Aub Group Limited · ASX:AUB
Aub — Austbrokers Holdings — H1 2010 Earnings Presentation
31 slides from Aub's earnings presentation, Feb 25, 2010
Slide 1: Cover letter: Presentation on Results for Half Year ended 31 December 2009
For personal use only 25th February 2010 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 2009 Attached for immediate release is Austbrokers H
Slide 2: First Half Year 2010 Results Presentation
For personal use only AUSTBROKERS HOLDINGS LIMITED First Half Year 2010 Results Presentation Thursday 25th February 2010 Lach McKeough CEO Steve Rouvray CFO
Slide 3: Agenda
Agenda For personal use only • Overview – Business Overview – 1HY 2010 Business Highlights – 1HY 2010 Financial Highlights • 1HY 2010 Financial Performance • FY 2010 Outlook 1
Slide 4: Business Overview
Business Overview For personal use only • Austbrokers is one of top four insurance broking networks in Australia – Over 1,300 personnel engaged in the business – Over $1.3 billion in premiums placed – Wide geographical spread – Regional presence – Solid SME base – Corporate capability – Owner / driv
Slide 5: Network Premium Distribution by Class
Network Premium Distribution by Class For personal use only Indicative 3
Slide 6: Network Premium Distribution by State
Network Premium Distribution by State For personal use only Indicative 4
Slide 7: Business Overview: Insurance Broking owner-driver model
Business Overview For personal use only • Insurance Broking owner-driver model – 40 member broker firms • 20 50% owned • 17 51% - 80% owned • 3 100% owned • Underwriting agency business – Entities are authorised to write business on behalf of licensed insurers – no underwriting risk – Austagencies •
Slide 8: Business Overview (con't): Joint Venture with IBNA – AIMS
Business Overview (con’t) For personal use only • Joint Venture with IBNA – A&I Member Services (AIMS) – $2.1 billion premium and 120 businesses (combined Austbrokers / IBNA) – AIMS value proposition to underwriters to develop products and closer relationships – Quality products – Potential source o
Slide 9: 1HY 2010 Highlights
1HY 2010 Highlights For personal use only • Acquisitions Direct – 50% of Austral Insurance Brokers based in Perth – 1st July 2009 • Acquisitions in the Network – SGP acquired Davies Brookes in Cambelltown NSW in October 2009 through share issue reducing our shareholding to 50% – North Coast Insuranc
Slide 10: 1HY 2010 Highlights
1HY 2010 Highlights For personal use only • Underwriting Agencies – Increased commission and fees income by 5% excluding acquisitions – Developed new agencies – Acquired 50% of Tasman Underwriting • Synergies / Efficiencies – Continued transfers of brokers to central DataCentre co-located with Telst
Slide 11: NPAT Growth 1HY 2006 - 2010
NPAT Growth 1HY 2006 - 2010 For personal use only % increase 14.6% 38% 12.6% 7.1% NPAT – Net profit after tax before amortisation of intangibles before profits on business / portfolios sold (Adjusted NPAT) 9
Slide 12: Earnings Per Share 1HY2006 - 2010
Earnings Per Share 1HY2006 - 2010 For personal use only Cents Cents per Share 8.2 9.3 12.9 14.5 15.3 Based on Adjusted NPAT calculated on same basis as Basic Earnings per Share 10
Slide 13: 1HY 2010 Financial Performance
1HY 2010 Financial Performance For personal use only $’000 1HY 1HY % change 2010 2009 Broker Revenue (net of commission 96,152 89,290 7.7 Paid) Brokers & Agencies Profit 15,497 14,199 9.1 (AHL share) Profit (before tax and amortisation 11,214 10,240 9.5 of intangibles and sales of businesses) NPAT (
Slide 14: Agenda
Agenda For personal use only • Overview • 1HY2010 Financial Performance: – Income statement – as per ASX reporting – Reconciliation to Adjusted NPAT – Profit and loss statement – detailed – Analysis of results – Funding • FY 2010 outlook 12
Slide 15: Income Statement 1HY 2010
Income Statement 1HY 2010 For personal use only 1HY2010 1HY2009 Variance % $’000 $’000 Revenue from ordinary activities 49,162 46,061 6.7 Expenses from ordinary activities (37,984) (36,182) 5.0 Borrowing costs (1,218) (1,182) 3.0 9,960 8,697 14.5 Profit from sale of interests in subsidiaries * 642 5
Slide 16: 1HY2010 Reconciliation to Adjusted NPAT
1HY2010 Reconciliation to Adjusted NPAT For personal use only Profit after tax Reconciliation of reported result to operating NPAT before profits relating to divestments and amortisation 1HY 1HY 2010 2009 $’000 $’000 Reported Profit attributable to members 7,168 6,689 Profits on sale of interest in
Slide 17: 1HY Compared to 2HY
1HY Compared to 2HY For personal use only 18 $M 16 14 12 Adjusted 10 NPAT 8 6 4 2 Financial Year 2HY 64% 65% 59% 57% 1HY 36% 35% 41% 43% 15
