Aub Group Limited · ASX:AUB
Aub — H1 2021 Earnings Presentation
47 slides from Aub's earnings presentation, Feb 23, 2021
Slide 1: Half Year FY2021 Results - Announcement and Investor Presentation
23 February 2021 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 Half Year FY2021 Results - Announcement and Investor Presentation Please find attached for immediate r
Slide 2: 1H21 Performance Overview
1H21 Performance Overview For personal use only A record 1H21 result that positions AUB Group for another strong year Summary — Underlying NPAT1 $30.7mn (1HFY20: $21.3mn) up 44.2%. — Underlying earnings per share 41.47 cents up 43.2%. — Mixture of underlying organic and acquisition driven growth pri
Slide 3: Highlights by operating division
our two key technology platforms, make further strategic investments including in 360 Underwriting and Experien and to continue our strategy to consolidate and scale existing businesses. For personal use only These strategic initiatives leave us poised for strong, continued growth in the second half
Slide 4: Capital Management, Dividends and FY21 Outlook
Capital Management Look through gearing2 has decreased to 34.0% at 31 December 2020 (30 June 2020: 34.2%). For personal use only AUB Group has undrawn facilities of $17.8mn at 31 December 2020 (30 June 2020: $58.0mn). Dividends The Board has determined a fully franked interim dividend of 16.0
Slide 5: Financial Results Summary
AUB 1H21 PRESENTATION OF FINANCIAL RESULTS TABLES For personal use only Table 1 Financial Results Summary FIN AN C IAL R ESU L TS SU MMAR Y 1H21 1H20 Var ianc e $ 000 $ 000 % 1 Revenue from ordinary activities 167,990 162,899 3.1% Underlying NPAT 2 30,747 21,327 44.2% Profit before tax 36,889 25,961
Slide 6: Reconciliation of Underlying NPAT to Reported NPAT
Table 2 Reconciliation of Underlying NPAT to Reported NPAT1 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 paymen
Slide 7: 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. In order to give a more comprehensive view of performance, the following table aggregates 100% of these For personal use only businesses’ revenu
Slide 8: 1H21 Results
For personal use only 1H21 Results Investor Presentation 23 February 2021 Mike Emmett CEO and Managing Director Mark Shanahan CFO 1
Slide 9: Key Messages
KEY MESSAGES For personal use only 1 2 3 4 5 6 Very strong Strong Ongoing Underwriting Strategic Exit Upgrade to 1H21 result, progress with growth in Agencies from Health & profit guidance underlying Execution BizCover, restructured, Rehabilitation, reflecting NPAT growth Priorities leading acquired
Slide 10: Financial Highlights 1H21
FINANCIAL HIGHLIGHTS 1H21 Underlying NPAT growth and EBIT Margin expansion underpinned by strong revenue growth For personal use only 1H21 1H20 Movement Underlying Revenue1 $310.9mn $272.1mn 14.3% Underlying Expenses1 $213.6mn $204.4mn 4.5% Underlying EBIT Margin1 31.3% 24.9% 640bps Underlying NPAT2
Slide 11: 1H21 Financial Performance: Divisional
1H21 FINANCIAL PERFORMANCE: DIVISIONAL Excellent results in Australian Broking with a 740bps improvement in margins as benefits of strategic initiatives begin to be realised For personal use only AUSTRALIAN AUSTRALIAN HEALTH AND OPERATING Vs. 1H20 NEW ZEALAND REHABILITATION comparative period BROKIN
Slide 12: Australian Broking: Reaping Rewards
AUSTRALIAN BROKING: REAPING REWARDS The performance in Australian Broking is a result of recent initiatives that will continue to drive sustainable improvement in revenue and underlying cost drivers For personal use only Austbrokers Revenue and Expense “Jaws”: Calendar Year 18 - 20 CY18 to CY20 Reve
