Slide 1: ASX cover letter for results presentation
25th August 2011 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 2011 Attached for immediate release is Austbrokers Holdings Limited (AUB) Presentat
Slide 2: Financial Year 2011 Results Presentation
AUSTBROKERS HOLDINGS LIMITED Financial Year 2011 Results Presentation Thursday 25th August 2011 Lach McKeough CEO Steve Rouvray CFO
Slide 3: Agenda
Agenda • Overview – Business Overview – FY 2011 Business Highlights – FY 2011 Financial Highlights • FY 2011 Financial Performance • FY 2012 Outlook 1
Slide 4: Business Overview
Business Overview • Austbrokers is one of the top four insurance broking networks in Australia – Over 1,600 personnel engaged in the business – Over $1.4 billion in gross written premiums placed ($1.1 billion pure premium) – Wide geographical spread over 110 locations – Regional presence – Solid SME
Slide 5: Business Overview (con't)
Business Overview (con’t) • Insurance Broking owner-driver model – 41 member broker firms • 22 50% owned • 16 51% - 85% owned • 3 100% owned – Represented in over 110 locations • Underwriting agency business – Austagencies are authorised to write business on behalf of licensed insurers – no underwri
Slide 6: Network Premium Distribution by Class
Network Premium Distribution by Class 34% Property 17% Motor Commercial 11% Liability 6% Workers Compensation 6%Professional Indemnity 5% Householders 5% Farm 4% Private Motor 3% Contractors 2% Marine Cargo 1% Marine Hull 1% Livestock 1% Personal Accident 1% Bonds 3% Other 4
Slide 7: FY 2011 Highlights
FY 2011 Highlights • Acquisitions Direct – 50% Country Wide Insurance Brokers on 1st April 2011. Based in Perth, offices in rural WA – income $6 million • Acquisitions in the Network – Rivers (50%) acquired portfolio in Cairns - income $540,000 – MGA (50%) acquired 50% of portfolio in Perth – income
Slide 8: FY 2011 Highlights (con't)
FY 2011 Highlights (con’t) • Premium Funding – Joint Venture with Pacific Premium Funding (GE Company) – contributed $11.7 million of total premium funding income – up 10.3% – Arrangement extends to end of FY 2012 • IT Broker Processing Platform – Developed EDI processing platform using iClose to co
Slide 9: FY 2011 Highlights (con't)
FY 2011 Highlights (con’t) • Synergies / Efficiencies – 33 brokers now operate on the central DataCentre for at least some services – Development of Austbrokers Business Centre to provide back office services – servicing 16 businesses • Owner Driver – Acquired additional minor shareholdings to assis
Slide 10: Profit Growth 2007 – 2011
Profit Growth 2007 – 2011 25 Reported NPAT Adjusted NPAT $M 20 $23,813 $21,365 15 10 5 0 2007 2008 2009 2010 2011 Increase N/A 15.3% 13.7% 18.5% 11% 14.7% 11.5% 12.1% 17.5% 18.1% Adjusted NPAT – Net profit after tax before amortisation of intangibles and profits on businesses / portfolios sold 8
Slide 11: Earnings Per Share FY 2007 - 2011
Earnings Per Share FY 2007 - 2011 Cents 45 40 44.18 cents 35 39.64 cents 30 25 Reported NPAT Adjusted NPAT 20 15 10 5 0 2007 2008 2009 2010 2011 Increase N/A 15.1% 13.6% 18.4% 11.0% 14.5% 11.5% 9.2% 12.2% 12.8% 9
Slide 12: FY 2011 Financial Performance
FY 2011 Financial Performance $’000 FY FY % change 2011 2010 Broker Revenue (net of commission 225,470 206,114 9.4 Paid) Brokers & Agencies Profit 42,930 37,752 13.7 (AHL share) Profit (before tax and amortisation 34,203 29,087 17.6 of intangibles and sales of businesses) NPAT Reported 21,365 18,189
Slide 13: Agenda
