Aub Group Limited · ASX:AUB
Aub — Austbrokers Holdings — H1 2013 Earnings Presentation
36 slides from Aub's earnings presentation, Feb 25, 2013
Slide 1: First Half Year 2013 Results Presentation
AUSTBROKERS HOLDINGS LIMITED First Half Year 2013 Results Presentation Monday 25th February 2013 Mark Searles CEO & Managing Director Steve Rouvray CFO
Slide 2: Agenda
Agenda • Overview – Business Overview – 1HY 2013 Financial Highlights – 1HY 2013 Operational Highlights • 1HY 2013 Financial Performance • FY 2013 Outlook 1
Slide 3: Business Overview
Business Overview Insurance Broking Network Underwriting Agencies Top 4 broking network in Australia Act on behalf of insurers Owner driver model $160 million in premium Strong regional presence – all states Niche & general agencies – most classes SME base Presence in five states Corporate capabilit
Slide 4: Business Overview con’t
Business Overview con’t Owner Driver Model 20 50% owned 19 51% to 85% 4 100% 43 Businesses Broking Over 110 Locations Financial Services General & Specialist Insurance Broking Operations – Life & Brokers Network Superannuation Total of $1.3 billion base Over 85 Partner premium (premium Shareholder P
Slide 5: 1HY2013 Financial Highlights
1HY2013 Financial Highlights Adjusted NPAT up 20% Reported NPAT up Operating revenue up 118% 10% Market cap $474M at EPS up 17% Austbrokers 31st January 2013 Interim dividend per AUB share of broker share up 16% to 11 profits up 14.2% cents Underwriting Agency profits up 57% 4
Slide 6: 1HY2013 Operational Highlights
1HY2013 Operational Highlights Successful roll out of new arrangement for Acquisitions totaling Premium Funding – $15.5 million Hunter Premium Funding Austbrokers Appointment of new Business intelligence CEO reporting roll out 5
Slide 7: 1HY2013 Operational Highlights con’t
1HY2013 Operational Highlights con’t Acquisition Taggart Associates 1st July Acquisition BGA 2012 Network Acquisitions Insurance Brokers – 6 businesses / Tas 1st December 2012 portfolios Acquired remaining Life income up 24.7% 50% Insurics 1st July (10% ex acquisitions) 2012 Insurance Broker Network
Slide 8: 1HY2013 Operational Highlights con’t
1HY2013 Operational Highlights con’t Commenced Strata Insurance Underwriting Agency in JV Commenced Accident Increased total income & Health Underwriting 37.9% Agency in JV Austagencies Securing New Development of Start Underwriting Underwriters for Up Businesses Agencies Products Continued to inves
Slide 9: 1HY 2013 Financial Performance
1HY 2013 Financial Performance $’000 1HY 1HY % change 2013 2012 Broker Revenue (net of commission 131,311 121,595 8.0 Paid) Brokers & Agencies Profit 25,168 21,295 18.2 (AHL share) Profit (before tax and amortisation 19,833 16,539 19.9 of intangibles and sales of businesses) NPAT Reported 24,489 11,
Slide 10: Agenda
Agenda • Overview • 1HY 2013 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 2013 outlook 9
Slide 11: 1HY 2013 Results – Financial Statement Presentation
1HY 2013 Results – Financial Statement Presentation 1HY2013 1HY2012 Variance % $’000 $’000 Revenue from ordinary activities 80,690 58,988 36.7 Expenses from ordinary activities (58,700) (42,432) 38.3 Borrowing costs (1,547) (1,241) 24.7 20,443 15,315 33.5 Fair value adjustment to the carrying value
Slide 12: 1HY 2013 Reconciliation of Reported NPAT to Adjusted NPAT
1HY 2013 Reconciliation of Reported NPAT to Adjusted NPAT 1HY 1HY 2013 2012 $’000 $’000 Reported Profit attributable to members (NPAT) 24,489 11,214 Fair value adjustments to the carrying value of associates at the date at which they became controlled entities* (12,630) - Adjustment in contingent co
Slide 13: 1HY 2013 Compared to 1HY 2012 - Highlights
1HY 2013 Compared to 1HY 2012 - Highlights $’000 1HY 2013 1HY2012 Change Net Profit after Tax attributable to members (NPAT) 24,489 11,214 118% Underlying (Adjusted NPAT) 13,759 11,461 20% Earnings per share (NPAT) 43.4 cents 20.4 cents 112.7% Earnings per share (Adjusted NPAT) 24.4 cents 20.8 cents
