Slide 1: AUB Group 1H20 Results Presentation Announcement
25 February 2020 For personal use only The Manager Market Announcements Office Australian Securities Exchange Ltd Level 6, Exchange Centre 20 Bridge Street Sydney NSW 2000 FOR RELEASE TO THE MARKET Dear Sir / Madam, AUB GROUP LIMITED 1H20 RESULTS PRESENTATION ANNOUNCEMENT Please find attached the fo
Slide 2: 1H20 Performance Overview
1H20 Performance Overview For personal use only Strong performance driven by organic growth, whilst making positive progress on strategic initiatives Summary — Adjusted NPAT1 $21.3 million (1H19: $17.0 million) up 25.3%. — Adjusted earnings per share 28.96 cents up 12.0%. — Organic growth the key dr
Slide 3: Highlights by operating division
Highlights by operating division For personal use only Australian Broking2 12.6% increase in pre-tax profit contribution from Australian Broking to $24.6m (1H19: $21.8m). Organic growth was assisted by an increase in commercial lines insurance premiums averaging 6.2% over the period. The curre
Slide 4: Execution Priorities Update
Execution Priorities Update For personal use only The Group outlined a number of Execution Priorities for FY20 and we are pleased to report good progress against all areas of focus, laying the foundation for long-term sustainable growth and profitability for the business. Execute on strategically al
Slide 5: Redefine Risk Services strategy
Redefine Risk Services strategy Profit improvement in the Health and Rehabilitation Services businesses was a priority. This has been achieved For personal use only by diversifying services, improving utilisation of staff and reducing costs. We are working with the respective businesses to determine
Slide 6: AUB 1H20 Presentation of Financial Results Tables
AUB 1H20 PRESENTATION OF FINANCIAL RESULTS TABLES Table 1 Financial Results Summary For personal use only FIN AN C IAL R ESU L TS SU MMAR Y 1H20 1H19 Var ianc e $ 000 $ 000 % 1 Revenue from ordinary activities 162,899 145,439 12.0% Adjusted NPAT 2 21,327 17,014 25.3% Profit before tax 25,961 29,673
Slide 7: Reconciliation of Adjusted NPAT to Reported NPAT
Table 2 Reconciliation of Adjusted NPAT to Reported NPAT 1 The reported profits of the business include non-operational items, such as profits and losses on sale of equity For personal use only interests, fair value adjustments to carrying values on ownership changes, changes to estimates or payment
Slide 8: Management Presentation of Results
Table 3 Management Presentation of Results A number of the businesses in the AUB Group are associates and are not consolidated in the financial statements. For personal use only In order to give a more comprehensive view of performance, the following table aggregates 100% of these businesses’ revenu
Slide 9: 1H20 Results
. 1H20 Results For personal use only Investor Presentation 25 February 2020 Mike Emmett CEO and Managing Director Mark Shanahan CFO © 2020 AUB Group Limited
Slide 10: Key Messages
For personal use only KEY MESSAGES Strong 1H20 result – Adjusted NPAT of $21.3mn, up 25.3% from 1 1H19 Two major acquisitions announced on 17 February 2020 – MGA 2 Whittles and BizCover, EPS accretive; will accelerate AUB Group's scale, capability and earnings Strong progress against Execution Prior
Slide 11: A. 1H20 Results Overview
1H20 Results For personal use only Presentation . A. 1H20 Results Overview © 2020 AUB Group Limited
Slide 12: 1H20 Group Performance
1H20 GROUP PERFORMANCE 1H20 1H19 Movement For personal use only Underlying Revenue1 $272.1mn $256.8mn 5.9% Underlying EBIT Margin2 23.0% 22.1% 90bps Adjusted NPAT3 $21.3mn $17.0mn 25.3% Adjusted Earnings per Share 28.96 cents 25.86 cents 12.0% Dividend per Share 14.5 cents 13.5 cents 7.4% Gearing Ra
Slide 13: 1H20 Performance Breakdown
1H20 PERFORMANCE BREAKDOWN 1H19 to 1H20 Adjusted NPAT1 Breakdown ($mns) For personal use only +25% +23% 0.4 22.8 1.3 0.9 0.6 21.3 3.3 18.6 1.6 17.0 1H19 1H19 Canberra 1H19 (excl. Organic Growth2 Acquisition Growth3 Interest Rate Cuts 1H20 excl. one-offs Redundancies 4 AASB16 Leases 1H20 Fraud Canber
Slide 14: 1H20 Divisional Performance
1H20 DIVISIONAL PERFORMANCE AUSTRALIAN NEW ZEALAND HEALTH AND For personal use only Vs. 1H19 OPERATING comparative AGENCIES period BROKING2 BROKING3 REHAB2 BUSINESSES4 $188.0mn $27.4mn $29.2mn $27.5mn $272.1mn Underlying1,3 Revenue 4.7 % 22.9 % 1.5 % 5.2 % 5.9 % 25.5% 30.4% 27.8% 12.2% 24.9% Underly
Slide 15: Australian Broking – 1H20
AUSTRALIAN BROKING – 1H20 Profit contribution to AUB Group – Pre- Movement Movement ▪ Pre-tax profit contribution to AUB Group of $24.6mn, an For personal use only 1H20 1H19 tax ($mns) ($) (%) increase of 12.6% from 1H19. Commission and fee income (net) 180.6 171.6 8.9 5.2% ▪ Included in 1H20 were $
Slide 16: New Zealand Broking – 1H20
NEW ZEALAND BROKING – 1H20 Profit contribution to AUB Group – Pre- Movement Movement ▪ Pre-tax profit contribution $4.9mn, an increase of 55.2% For personal use only 1H20 1H19 on 1H19. tax ($mns) ($) (%) ▪ Significant portion of profit growth arising from the Commission and fee income (net) 26.8 21.
