Colonial — H1 1999 Earnings Presentation
53 slides from Colonial's earnings presentation, 1999
Slide 1: Interim Results 1999
Interim Results 1999 (6) Colonial.
Slide 2: Mr Peter Smedley, Group Managing Director & CEO
Mr Peter Smedley Group Managing Director & Chief Executive Officer
Slide 3: Consistent delivery of strategy
Consistent delivery of strategy p Growing success of allfinanz p Greater geographic diversity p Success of integrations â cost savings significantly ahead of schedule â strong customer retention
Slide 4: Agenda
Agenda p Key achievements p Financial performance p Group outlook
Slide 5: Interim result 1999
Interim result 1999 Net profit after tax p NPAT $212 million A$m â 54% above 1998 250 â EPS s 19% 200 (annualised) on 1998 150 100 p DPS 9 cents â s 28% on 1998 50 interim dividend 0 H1 97 H1 98 H1 99 (H1 1997 - restated)
Slide 6: Key achievements
Key achievements p Success of L&G and Prudential integration â cost savings $150m annualised â target met 2 years ahead of schedule p New business growth s 50% p Market share growth for all 3 business units p Continuing to build scale through acquisitions â Nicholas-Applegate Asia and UK â National
Slide 7: Key achievements
Key achievements p China joint venture signed p Vietnam joint venture signed p Global Y2K compliance program completed p AFS banking systems converted to new modern platform
Slide 8: Group assets held and under management A$75.8 billion
Group assets held and under management A$75.8 billion A$b 80 70 60 Banking 50 Insurance & super 40 Funds management 30 - includes external 20 funds under overlay 10 management 0 93 94 95 96 97 H1 98 H1 98 99
Slide 9: Group new insurance and super business - A$1.6b
Group new insurance and super business - A$1.6b s 171% A$b 2 1.5 1 0.5 0 H1 98 H1 99
Slide 10: Group new lending
Group new lending s 15% A$b 3 2 1 H1 98 H1 99
Slide 11: Other financial highlights
Other financial highlights p Australian Financial Services cost-to-income ratio t to 50% (62% at June 98) p Colonial Ltd capital adequacy 11.5% (11% at June 98) p Market capitalisation $5.3b at June 99
Slide 12: Efficient and flexible balance sheet management
Efficient and flexible balance sheet management Gearing ratio 31% - Debt to total capital A$b 4 3 Share h olde rs' e quity 2 Group debt Bank subordinated 1 debt 0
Slide 13: Y2K compliance program completed globally
Y2K compliance program completed globally p Y2K remediation completed and process reviewed worldwide p Colonial State Bank core systems replacement successful p Comprehensive global business continuity programs in place
Slide 14: Business unit contributions
Business unit contributions (A$m) H1 99 H1 98 Australian Financial Services - banking 66 60 - insurance and superannuation 86 22 152 82 International Financial Services - Colonial UK 25 52 - Colonial NZ 16 2 - CMG Asia 19 2 60 56 Colonial First State Investments 34 17 246 155 Head office and interes
Slide 15: Profit contribution - AFS
Profit contribution - AFS (A$m) H1 99 H1 98 Australian Financial Services - banking 66 60 - insurance and superannuation 86 22 152 82 International Financial Services - Colonial UK 25 52 - Colonial NZ 16 2 - CMG Asia 19 2 60 56 Colonial First State Investments 34 17 246 155 Head office and interest
Slide 16: AFS Profit & Loss
AFS Profit & Loss % (A$m) H1 99 H1 98 change Net interest income 219 211 3.8 Other operating income 191 123 55.3 Total operating income 410 334 22.8 Operating expenses 205 207 (1.0) Charge for doubtful debts 19 14 35.7 Net profit before tax 186 113 64.6 Tax 34 31 9.7 Net profit after tax 152 82 85.4
Slide 17: AFS - success of L&G and Prudential integration
AFS - success of L&G and Prudential integration p Integration largely complete at June 99 â annualised cost savings of $105m achieved by AFS â 2 years ahead of schedule r 3 phases â corporate consolidation â future business platform â conversion of legacy book
Slide 18: AFS - success of L&G and Prudential integration
AFS - success of L&G and Prudential integration p Corporate consolidation â single corporate identity achieved â duplication and overlap eliminated, ie Personnel, Legal / Secretarial, Finance and Marketing â common organisational structure created, including relocation
Slide 19: AFS - success of L&G and Prudential integration
AFS - success of L&G and Prudential integration p Future business platform created â product range and product systems rationalised â other business systems rationalised, ie accounting, unit pricing, front end systems â common infrastructure created
Slide 20: AFS - Smooth conversion to Life 400
