 1HY 2014 1HY 2013 VARIANCE VARIANCE #039;000 #039;000 #039;000 % BROKER OPERATIONS COMMISSION AND FEES 120,386 105,074 15,312 14.6% LIFE INCOME 6,337 6,018 319 5.3% PROFIT COMMISSIONS 266 241 25 10.4% PREMIUM FUNDING 12,534 11,654 880 7.6% INTEREST 4,974 5,
Slide 33: 1HY 2014 Results
1HY 2014 Results Appendix 1 Management Presentation #039;000 1HY 2014 1HY 2013 VARIANCE VARIANCE $ % CONSOLIDATED BROKERS COMMISSION AND FEES 51,218 44,238 6,980 15.8% LIFE INCOME 4,268 4,025 243 6.0% PROFIT COMMISSIONS 132 207 (75) -36.2% PREMIUM FUNDING 4,756 4,121 635 15.4% INTEREST 1,845 1,812 33 1
Slide 34: Appendix 2
Appendix 2
Slide 35: Austagencies Results
Austagencies Results Appendix 2 1HY 2014 1HY 2013 INCR / INCR / (DECR) (DECR) % Commission and fees 16,969 12,238 4,731 38.7 Profit commission 120 290 (170) (58.6) Claims handling fees 351 69 282 408.7 Interest 334 348 14 (4.0) Other income 13 - 13 - 17,787 12,945 4,842 37.4 Expenses (12,652) (9,070
Slide 36: Appendix 3
Appendix 3
Slide 37: Balance Sheet
Balance Sheet Appendix 3 31 Dec 2013 30 June 2013 $’000 $’000 Current Assets Cash at Bank 45,813 38,083 Cash at Bank – Trust 104,106 112,610 Receivables 110,040 156,698 Other financials assets 1,160 1,716 Total Current Assets 261,119 309,107 Non Current Assets Receivables 49 264 Plant Equipment 7,76
Slide 38: Balance Sheet con’t
Balance Sheet con’t 31 Dec 2013 30 June 2013 $’000 $’000 Liabilities Current Liabilities Payables 197,433 253,395 Tax Liabilities 3,878 6,071 Provisions 8,899 9,963 Interest bearing loans borrowings 10,671 10,132 Total Current Liabilities 220,881 279,561 Non Current Liabilities Provisions 2,303 2,46
Slide 39: Cash Flow
Cash Flow 1HY2014 1HY2013 $’000 $’000 Cash flows from operation 20,094 21,215 Cash flows from investing activities - Acquisitions (5,292) (7,011) - Proceeds from disposal of portfolio / associate 342 - - Share issues to non controlling entities 2,846 2,243 - Proceeds received from new consolidated e
Slide 40: Austbrokers
alt austbrokers ail