Slide 17: Agencies – 1H20
AGENCIES – 1H20 Profit contribution to AUB Group – Pre- Movement Movement ▪ Pre-tax profit contribution to AUB Group of $5.5mn, an For personal use only 1H20 1H19 tax ($mns) ($) (%) increase of 8.8% on 1H19. Commission and fee income (net) 28.4 27.9 0.5 1.9% ▪ Strong premium growth contributing to o
Slide 18: Health and Rehabilitation – 1H20
HEALTH AND REHABILITATION – 1H20 Profit contribution to AUB Group – Pre- Movement Movement ▪ Pre-tax profit contribution to AUB Group of $1.8mn For personal use only 1H20 1H19 tax ($mns) ($) (%) increased by 124.8% on 1H19, as a result of improved utilisation, cost management and diversified service
Slide 19: Strong Balance Sheet and Capital Position
STRONG BALANCE SHEET AND CAPITAL POSITION Consolidated Balance Sheet Overview Movement Movement For personal use only 31 Dec 19 30 Jun 19 ($mns) ($mns) (%) ▪ Cash reduced mainly due to repayment Cash 50.0 70.0 (20.0) -29% of group interest-bearing loans and borrowings. Cash - Trust 135.0 150.0 (15.0
Slide 20: Group Debt
GROUP DEBT 1 Total Group Debt on a look-through basis2 ($mns) For personal use only 292.7 16.1 71.3 19.9% 1H20 AUB Group Gearing4 134.0 (FY19 21.7%) 118.3 23.0 21.9 205.3 55.5 Post acquisitions 32.9% est.7 50.7 7 55.5 45.7 6 6 Total AUB Group Debt 30/6/19 Total AUB Group Debt 31/12/19 Total AUB Grou
Slide 21: B. Major Acquisitions
1H20 Results For personal use only Presentation . B. Major Acquisitions © 2020 AUB Group Limited
Slide 22: MGA Whittles – Transaction Summary
For personal use only MGA WHITTLES – TRANSACTION SUMMARY ▪ On 17 February 2020, AUB agreed to acquire the balance of shares in the MGA Whittles Group for $140 million with expected completion 31 March ▪ MGA is one of 2020 Australia’s top 10 brokerages and has, for the past 40 years, been ▪ The purch
Slide 23: MGA Whittles – Business Overview
For personal use only MGA WHITTLES – BUSINESS OVERVIEW MGA Whittles Group is the largest and most profitable Austbrokers partner business. The business has invested heavily in its underlying operating platforms Revenue Growth (2010-2019) EBIT Margin (MGA Whittles vs AUB Group) 11% CAGR +9% 2010 2011
Slide 24: BizCover – Transaction Summary
For personal use only BIZCOVER – TRANSACTION SUMMARY ▪ Acquired 40% share in BizCover for $132 million1 on 17 February 2020 ▪ Online insurance solution to distribute and administer ▪ Given the BizCover CY20 forecast EBITDA of $17.7mn, this price implies commercial insurance an EBITDA multiple of 18.