Slide 13: Exceptional Performance
EXCEPTIONAL PERFORMANCE Strong growth trajectory: 29% revenue & 67% profit growth since investment with significant potential for further growth via expansion into growth markets For personal use only Since AUB Group’s investment in Feb’20 (excludes JobKeeper) New Growth Opportunities Cumulative Rev
Slide 14: Vision: To Be the Way SMEs Insure Their Business
VISION: TO BE THE WAY SMEs INSURE THEIR BUSINESS MISSION: TAKE THE HASSLE OUT OF BUSINESS INSURANCE For personal use only 1 Leading full lifecycle SME insurance platform in AU and NZ – operates across entire value chain, no underwriting risk Lifetime Value/Customer 2 Massive addressable market, stro
Slide 15: Established in SME Insurance Market
ESTABLISHED IN SME INSURANCE MARKET Positioned for ongoing growth – multi-channel presence underpinned by a comprehensive offering For personal use only BizCover Channel Multi-channel market penetration leverages market leading platform while investment in brand drives operational leverage BizCover
Slide 16: Reinvigorating the Agencies Division
REINVIGORATING THE AGENCIES DIVISION Restructure will deliver growth while acquisition of 360 Underwriting will accelerate outcomes and unlock synergy benefits For personal use only Austagencies Restructure of Austagencies aligns capabilities (Underwriting Agencies) to better support Austbrokers a
Slide 17: Exit from Health & Rehabilitation on Track
EXIT FROM HEALTH & REHABILITATION ON TRACK Sale of Altius completes exit from non-core division enabling increased focus on Broking & Agencies For personal use only Transaction Overview AUB Group agreed on 20 January 2021 to sell its shareholding in Altius Group Holdings to Cash proceeds from sale
Slide 18: 1H21 Financial Performance: Overview
1H21 FINANCIAL PERFORMANCE: OVERVIEW UNPAT growth in 1H21 underpinned by strong organic growth complemented by healthy profits from acquisitions For personal use only 1H20 to 1H21 Underlying NPAT1 Breakdown ($mns) 1H17 to 1H21 Underlying NPAT1 Growth vs Prior Comparative Periods (%) 44.2% 36.2% 30.7
Slide 19: AUB Corporate Cashflow Overview
AUB CORPORATE CASHFLOW OVERVIEW Operating cash generated of $33.5mn (excluding impact of Altius sale) For personal use only AUB Corporate Entity Cash Movement ($mns) Operating cash generated of $33.5mn3 40.0 11.1 61.7 44.6 25.8 24.6 13.0 FY21 Opening Dividend Received Net Corporate Expenses Increase
Slide 20: Shareholder Returns
SHAREHOLDER RETURNS Strong uplift of 43.2% in underlying EPS underpinned by excellent organic and acquisition growth For personal use only Underlying Earnings Per Share1 (Cents per share) 43.2% 12.0% 0.2% 41.47 25.80 25.86 28.96 1H18 1H19 1H20 1H21 Dividend Per Share (Cents) 32.0 32.5 35.5 10.3% 7.4
Slide 21: FY21 Guidance: Upgrade
FY21 GUIDANCE: UPGRADE Guidance: Underlying NPAT for FY21 in the range of $63.0mn - $65.0mn, representing growth of 17.9% - 21.7% over FY20 For personal use only FY21 Underlying NPAT1 by Half ($mns) Guidance upgrade driven largely by 1H21 63.0 - 65.0 outperformance, previous 2H21 forecast 3.4 26.0
Slide 22: Thank You
For personal use only 15 Thank You
Slide 23: Appendices
1H21 INVESTOR PRESENTATION For personal use only 17 A. 1H21 Financial Results Detail 29 B. AUB Group Portfolio Overview 37 C. AUB Group Business Overview Appendices 16
Slide 24: A. 1H21 Financial Results Detail
For personal use only Appendices A. 1H21 Financial Results Detail 17
Slide 25: 1H21 Divisional Performance Breakdown