AFS - success of L&G and Prudential integration p Smooth conversion to Life 400 â all current life business being written on Life 400 â all L&G inforce book on system â Y2K remediation completed â conversion of CMLA inforce book underway â Prudential to follow â completion of inforce conversion by Q
Slide 21: AFS - success of L&G and Prudential integration
AFS - success of L&G and Prudential integration p Customer retention sustains inforce book p Retention of key distributors boosts sales momentum
Slide 22: Delivering on allfinanz
Delivering on allfinanz p Allfinanz cross-sell ratio up to 17% on expanded customer base (15% at Dec 98) p Sales through AFS allfinanz network â master funds s 217% â annuities s 451%
Slide 23: Delivering on allfinanz
Delivering on allfinanz p AFS wholesale and licensed channels selling 17% of lending products p Expansion of allfinanz retail network â rural expansion via ‘single site’ operations and retail agents â move into supermarket banking
Slide 24: AFS lending growth
AFS lending growth Loans outstanding s 12% A$b 20 15 n Business n Consumer 10 5 Jun-98 Jun-99 â net interest margin improvement over H2 98
Slide 25: AFS banking market share maintained
AFS banking market share maintained Total domestic lending (including securitisation) % 5 4 4.05 3.96 3 2 Mar-98 Jun-98 Sep-98 Dec-98 Mar-99 Sources: ABA, S&P
Slide 26: AFS other operating income
AFS other operating income s 55% A$m 200 150 Insurance & super 100 profit CST other income 50 0 H1 98 H1 99
Slide 27: AFS insurance & super MoS profit
AFS insurance & super MoS profit s 291% (A$m) H1 99 H1 98 Planned profit margins 36 9 Experience variation 9 3 Capitalised loss reversals 3 (4) Operating margins 48 8 Investment earnings on shareholder capital 38 14 Net profit after tax - shareholder 86 22
Slide 28: AFS insurance & super new business
AFS insurance & super new business s 196% s 11% on pre-acquisition comparison A$m 1500 Master funds / trusts 1250 1000 Risk 750 Annuities, bonds, 500 stat. fund products 250 Unit trusts 0 H1 98 H1 99
Slide 29: AFS insurance & super - continuing to build market share
AFS insurance & super - continuing to build market share New annual premiums Single premiums Ranked no. 1 Ranked no. 6 % 19 % 6 18.9 5.9 16 5.5 14.5 13 5 Sep-98 Dec-98 Sep-98 Dec-98 Source: Rice Kachor
Slide 30: AFS insurance & super - continuing to build market share
AFS insurance & super - continuing to build market share Australian master funds % 6 5.8 5.6 5 Sep-98 Dec-98 Mar-99 Source: Plan for Life â $3.4b funds under management ($2.5b at Dec 98)
Slide 31: AFS insurance & super appraisal value
AFS insurance & super appraisal value (A$m) H1 99 H2 98 Shareholder net worth 715 627 Value of inforce business 1,003 987 Embedded value 1,718 1,614 Value of future new business 183 181 Appraisal value 1,901 1,795 Value of service company 660 724 Adjusted value 2,561 2,519 Value of one year’s sales
Slide 32: AFS liabilities
AFS liabilities Retail deposits s 23% LT debt t 11% A$b A$b 12 10 10 8 8 LT debt 6 6 Other 4 liabilities 4 2 2 0 0 Jun 98 Jun 99 Jun 98 Jun 99
Slide 33: AFS core banking systems replacement successful
AFS core banking systems replacement successful p Y2K compliance p Thorough testing â systems tested April – June p All data successfully transferred â minimal customer impact p Internationally proven, highly efficient banking platform p Vision Plus card processing package p Cashcard Australia â acc
Slide 34: Profit contribution - IFS
Profit contribution - IFS (A$m) H1 99 H1 98 Australian Financial Services - banking 66 60 - insurance and superannuation 86 22 152 82 International Financial Services - Colonial UK 25 52 - Colonial NZ 16 2 - CMG Asia 19 2 60 56 Colonial First State Investments 34 17 246 155 Head office and interest
Slide 35: Profit contribution - Colonial UK
Profit contribution - Colonial UK (A$m) H1 99 H1 98 Australian Financial Services - banking 66 60 - insurance and superannuation 86 22 152 82 International Financial Services - Colonial UK 25 52 - Colonial NZ 16 2 - CMG Asia 19 2 60 56 Colonial First State Investments 34 17 246 155 Head office and i
Slide 36: Colonial UK - solid underlying result
Colonial UK - solid underlying result p Total new business sales s 55% â insurance and super s 35% â lending s 73% â flow-on effect of sales force expansion p Solid investment outcome in mixed conditions p Business being positioned for regulatory changes â Stakeholder Pensions
Slide 37: UK insurance business
UK insurance business New business sales s 35% New business losses t 26% $m $m 150 12 130 9 110 90 6 70 50 3 H1 98 H1 99 H1 98 H1 99