Slide 25: BizCover – Business Overview
For personal use only BIZCOVER – BUSINESS OVERVIEW BizCover is an online commercial insurance distribution platform focused on the Micro- SME client segment. It is widely recognised as the leading direct small business insurance platform in Australia and New Zealand Market Overview Market Size and P
Slide 26: BizCover – Strategic Rationale
For personal use only BIZCOVER – STRATEGIC RATIONALE AUB Group’s investment enables us to benefit from an established, high growth and very profitable insurance distribution business in a complementary client segment Financial Performance Revenue Growth ▪ Profit growth of ~60% CAGR CAGR +38% ▪ EBIT
Slide 27: C. Update on Execution Priorities
1H20 Results For personal use only Presentation . C. Update on Execution Priorities © 2020 AUB Group Limited
Slide 28: Execution Priorities Update
EXECUTION PRIORITIES UPDATE ▪ Agreed to acquire 100% of shares in MGA Whittles Group For personal use only EXECUTE ON ▪ Acquired 40% interest in online brokerage, BizCover 1 STRATEGICALLY ALIGNED ▪ Terminated our conditional agreement with Pemba to acquire interest in Coverforce ACQUISTIONS ▪ Contin
Slide 29: Q4FY20 Launch: Austbrokers Express Cover
For personal use only Q4FY20 LAUNCH: AUSTBROKERS EXPRESS COVER Allows our partners to efficiently service low value, high volume business by leveraging a new digital solution powered by BizCover technology providing multi- insurer and modular product quote-to-bind capability Product Category Commodi
Slide 30: D. FY20 Guidance
1H20 Results For personal use only Presentation . D. FY20 Guidance © 2020 AUB Group Limited
Slide 31: FY20 Guidance Upgraded
For personal use only FY20 GUIDANCE UPGRADED 16-18 % + 5-6 % ANPAT Growth FY20 GUIDANCE 8-10 % + 1-2 % ANPAT Growth FY20 Guidance - August 2019 1 Organic Outperformance Acquisition Growth 2 FY20 Upgraded Guidance 6-8 % + 3-4 % EPS Growth EPS GROWTH 2-4 % EPS Growth FY20 Guidance - EPS Growth Impact
Slide 32: FY20 Guidance Overview
FY20 GUIDANCE OVERVIEW ▪ The AUB Group expects Adjusted NPAT growth of 16-18% for FY20 For personal use only ▪ 1H20 performance has been strong and significant progress has been made to realise internal efficiencies and implement strategic initiatives. This improved outlook together with recent majo
Slide 33: E. Closing
1H20 Results For personal use only Presentation . E. Closing © 2020 AUB Group Limited
Slide 34: Enhancing AUB Group's Earnings Potential
For personal use only ENHANCING AUB GROUP’S EARNINGS POTENTIAL Strategies to improve AUB’s organic growth and profitability are delivering 1 encouraging early results ▪ 25% Adjusted NPAT growth 1H20 Two complementary strategic acquisitions 2 ▪ Enhance AUB’s scale, capability and earnings with the po
Slide 35: Questions
For personal use only Questions Mike Emmett CEO and Managing Director Mark Shanahan CFO © 2020 AUB Group Limited
Slide 36: Thank You
For personal use only Thank You © 2020 AUB Group Limited
Slide 37: Notice
NOTICE SUMMARY INFORMATION For personal use only This document has been prepared by AUB Group Limited (ABN 60 000 000 715) (AUB). It is a presentation of general background information about AUB Group's activities current at the date of the presentation. It is information in a summary form and does
Slide 38: 1H20 Results Presentation Speaking Notes
1H20 Results Presentation For personal use only Speaking Notes Opening Thank you for joining Mark and I as we take you through the first half results. We have released a presentation to the ASX this morning and I will refer to selected pages on this call. Slide 2 – Key Messages There are four key
Slide 39: Speaking Notes: Australian and New Zealand Broking
Underlying commission and fee income grew mainly due to average commercial premium rate increases For personal use only of 6.2% The Australian broking EBIT margin grew 50bp to 25.5%. Slide 8 – New Zealand Broking – 1H20 The profit contribution from the division was $4.9m, up 55.2% largely refl
Slide 40: Speaking Notes: MGA Whittles Acquisition
Last week on 17th February we announced that AUB has agreed to acquire the balance of shares in the MGA For personal use only Whittles Group for $140m, this price reflecting an EBITA multiple of 10x. The details are reflected on slide 14. We anticipate this will be 8% EPS accretive on the basis we h
Slide 41: Speaking Notes: Austbrokers Express Cover
Slide 21 describes our third and most ambitious technology initiative. Austbrokers Express Cover is a quote- For personal use only to-bind system for use by Austbrokers members to simplify and improve the buying experience for their customers. The platform is powered by BizCover technology but is di