1H21 Divisional Performance Breakdown For personal use only 1H20 to 1H21 Underlying NPAT1 ($mns) 44.2% 0.3 0.3 1.0 1.8 4.6 30.7 14.8 21.3 Pre-Tax 1H20 Australian Broking New Zealand Australian Agencies Health and Net Corporate result2 Tax 1H21 Rehabilitation 1. Underlying NPAT is used by management
Slide 26: Australian Broking
Australian Broking For personal use only Profit contribution to AUB Group – Pre-tax 60.1% increase in pre-tax profit contribution from Australian Broking to $39.3mn 1H21 1H20 Movement ($) Movement (%) (1H20: $24.6mn), underpinned by excellent organic and acquisition growth ($mns) Commission and fe
Slide 27: New Zealand
New Zealand For personal use only Profit contribution to AUB Group – Pre-tax Pre-tax profit contribution $5.2mn, an increase of 5.9% on 1H20 1H21 1H20 Movement ($) Movement (%) ($mns) Flat premium rates observed towards the end of 1H21 Commission and fee income (net) 25.1 24.8 0.3 1.2% Premium F
Slide 28: Australian Agencies
Australian Agencies For personal use only Profit contribution to AUB Group – Pre- Movement Movement 4.8% decrease in pre-tax profit contribution from Australian Agencies to $5.3mn 1H21 1H20 tax ($mns) ($) (%) (1H20: $5.5mn) Commission and fee income (net) 28.1 28.4 (0.3) (1.1%) COVID-19 impacted
Slide 29: Health and Rehabilitation
Health and Rehabilitation For personal use only Profit contribution to AUB Group – Pre- Movement Movement 58.4% increase in pre-tax profit from Health and Rehabilitation to 1H21 1H20 tax ($mns)3 ($) (%) $2.8mn (1H20: $1.8mn) Underlying Revenue1 20.9 27.5 (6.6) (23.9%) The improved performance wa
Slide 30: Strong Balance Sheet and Capital Position
Strong Balance Sheet and Capital Position For personal use only The business continues to be strongly cash-generative. Consolidated Balance Sheet Overview Cash generated from operations, together with Corporate ($mns) 1H21 FY20 Movement debt facilities have been invested in quality growth assets C
Slide 31: AUB Group Debt
AUB Group Debt For personal use only Total AUB Group Debt on a look-through basis1 ($mns) 286.6 (7.2) (1.6) 255.2 20.0 40.2 18.4 36.0 34.0% 43.2 1H21 AUB Group Gearing Ratio4 192.0 232.2 (FY20 34.2%) Total AUB Group Corporate Debt2 Consolidated Entity Associates Total AUB Group Debt Debt 30 June 202
Slide 32: Reconciliation of Reporting NPAT to Underlying NPAT
A1.0 Reconciliation of Reporting NPAT to Underlying NPAT1 For personal use only 1H21 1H20 Movement (%) ($000) ($000) Net Profit after tax attributable to equity holders of the parent 23,981 16,596 44.5% Add back non controlling interest as per financial statements 5,273 2,325 Add back tax expense as
Slide 33: Management Presentation of Results
A2.1 Management Presentation of Results1 For personal use only 1H21 ($’000) 1H20 ($’000) Movement ($’000) Movement (%) Australian Broking revenue 233,407 187,952 45,455 24.2% Australian Broking expenses (156,676) (140,036) (16,640) 11.9% EBIT - Australian Broking 76,731 47,916 28,815 60.1% New Zeala
Slide 34: Management Presentation of Results
A2.2 Management Presentation of Results1 For personal use only 1H21 ($’000) 1H20 ($’000) Movement ($’000) Movement (%) Australian Broking revenue 233,407 187,952 45,455 24.2% Australian Broking expenses (158,247) (143,033) (15,214) 10.6% Net profit - Australian Broking 75,160 44,919 30,241 67.3% Pro
Slide 35: Consolidated Cash flow Statement
A3.0 Consolidated Cash flow Statement For personal use only 1H21 1H20 ($’000) ($’000) Cash flows from operations 50,643 32,861 Cash flows from investing activities Acquisitions (35,324) (8,929) Net Sales proceeds (net of cash reduced on deconsolidation) 2,395 3,184 Plant equipment / Other (1,895) (1
