Aub Group Limited · ASX:AUB
Aub — Austbrokers Holdings — H1 2015 Earnings Presentation
30 slides from Aub's earnings presentation, Feb 25, 2015
Slide 1: Cover letter to ASX for 1HY15 results presentation
For personal use only 25th February 2015 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 31st December 2014 Attached for immediate release is Austbrokers
Slide 2: Austbrokers Holdings Ltd 1HY15 Results
For personal use only AUSTBROKERS HOLDINGS LTD 1HY15 RESULTS WEDNESDAY 25 FEBRUARY 2015
Slide 3: Performance Summary 1HY15
PERFORMANCE SUMMARY 1HY15 Reported NPAT up 8.3% on 1HY14 to Adherence to clearly defined Group For personal use only $13.9m strategy driving income growth in all market facing areas and ensuring Adjusted NPAT decreased by 14.8% continued diversification of profit ($14.6m to $12.4m on adjusted
Slide 4: Key Performance Indicators 1HY15
KEY PERFORMANCE INDICATORS 1HY15 For personal use only 3
Slide 5: For personal use only
More than $2.5B : Equity in 70+ LEADING insurance broking, underwriting agencies, “=bWP businesses across & risk services group © So6HO6 S606 Goods SoGn6ooGn 250+ locations LARGEST broking & ~30 YRS _ Cluster in NZ =) r a active . : LARGEST equity W JV with LEADING SENSO | feelin broking cluster Pe
Slide 6: A Diversified Group
A DIVERSIFIED GROUP Australia and NZ’s leading equity based insurance broking, underwriting agency and risk services For personal use only group and pioneers of the ‘Owner-Driver’ model. • BWM – New Zealand’s • 50+ broking groups • 21 agency groups • 3 leading businesses largest cluster group • Larg
Slide 7: Income Growth Across All Business Divisions
INCOME GROWTH ACROSS ALL BUSINESS DIVISIONS For personal use only 6
Slide 8: Investments in Group Services Improve Service and Efficiency
INVESTMENTS IN GROUP SERVICES IMPROVE SERVICE AND EFFICIENCY For personal use only 7
Slide 9: Financial Performance
For personal use only FINANCIAL PERFORMANCE
Slide 10: 1HY Growth Since ASX Listing
1HY GROWTH SINCE ASX LISTING For personal use only CONTINUED 1HY NPAT GROWTH NPAT of $13.9 million up 8.3% on 1HY14 Adjusted NPAT down 14.8% 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% (18.9)% 10.5% 8.3% (14.8)% NPAT: Net Profit after tax attributa
Slide 11: Dividend Maintained - Earnings Per Share
DIVIDEND MAINTAINED - EARNINGS PER SHARE For personal use only Interim dividend per share 1HY15 12.0 cents (1HY14 12.0 cents) DRP in place but not underwritten Payout ratio on adjusted NPAT is 60% (FY14 65%) 10
Slide 12: Reported NPAT Needs Reconciliation
REPORTED NPAT NEEDS RECONCILIATION For personal use only 1HY15 1HY14 Variance $’000 $’000 % Revenue from ordinary activities 97,691 92,184 6.0 Income arising from sale of interests in Associates and controlled entities and adjustments to carrying values of associates and to contingent consideration
Slide 13: Underlying NPAT
UNDERLYING NPAT For personal use only 1HY15 1HY14 Variance $’000 $’000 % Reported Profit attributable to members 13,853 12,791 8.3 Add (Less) adjustments to the carrying value of associates (no income tax applicable)* (3,525) - Profit from operations 10,328 12,791 (19.3) Amortisation of intangibles
Slide 14: Contribution to 1HY15
CONTRIBUTION TO 1HY15 For personal use only Increase in corporate expenses and technology investments to build platform for continued growth Broker acquisitions, acquisition costs (2.9%) and increased borrowings (1.3%) impacted growth by 4.2% Deferral of broker income decreased growth by 2.7%
Slide 15: Broker Profits Impacted by Soft Market
BROKER PROFITS IMPACTED BY SOFT MARKET For personal use only Continued growth in Premium Funding Interest income reduction from lower rates still a negative After costs acquisitions contributed negatively growth Deferral of income from 1HY to 2HY 14
Slide 16: Insurance Broking Margin Impact
INSURANCE BROKING MARGIN* IMPACT For personal use only Base commission and fees represented 18.2% of base premiums (1HY14 17.4%) Commission and fee split 62.5%/37.5% (1HY14 65%/35%) – due to increase in fees Margins have been impacted by negative contributions and related costs from acquisitio
