Colonial — FY1999 Earnings Presentation
40 slides from Colonial's earnings presentation, 2000
Slide 1: Annual Results 1999
} Colonial. Annual Results 1999
Slide 2: Success in delivering strategy generated growth and performance
Success in delivering strategy generated growth and performance Q Reinforced position as leading ‘allfinanz’ company Q Increased scale and efficiency through organic growth and strategic acquisitions ± Nicholas-Applegate ± Trust Bank ± National Bank of Fiji ± Hambro Grantham ± Stewart Ivory Q Legal
Slide 3: Success in delivering strategy generated growth and performance
Success in delivering strategy generated growth and performance Q Maintained commitment to building strong businesses in Asia ± growth of operations in Hong Kong and Thailand ± joint venture companies established in China and Vietnam Q Created strong technological platform for ongoing growth and dev
Slide 4: Profitability up 49%
Profitability V 49% Net profit after tax Q NPAT $455 million A$m 500 ± EPS V 26% to 45.9 cents 400 300 Q Final dividend 11 cents 200 ± total 1999 dividend 100 20 cents 0 96 97 98 99
Slide 5: Group assets held and under management
Group assets held and under management V to $87.3 billion Q Assets well balanced between business streams A$b 90 80 70 Banking 60 50 Insurance & super 40 Funds 30 m anagem ent 20 10 0 93 94 95 96 97 98 99
Slide 6: Strong growth in new business
Strong growth in new business Q Group insurance and superannuation new business V 97% to $3.7b Q Group new lending V 11% to $6.3b Q Group funds management inflows V 53% to $8.7b
Slide 7: Efficient and flexible balance sheet management
Efficient and flexible balance sheet management Q Gearing ratio 24% debt to total capital A$b % 8 35 Shareholders' equity 6 30 Group debt 4 25 Bank subordinated debt 2 20 Group gearing ratio 0 15 1998 1999 ± Capital adequacy ratio 11.8%
Slide 8: Diversity underpins performance
Diversity underpins performance (A$m) 1999 1998 Australian Financial Services - banking 139 125 - insurance and superannuation 185 87 324 212 International Financial Services - Colonial UK 57 68 - Colonial NZ 35 12 - CMG Asia 33 14 125 94 Colonial First State Investments 70 42 519 348 Head office an
Slide 9: Australian Financial Services profit contribution
Australian Financial Services – profit contribution V 53% (A$m) 1999 1998 Australian Financial Services - banking 139 125 - insurance and superannuation 185 87 324 212 International Financial Services - Colonial UK 57 68 - Colonial NZ 35 12 - CMG Asia 33 14 125 94 Colonial First State Investments 70
Slide 10: Australian Financial Services – P & L
Australian Financial Services – P & L (A$m) 1999 1998 % change Net interest income 448 420 6.7 Other operating income 394 290 35.9 Total operating income 842 710 18.6 Operating expenses 411 411 – Charge for doubtful debts 82 28 192.9 Net profit before tax 349 271 28.8 Tax expense 25 59 (57.6) Net pr
Slide 11: Other operating income up 36%
Australian Financial Services – other operating income V 36% A$m 400 Insurance & super operating margin 300 Insurance & super 200 investment income CST non-interest 100 income 0 1998 1999
Slide 12: Increased scale and efficiency
Australian Financial Services – increased scale and efficiency Q Success of Legal & General and Prudential integration ± $109 million in cost savings within AFS ± 2 years ahead of schedule Q Insurance and superannuation result V 113% Q Value of one year’s sales V 24%
Slide 13: Increased scale and efficiency
Australian Financial Services – increased scale and efficiency Q Greater distribution capacity boosted sales result ± broad retail, wholesale, corporate and licensed channels Q Cost-to-income ratio W to 48.8% ± 57.9% in 1998
Slide 14: Insurance and super new business up 120%
Australian Financial Services – insurance and super new business V 120% A$b 3.5 ± master funds / trusts 3 V 223% 2.5 ± 8.4% market share 2 in master funds 1.5 ± V 28% on ‘like for 1 like’ pre-acquisition 0.5 comparison 0 1998 1999 Master funds / trusts Risk & savings Annuities, bonds, stat fund prod