Agenda • Overview • FY 2011 Financial Performance: – Income statement – as per Financial Report – Reconciliation to Adjusted NPAT – Profit and loss statement – detailed – Balance sheet – Other financials – Changes to accounting standards • FY 2011 outlook 11
Slide 14: FY 2011 Results – Management Presentation
FY 2011 Results – Management Presentation FY 2011 FY 2010 Variance $’000 $’000 % Revenue from ordinary activities 114,288 105,610 8.2 Expenses from ordinary activities (79,963) (76,562) 4.4 Borrowing costs (2,446) (2,451) (0.2) 31,879 26,597 19.8 Profit from sale of interests in subsidiaries 249 621
Slide 15: Profit after tax
FY 2011 Profit after tax Reconciliation of reported NPAT to NPAT before profits relating to divestments and amortisation of intangibles FY FY 2011 2010 $’000 $’000 Reported profit attributable to members 21,365 18,189 Profits after tax on sale of business (105) (572) Profit from ongoing operations 2
Slide 16: FY 2011 Compared to FY 2010 - Highlights
FY 2011 Compared to FY 2010 - Highlights • Adjusted NPAT for FY 2011 at $23.8 million (2010 $20.2 million) – Adjusted NPAT excludes $0.1 million profits on sale of businesses and $2.6 million amortisation of intangibles expense – exceeded 2010 Adjusted NPAT by $3.6 million – 18.1% – 2HY contributed
Slide 17: 2011 FY Compared to 2010 FY
2011 FY Compared to 2010 FY 25 $M 20 15 2HY Adjusted 1HY NPAT 10 5 0 2006 2007 2008 2009 2010 2011 Financial Year 2HY 64% 65% 59% 60% 61% 59% 1HY 36% 35% 41% 40% 39% 41% 15
Slide 18: Dividend
Dividend Dividend • 17 cents per share fully franked – up from 15 cents last year • Full year dividend 25.5 cents per share up 13.3% on FY 2010 • Above eps growth of 12.8% on an adjusted NPAT basis or 12.2% on reported NPAT • Dividend reinvestment plan suspended for final dividend 16
Slide 19: FY 2011 Results – Management Presentation
FY 2011 Results – Management Presentation FY 2011 FY 2010 VARIANCE VARIANCE #039;000 #039;000 #039;000 % BROKER OPERATIONS COMMISSION AND FEES 184,495 169,301 15,194 9.0% LIFE INCOME 8,620 8,107 513 6.3% PROFIT COMMISSIONS 1,910 1,078 832 77.2% PREMIUM FUNDING 15,746 14,970 776 5.2% INTEREST 9,819 7,419 2,40
Slide 20: FY 2011 Results – Management Presentation
FY 2011 Results – Management Presentation #039;000 FY 2011 FY 2010 VARIANCE VARIANCE $ % CONSOLIDATED BROKERS COMMISSION AND FEES 63,055 59,665 3,390 5.7% LIFE INCOME 4,965 4,668 297 6.4% PROFIT COMMISSIONS 820 448 372 83.0% PREMIUM FUNDING 4,840 4,561 279 6.1% INTEREST 3,093 2,245 848 37.8% OTHER INCO
Slide 21: Increase in NPAT FY 2011 vs FY 2010
Increase in NPAT FY 2011 vs FY 2010 $’000 25000 24000 23000 22000 21000 20000 19000 18000 17000 FY2010 Corp Exp Tax Borrowing Costs Corp Income Austagencies Share of Broker FY2011 Interest Profits Notes 1. Corporate income increase due to higher interest rates and increased funds on deposit 2. Corpo
Slide 22: Analysis of Contribution to Growth in NPAT
Analysis of Contribution to Growth in NPAT Growth in Adjusted NPAT $’000 % of Growth Share of broker profits 3,086 15.3 Austagencies 515 2.6 Corporate interest earnings 357 1.8 Borrowing costs 28 0.1 Tax 67 0.3 Offset by Corporate expenses (405) (2.0) Total 3,648 18.1 Notes Corporate interest earnin
Slide 23: Increase in Pre-Tax Broker Profits FY 2011 from FY 2010
Increase in Pre-Tax Broker Profits FY 2011 from FY 2010 $’000 73000 68000 63000 58000 53000 48000 43000 38000 33000 FY2010 Expenses Other Income Life Income Profit Shares AIMS Premium Interest Commission FY2011 Commission Funding & Fees 21