Slide 17: Underwriting Agencies
UNDERWRITING AGENCIES For personal use only Total income up 26% 21% growth in net commission and fees to $20.5 million Profit commissions up $938,000 – underwriting profitable business Expenses excluding acquisitions and start ups were up 35% – increased resourcing and technology costs to keep
Slide 18: Income to Expense Ratio Held Below Historic Rolling Average
INCOME TO EXPENSE RATIO HELD BELOW HISTORIC ROLLING AVERAGE For personal use only Corporate expenses as % of income (share pre-tax profits from business operations) Stated Group objective of managing income: expense ratio below historic rolling average Ongoing investment in business within def
Slide 19: Risk Services - A First
RISK SERVICES – A FIRST For personal use only Contributed 2.8% to overall growth Commenced February 2014 with acquisition of 50% of Procare group Supplemented by acquisitions of Risk Strategies (July 2014) and Altius Group (February 2015) Early in development of opportunities to grow in this s
Slide 20: Funding Position
FUNDING POSITION For personal use only Total consolidated entities debt $60 million Strong net cash flow of ~$12 million over – includes subsidiaries which have separate the next twelve months after earn out facilities payments and assuming final dividend underwritten DRP Austbrokers Holdings
Slide 21: Outlook
For personal use only OUTLOOK
Slide 22: Market Conditions FY15
MARKET CONDITIONS FY15 For personal use only Premium rates 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 outlook may have impact on SME Ins
Slide 23: Growth Strategies FY15
GROWTH STRATEGIES FY15 For personal use only Continue to seek growth across all 3 divisions Continue to diversify income growth via acquisitions and organic opportunities across all divisions, as well as start-up opportunities in Underwriting Agencies and Risk Services areas Leverage back office
Slide 24: Well Positioned for FY15
WELL POSITIONED FOR FY15 For personal use only 2HY15 will benefit from Groundwork undertaken in FY14 and first half in developing products, systems and processes Organic growth expected to continue to emerge through broker network initiatives Deferred income being booked Insurance broking co
Slide 25: For personal use only
For personal use only This release may contain forward looking statements relating to future matters, which are subject to known and unknown risks, Uncertainties and other important factors which could cause the actual results, performance or achievements of Austbrokers and the Austbrokers Group to
Slide 26: Appendices
For personal use only APPENDICES
Slide 27: Appendix - 1HY15 Results
APPENDIX 1 – 1HY15 RESULTS For personal use only 1HY 2015 1HY 2014 VARIANCE VARIANCE $’000 $’000 $’000 % BROKER OPERATIONS Commission And Fees 122,465 120,386 2,079 1.7% Life Income 6,025 6,337 (312) -4.9% Profit Commissions 224 266 (42) -15.8% Premium Funding 12,872 12,534 338 2.7% Interest 4,779 4
Slide 28: Appendix - 1HY15 Results
APPENDIX 1 – 1HY15 RESULTS For personal use only VARIANCE VARIANCE $'000 1HY 2015 1HY 2014 $ % Consolidated Brokers Commission And Fees 54,239 51,218 3,021 5.9% Life Income 4,143 4,268 (125) -2.9% Profit Commissions 224 132 92 69.7% Premium Funding 4,869 4,756 113 2.4% Interest 1,701 1,845 (144) -7.
Slide 29: Appendix - Underwriting Agencies
APPENDIX 2 - UNDERWRITING AGENCIES For personal use only 1HY15 1HY14 INC/(DECR)% $’000 $’000 Commission and Fees 20,556 16,969 21% Profit Commission 1,058 120 882% Claims Handling Fee 300 351 (15)% Interest 386 334 16% Other Income 93 13 715% Total Income 22,393 17,787 26% Expenses (17,109) (12,652)
Slide 30: Appendix - 1HY15 Cash Flow
APPENDIX 3 – 1HY15 CASH FLOW 1HY15 1HY14 For personal use only $’000 $’000 Cash flows from operations 14,967 20,094 Cash flows from investing activities - Acquisitions* (20,978) (2,446) - Sales proceeds / loan repayments (159) 559 - Plant equipment / other (814) (872) (21,951) 2,759 Cash flows from