Slide 15: Insurance & super margin on services profit up 113%
Australian Financial Services – insurance & super Margin on Services profit V 113% (A$m) 1999 H1 99 1998 Planned profit margins 62 36 32 Experience variation 28 9 14 Capitalised loss reversals 16 3 3 Operating margins 106 48 49 Investment earnings on shareholder capital 79 38 38 Net profit after tax
Slide 16: Expanded banking operation
Australian Financial Services – expanded banking operation Q Colonial State Bank profit V 11% to $139m Q Trust Bank acquisition ± leading position in new banking market Q Expansion of franchised retail network ± rollout of in-store supermarket banking ± ‘single site’ franchises and community banking
Slide 17: Lending growth
Australian Financial Services – lending growth Q Total loans outstanding V 27% to $20b A$b 20 15 Business 10 Consumer 5 0 1998 1999
Slide 18: Cross-selling success
Australian Financial Services – cross-selling success Q ‘Allfinanz’ cross-sell ratio boosted to 21% ± 42% of Spring home loan sale customers became ‘allfinanz’ customers Q Sales via retail network ± master funds and annuities V 200% Q Cross-selling through wholesale and licensed sales channels
Slide 19: Successful core banking system replacement
Australian Financial Services – successful core banking system replacement Q All data smoothly transferred ± minimal customer impact Q Effective and efficient Systematics banking system ± Vision Plus credit card processing package Q Capacity for sustained growth and international leverage
Slide 20: Australian Financial Services liabilities
Australian Financial Services liabilities Retail deposits LT debt / other liabilities V 25% V 11% A$b A$b 14 12 12 10 LT debt 10 8 issues 8 6 Other 6 liabilities 4 4 2 2 0 0 1998 1999 1998 1999
Slide 21: International Financial Services profit contribution
International Financial Services – profit contribution V 33% (A$m) 1999 1998 Australian Financial Services - banking 139 125 - insurance and superannuation 185 87 324 212 International Financial Services - Colonial UK 57 68 - Colonial NZ 35 12 - CMG Asia 33 14 125 94 Colonial First State Investments
Slide 22: Profit contribution – Colonial UK
Profit contribution – Colonial UK (A$m) 1999 1998 Australian Financial Services - banking 139 125 - insurance and superannuation 185 87 324 212 International Financial Services - Colonial UK 57 68 - Colonial NZ 35 12 - CMG Asia 33 14 125 94 Colonial First State Investments 70 42 519 348 Head office
Slide 23: Colonial UK highlights
Colonial UK highlights Q Sales growth, strong result in lending ± mortgages V 166% ± other lending V 46% Q New business losses W 42% to $12m Q Development of sales force Q Cost efficiencies
Slide 24: Colonial UK earnings
Colonial UK earnings (A$m) 1999 1998 Planned profit margins 32 37 Experience variation 10 (6) New business losses (12) (22) Operating margins 30 9 One-offs – including Y2K and regulatory review costs (12) (8) Investment earnings on shareholder capital 39 67 Net profit after tax – shareholder 57 68
Slide 25: Profit contribution – Colonial New Zealand
Profit contribution – Colonial New Zealand (A$m) 1999 1998 Australian Financial Services - banking 139 125 - insurance and superannuation 185 87 324 212 International Financial Services - Colonial UK 57 68 - Colonial NZ 35 12 - CMG Asia 33 14 125 94 Colonial First State Investments 70 42 519 348 Hea
Slide 26: Colonial NZ earnings up 192%
Colonial NZ earnings V 192% (A$m) 1999 1998 Planned profit margins 25 7 Experience variation (2) (5) New business losses - (1) Operating margins 23 1 Investment earnings on shareholder capital 12 11 Net profit after tax – shareholder 35 12
Slide 27: Colonial NZ – benefiting from increased scale
Colonial NZ – benefiting from increased scale Q Increased scale ± NZ’s 2nd largest life insurer Q Successful integration ± annualised cost savings A$20m ± cost-to-income ratio W to 17.1% (27.6% at Dec 98) Q Retention and growth of distribution network Q New business sales V 129% Q Repackaged product