Slide 18: Dividend
Dividend For personal use only Interim Dividend • 7.5 cents per share fully franked – up from 7cents last year • Subject to DRP • DRP shortfall to be underwritten subject to satisfactory terms • Shares will be issued at 2.5% discount to five day VWAP 16
Slide 19: 1HY2010 Compared to 1HY2009
1HY2010 Compared to 1HY2009 For personal use only 1HY 2010 1HY 2009 VARIANCE VARIANCE $'000 $'000 $'000 % BROKER OPERATIONS COMMISSION AND FEES 78,744 71,877 6,867 9.6% LIFE INCOME 4,054 3,646 408 11.2% PROFIT COMMISSIONS 366 233 133 57.1% PREMIUM FUNDING 7,002 5,659 1,343 23.7% INTEREST 3,380 5,258
Slide 20: 1HY2010 Compared to 1HY2009
1HY2010 Compared to 1HY2009 For personal use only 1HY 2010 1HY 2009 VARIANCE VARIANCE $'000 $'000 $'000 % CONSOLIDATED BROKERS COMMISSION AND FEES 27,281 23,684 3,597 15.2% LIFE INCOME 2,593 2,197 396 18.0% PROFIT COMMISSIONS 73 26 47 180.8% PREMIUM FUNDING 2,454 2,178 276 12.7% INTEREST 1,101 1,574
Slide 21: Increase in NPAT 1HY2010 vs 1HY2009
Increase in NPAT 1HY2010 vs 1HY2009 For personal use only $’000 8000 7800 7600 7400 7200 7000 6800 6600 6400 6200 6000 1HY2009 Tax AA Corp Income Corp Exp Broker Profits 1HY2010 Interest Notes 1. Non recurring tax credit in 1HY2009 2. Austagencies lower interest earnings 3. Corporate income impacted
Slide 22: Analysis of Contribution to Growth in NPAT
Analysis of Contribution to Growth in NPAT For personal use only Growth in Adjusted NPAT $’000 % of Growth Share of broker profits - Direct acquisitions HY 2009 207 2.8 - Existing network 643 8.8 Corporate expenses 137 1.9 Offset by Corporate interest earnings (267) (3.7) Austagencies (38) (0.5) Tax
Slide 23: Increase in Pre-Tax Share of Broker Profits 1HY2010 from 1HY2009
Increase in Pre-Tax Share of Broker Profits 1HY2010 from 1HY2009 For personal use only $’000 14500 14000 13500 13000 12500 12000 11500 11000 10500 10000 FY2009 Interest Deferal Resourcing AIMS Premium Acquisition Increase in FY2010 Earnings Income Commission Funding Direct Other inc Income Net of Ex
Slide 24: Increase in Share of Broker Profits 1HY2010 vs 1HY2009
Increase in Share of Broker Profits 1HY2010 vs 1HY2009 For personal use only $’000 % of Growth Increase in premium funding 650 5.2 Increase in AIMS commission 300 2.4 Increase in other broking income less increase in expenses 1,569 12.4 Direct acquisitions 434 3.4 Offset by Interest earnings (1,100)
Slide 25: Broker Profits and Income
Broker Profits and Income For personal use only • Brokers Profits (before tax) as a percentage of Broker Income Including Austagencies Insurance Broking 1HY10 25.2% 25.1% 1HY09 25.6% 25.4% 1HY08 25.2% 25.0% 1HY07 20.7% 1HY06 19.2% Impacted by reduction in interest earnings – without decline in inter
Slide 26: Austagencies Underwriting Agencies
Austagencies Underwriting Agencies For personal use only $’000 1HY 2010 1HY 2009 INCR / (DECR) Commission and fees 4,542 4,170 372 Profit commission 479 653 (174) Claims handling fee 232 177 55 Interest 126 292 (166) Other income 6 8 (2) 5,385 5,300 83 Expenses 3,938 3,800 (138) Net Profit before in
Slide 27: Funding
Funding For personal use only • Facility from St George Bank– limit $44.3 million including subsidiaries $6.5 million • Facility utilised at December 2009 – $27.4 million at holding company level ($1 million since repaid) – $6.4 million in subsidiaries • Facility term is 5 years to August 2013 • Est
Slide 28: Agenda
Agenda For personal use only • Business Overview • 1HY 2010 Financial Performance • FY 2010 Outlook – Market conditions – Strategy – Outlook 26
Slide 29: Market conditions
Market conditions For personal use only • Premium rates – Only moderate increase evident – Competitive market limiting underwriters in achieving desired increases • Lower interest rate environment but recent increases have put 2HY2010 current cash rate ahead of average rate for 2HY2009 • Level and t
Slide 30: Strategy
Strategy For personal use only • Growth – acquisition activity to continue – business development – marketing strategies – acquire experienced account executives • Continue to expand underwriting agency capability • Back office synergies and efficiencies – transfer of brokers to central IT DataCentr
Slide 31: FY2010 Outlook
FY2010 Outlook For personal use only • Premium rate increases likely to continue but will only be moderate • Insurance broking industry consolidation – continuing acquisition opportunities • Any new acquisition activity unlikely to contribute significantly to FY2010 results • Organic growth in incom