Slide 36: B. AUB Group Portfolio Overview
For personal use only Appendices B. AUB Group Portfolio Overview 29
Slide 37: Market Sizing and AUB Group Share
Market Sizing and AUB Group Share For personal use only Australian Insurance Market AUB ~11% AUB Share of the 27% Intermediated GI Market Total 2020 Premium $92bn 46% ~22% 27% AUB Share of the GI SME AUB Segment General Insurance Life Insurance Health Insurance Data sources: APRA Quarterly General I
Slide 38: Insurance Portfolio – Premium and Size
Insurance Portfolio – Premium and Size For personal use only Annual Premium1 ($bns) 3.4 3.2 ~$3.6bn2 Premium under 2.8 influence across the AUB 1.8 network 1.8 2H 1.5 1.8 ~1.4mn Australian Broking Policies written 1.8 within the AUB 1.6 network (FY20) 1.4 1H 1.3 FY18 FY19 FY20 FY21 1. Total includes
Slide 39: Stable and Predictable Operational Drivers
Stable and Predictable Operational Drivers For personal use only ~$3.6bn1 Premium under influence across ~9% 89% the AUB network increase in average premium 1H21 Premium per client CAGR over the last 3 years2 Retention3 ~1.4m …supported by a small but (excl. rate increases) Policies written consiste
Slide 40: Diversified Australian Broking Portfolio Mix
Diversified Australian Broking Portfolio Mix1 For personal use only Client Segment Mix Product Line Mix Geography Mix Insurer Mix Corporate Business PI NSW WA NT Allianz National Transport Insurance 26% 19% 6% 38% 12% 2% 12% 3% Medium Enterprise Liability Motor - Fleet VIC SA TAS QBE SURA 25% 11% 5%
Slide 41: Group Insurance Portfolio Mix: Product and Insurer
Group Insurance Portfolio Mix: Product and Insurer For personal use only Portfolio Mix – Premium by Product / Risk Line Portfolio Mix – Premium by Insurer 11% 19% 24% 32% 10% 4% 11% 8% 4% 2% 4% 2% 8% 8% 4% 2% 4% 3% 7% 8% 4% 5% 5% 5% 6% Business Workers Comp QBE CGU Ando Liability Motor - Private All
Slide 42: Insurance Portfolio Mix: Category and Geography
Insurance Portfolio Mix: Category and Geography For personal use only Portfolio Mix – by Category (%) Portfolio Mix – by Geography (%) 12% 13% NT 2% QLD 12% WA 8% NSW SA 29% 8% ACT 2% 87% 88% VIC 15% Commercial Lines Personal Lines NZ TAS 1% 23% Portfolio mix is based on available data from key Aust
Slide 43: Insurance Operations: Reach and Scale
Insurance Operations: Reach and Scale For personal use only >450 NT ~11% 5 locations AUB Share of the QLD locations 13% 75 locations Intermediated GI Market (AU) WA 29 locations SA NSW 29 locations 139 locations >3,000 ACT 8 locations ~22% AUB Share of the GI staff 87% VIC SME Segment (AU) 54 locati
Slide 44: C. AUB Group Business Overview
For personal use only Appendices C. AUB Group Business Overview 37
Slide 45: AUB Group – An Overview
AUB Group – An Overview1 For personal use only $3.6BN+ GWP2 17 STRATEGIC INSURANCE 64 broking partner businesses. INSURANCE BROKING OF $3.0BN VIA EQUITY PARTNERSHIPS AUSTRALIAN Established complementary capabilities in Life AND NETWORK PARTNERS | SPECIALIST Insurance Broking, Premium Funding, Cl
Slide 46: Our Board of Directors
Our Board of Directors For personal use only David Clarke Robin Low Cath Rogers Non-Executive Chair, Chair of the Nominations Committee Non-Executive Director, Chair of the Audit & Risk Committee Non-Executive Director 40 years experience in investment Former PwC partner with over 30 Previousl
Slide 47: Notice
Notice For personal use only SUMMARY INFORMATION 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’s activities current at the date of the presentation. It is information in a summary form and does not pu