Slide 28: Profit contribution – CMG Asia
Profit contribution – CMG Asia (A$m) 1999 1998 Australian Financial Services - banking 139 125 - insurance and superannuation 185 87 324 212 International Financial Services - Colonial UK 57 68 - Colonial NZ 35 12 - CMG Asia 33 14 125 94 Colonial First State Investments 70 42 519 348 Head office and
Slide 29: CMG Asia – strong new business growth
CMG Asia – strong new business growth Q Hong Kong 5th for new business ± new business V 148% ± sales force development, 41% agency growth ± pensions business established pre-MPF Q Thailand 3rd for new business ± 9% market share ± new business V 62%
Slide 30: CMG Asia – business development
CMG Asia – business development Q JV company established in Shanghai Q Vietnam insurance licence Q Banking acquisition in Fiji Islands
Slide 31: CMG Asia embedded value up 24%
CMG Asia embedded value V 24% Q Value of one year’s sales V 100% to A$30m 31 Dec 98 A$490m 31 Dec 99 A$607m Hong Kong - 65% Hong Kong - 67% Thailand - 12% Thailand - 10% Philippines - 12% Philippines - 9% China / Vietnam - 1% China / Vietnam - 6% Fiji - 6% Fiji - 5% Indonesia - 2% Indonesia - 2% Mal
Slide 32: CMG Asia earnings up 136%
CMG Asia earnings V 136% (A$m) 1999 1998 Planned profit margins 22 11 Experience variation (13) (8) New business losses (8) (2) Operating margins 1 1 Investment income on shareholder capital 32 11 H1 1998 earnings (non-MoS) - 2 Net profit after tax 33 14
Slide 33: Colonial First State Investments – profit contribution
Colonial First State Investments – profit contribution V 67% (A$m) 1999 1998 Australian Financial Services - banking 139 125 - insurance and superannuation 185 87 324 212 International Financial Services - Colonial UK 57 68 - Colonial NZ 35 12 - CMG Asia 33 14 125 94 Colonial First State Investments
Slide 34: Colonial First State Investments – sustained growth and performance
Colonial First State Investments – sustained growth and performance Q Inflows of external funds V 53% to $8.7b Q Completion of Legal & General and Prudential integration ± annualised cost savings of $33m ± maintained excellent investment performance Q Nicholas-Applegate acquisition ± boosted Asian b
Slide 35: Colonial First State Investments – sustained growth and performance
Colonial First State Investments – sustained growth and performance Q HK business positioned for Mandatory Provident Fund Q Australian listed property trusts merged Q Hambro Grantham acquisition Q Australian ‘Fund Manager of the Year’
Slide 36: Colonial First State Investments – sustained growth and performance
Colonial First State Investments – sustained growth and performance Q Developing credentials in UK market ± retail product launch ± hub for international equities ± Stewart Ivory acquisition expands UK capabilities
Slide 37: Colonial First State Investments – sustained growth and performance
Colonial First State Investments – sustained growth and performance Q Restructure and consolidation of NZ product range ± listed property trust attracted NZ$53m external funds ± rating from Morningstar Q Launch of SmartShare Online Internet share trading
Slide 38: Colonial First State Investments – $54.9b funds under management
Colonial First State Investments – $54.9b funds under management A$b 60 50 40 30 20 10 0 94 95 96 97 98 99 External funds under overlay management External Internal
Slide 39: Colonial First State Investments – cost-to-income ratio 60.4%
Colonial First State Investments – cost-to-income ratio 60.4% 65 60 55 Dec 97 Dec 98 Dec 99
Slide 40: Focus on delivering group vision produced strong performance
Focus on delivering group vision produced strong performance Q Greater scale Q Increased efficiency Q Uniquely positioned business Q Centralisation of support functions ± efficient groupwide use of support services ± enhanced customer focus