Slide 24: Increase in Broker Pre Tax Profits FY 2011 vs FY 2010
Increase in Broker Pre Tax Profits FY 2011 vs FY 2010 $’000 % Increase in Commission and fees 14,334 Increase in premium funding 776 Increase in interest earnings 2,400 Increase in AIMS commission 860 Increase in Life income 513 Increase in profit commission 832 Offset by Other income (359) Increase
Slide 25: Broker Profits as % of Broker Income
Broker Profits as % of Broker Income Profits (before tax) as a percentage of Broker Income Including Austagencies Insurance Broking only 2011 29.4% 29.5% 2010 28.5% 28.6% 2009 28.3% 28.4% 2008 26.7 % 26.8% 2007 24.8% 24.2% 2006 25.2% 2005 23.4% 2004 22.3% 2003 20.8% Base commission and fees represen
Slide 26: Austagencies Results
Austagencies Results PROFIT IMPACT $’000 FY 2011 FY 2010 INCR / (DECR) INCR / (DECR) % Commission and fees 12,905 9,758 3,147 32.3 Profit commission 688 1,176 (488) (41.5) Claims handling fees 325 294 31 10.5 Interest 532 298 234 78.5 Other income 86 1 85 14,536 11,527 3,009 26.2 Expenses 10,514 8,2
Slide 27: Balance Sheet (con't)
Balance Sheet (con’t) 30 June 2011 30 June 2010 Assets $000 $000 Current Assets Cash at Bank 37,326 23,840 Cash at Bank – Trust 65,008 57,147 Receivables 102,090 90,350 Other financial assets 679 1,461 Total Current Assets 205,103 172,798 Non Current Assets Receivables 173 163 Plant Equipment 4,508
Slide 28: Balance Sheet (con't)
Balance Sheet (con’t) 30 June 2011 30 June 2010 Liabilities $000 $000 Current Liabilities Payables 160,017 138,196 Tax Liabilities 4,718 3,326 Provisions 8,194 7,452 Interest bearing loans and borrowings 622 481 Total Current Liabilities 173,551 149,455 Non Current Liabilities Provisions 1,510 1,312
Slide 29: Cash Flow
Cash Flow 2011 2010 $’000 $’000 Cash flows from operations 27,127 24,248 Cash flows from investing activities - Acquisitions (8,017) (2,827) - Sales proceeds / loan repayments 2,214 151 - Plant equipment (1,346) (756) (7,149) (3,432) Cash flows from financing activities - Dividends (10,463) (9,311)
Slide 30: Funding
Funding • Free cash currently $10 million • Facility from St George Bank – limit $44.1 utilised at June 2011 – $27.3 million at holding company level – $5.6 million in subsidiaries • Facility term is 5 years to August 2013 • Estimated $3.1 million committed for future payments for completed acquisit
Slide 31: Agenda
Agenda • Business Overview • FY 2011 Financial Performance • FY 2012 Outlook – Market conditions – Strategy – Outlook 29
Slide 32: Market Conditions FY 2012
Market Conditions FY 2012 • Premium rates – Underwriters are seeking increases following poor claims experience – Competition dampens extent of increases desired by underwriters – Premium rate movements vary across classes • Relatively stable interest rate environment • Moderate economic growth fore
Slide 33: Strategies FY 2012
Strategies FY 2012 • Growth – acquisition activity to continue – business development – marketing strategies – marketing initiatives implemented to increase cross sell of insurance products • Expand underwriting agency capability • Centralised services to create efficiencies – IT Central DataCentre
Slide 34: Outlook FY 2012
Outlook FY 2012 • Premium rate increases being sought by underwriters • Economic outlook uncertain – impact on SME sector • Insurance broking industry consolidation – continuing acquisition opportunities • Organic growth expected to continue to emerge through broker network initiatives and premium r