Slide 38: Colonial UK earnings
Colonial UK earnings (A$m) H1 99 H1 98 Planned profit margins 16 17 Experience variation 7 5 New business losses (8) (11) Operating margins 15 11 One-offs — including sales force take-on, Y2K and regulatory review costs (15) (14) Investment earnings on shareholder capital 25 55 Net profit after tax
Slide 39: Profit contribution - Colonial NZ
Profit contribution - Colonial NZ (A$m) H1 99 H1 98 Australian Financial Services - banking 66 60 - insurance and superannuation 86 22 152 82 International Financial Services - Colonial UK 25 52 - Colonial NZ 16 2 - CMG Asia 19 2 60 56 Colonial First State Investments 34 17 246 155 Head office and i
Slide 40: Colonial NZ achievements
Colonial NZ achievements p Success of integration â annualised cost savings A$18m by June 99 â cost-to-income ratio t to 17.7% (28.4% at June 98) p Expanded distribution â complements insurance franchise â key relationships retained â delivering strong sales p Repackaged products
Slide 41: Colonial NZ strong new business
Colonial NZ strong new business New business sales s 238% A$m 80 60 40 20 0 H1 98 H1 99 â sales level maintained on pre-acquisition comparison â new business losses eliminated
Slide 42: Colonial NZ earnings
Colonial NZ earnings s 700% (A$m) H1 99 H1 98 Planned profit margins 10 2 Experience variation 1 - New business losses - (2) Operating margins 11 - Investment earnings on shareholder capital 5 2 Net profit after tax - shareholder 16 2
Slide 43: Profit contribution - CMG Asia
Profit contribution - CMG Asia (A$m) H1 99 H1 98 Australian Financial Services - banking 66 60 - insurance and superannuation 86 22 152 82 International Financial Services - Colonial UK 25 52 - Colonial NZ 16 2 - CMG Asia 19 2 60 56 Colonial First State Investments 34 17 246 155 Head office and inte
Slide 44: CMG Asia performed well through difficult operating conditions
CMG Asia performed well through difficult operating conditions p HK new business s 298% p 3rd largest sales force in HK p Banking acquisition in Fiji Islands p Vietnam JV partnership signed p China JV partnership signed
Slide 45: CMG Asia embedded value to $504m
CMG Asia embedded value s 4% to $504m - value of one year’s sales s 47% to $22m 31 Dec 98 A$483m 30 Jun 99 A$504m n Hong Kong - 66% n Hong Kong - 67% n Philippines - 12% n Philippines - 11% n Thailand - 12% n Thailand - 13% n Indonesia - 2% n Indonesia - 2% n Malaysia - 2% n Malaysia - 1% n Fiji - 6
Slide 46: CMG Asia MoS earnings
CMG Asia MoS earnings s 58% (A$m) H1 99 H2 98 Planned profit margins 11 11 Experience variation (1) (8) New business losses (6) (2) Operating margins 4 1 Investment income on shareholder capital 15 11 Net profit after tax - shareholder 19 12 (Includes Fiji)
Slide 47: Profit contribution - CFSI
Profit contribution - CFSI (A$m) H1 99 H1 98 Australian Financial Services - banking 66 60 - insurance and superannuation 86 22 152 82 International Financial Services - Colonial UK 25 52 - Colonial NZ 16 2 - CMG Asia 19 2 60 56 Colonial First State Investments 34 17 246 155 Head office and interest
Slide 48: Colonial First State Investments highlights
Colonial First State Investments highlights p Successful integration of L&G and Prudential â maintained exceptional investment performance â annualised cost savings of $28m p Strong inflows of external funds - $4.3b p Awarded “Fund Manager of the Year” in Australia â twice in 3 years p Nicholas-Appl
Slide 49: Colonial First State Investments - $47.6b funds under management
Colonial First State Investments - $47.6b funds under management A$b 50 External funds under 40 overlay management 30 External 20 Internal 10 0 94 95 96 97 98 H1 99
Slide 50: Colonial First State Investments - continuing to build market share
Colonial First State Investments - continuing to build market share Australian total retail FUM Ranked no. 4 % 8 7.14 7 6.32 6 Sep-98 Dec-98 Mar-99 Source: Assirt
Slide 51: Colonial First State Investments - gross external fund inflows
Colonial First State Investments - gross external fund inflows s 55% A$b 5 4 3 2 1 0 H1 98 H1 99
Slide 52: Colonial First State Investments cost-to-income ratio
Colonial First State Investments cost-to-income ratio t to 58% % 65 63.5 60 58 55 Jun-98 Dec-98 Jun-99
Slide 53: Commitment to fundamentals that deliver shareholder wealth
Commitment to fundamentals that deliver shareholder wealth p Increased scale brings cost efficiencies â $150m annualised integration savings achieved by June 1999 p Allfinanz strategy driving revenue growth â strong model and platform for integrated financial services p Multiple income streams â str