Slide 14: NPAT Growth 1HY 2007 - 2013
NPAT Growth 1HY 2007 - 2013 25000 NPAT 20000 Adjusted NPAT 15000 10000 5000 0 2007 2008 2009 2010 2011 2012 2013 % increase Adjusted 28.3% 25.1% 14.3% 7.2% 21.3% 29% 118% % increase NPAT 14.6% 38% 12.6% 7.1% 25.9% 17% 20% NPAT - Net Profit after tax attributable to members Adjusted NPAT – Net profit
Slide 15: Earnings Per Share 1HY2007 - 2013
Earnings Per Share 1HY2007 - 2013 45 NPAT cents per share 40 Adjusted NPAT cents per share 35 30 25 20 15 10 5 0 2007 2008 2009 2010 2011 2012 2013 NPAT cents per share 9.3 11.7 13.3 14.1 16.3 20.4 24.4 Adjusted NPAT cents per share 9.3 12.9 14.5 15.3 18.4 20.8 43.4 Adjusted NPAT calculated on same
Slide 16: 1HY Compared to 2HY
1HY Compared to 2HY 25 $M 20 15 2HY Adjusted 1HY NPAT 10 5 0 2006 2007 2008 2009 2010 2011 2012 2013 Financial Year 2HY 64% 65% 59% 60% 61% 59% 58% 1HY 36% 35% 41% 40% 39% 41% 42% 15
Slide 17: Interim Dividend
Interim Dividend • 11.0 cents per share fully franked – up from 9.5 cents last year • Increase of 15.8% • Eps growth of 17.3% on an adjusted NPAT basis expected to moderate in 2HY 2013 • Eligible for reinvestment under Dividend Reinvestment Plan • DRP not being underwritten 16
Slide 18: Increase in Adjusted NPAT 1HY2013 vs 1HY2012
Increase in Adjusted NPAT 1HY2013 vs 1HY2012 $’000 15,000 14,500 14,000 13,500 13,000 12,500 12,000 11,500 11,000 10,500 10,000 1HY 2012 Corp Exp Tax Borrowing Costs Corp Income Austagencies Broker Profits 1HY 2013 Interest Adjusted NPAT 11,461 (458) (9) (14) 37 800 1,942 13,759 % Growth (4.0)% (0.1
Slide 19: Increase in Pre-Tax Broker Profits 1HY 2013 from 1HY 2012
Increase in Pre-Tax Broker Profits 1HY 2013 from 1HY 2012 $’000 38000 37000 36000 35000 34000 33000 32000 31000 30000 1HY 2012 Interest Profit Other Life Premium Increase in c&f 1HY 2013 Earnings Commissions Funding inc net of exps Profit 33,597 (580) 39 452 1,191 1,437 1,058 37,194 Growth % (1.7)%
Slide 20: Broker Profits as % of Broker Income
Broker Profits as % of Broker Income Profits (before tax) as a percentage of Broker Income 29 28 27 26 25 Including Austagencies 24 Insurance Broking Only 23 22 21 20 1HY06 1HY07 1HY08 1HY09 1HY10 1HY11 1HY12 1HY13 Total 19.2 20.7 25.2 25.6 25.2 27.3 27.3 28.5 Broking 25.0 25.4 25.1 27.6 27.7 28.3 B
Slide 21: Austagencies - 1HY 2013
Austagencies - 1HY 2013 • NPBT up 57% (54% excluding acquisitions) to $3.142 million • Commission and fee income up 37% (31% excluding acquisitions) to $12.238 million • Expenses up 29% (21% excluding acquisitions) • Increased margin from 25.0% to 29.9% • Growth driven largely through start ups such
Slide 22: Balance Sheet & Cash Flow
Balance Sheet & Cash Flow • Balance sheet impacted by associates becoming controlled entities during period including adjustment to carrying value $12.6 million – Increase in intangibles and goodwill - $43.8 million – Increase in trust bank and receivables (compared 12 / 11) – Borrowings are $41.4 m
Slide 23: Funding
Funding • Facility from St George Bank – limit $38 million at holding company level – $27 million drawn – $11 million undrawn • Facility term is 5 years to August 2013. Reached agreement with St George on terms for new $40 million three year facility – in process of legal documentation • Estimated $
Slide 24: Agenda
Agenda • Business Overview • 1HY 2013 Financial Performance • FY 2013 Outlook – Market conditions – Strategy – Outlook 23
Slide 25: Market Conditions FY 2013
Market Conditions FY 2013 • Premium rates – Underwriters continue to seek increases particularly property classes – Competition restrains extent of increases achievable – Premium rate movements vary across classes • Lower interest rate environment • Moderate economic growth forecast but patchy econo
Slide 26: Strategies FY 2013
Strategies FY 2013 • Optimisation of operating model to continue to underpin future growth across the group • Growth – acquisition activity to continue – focus on increasing cross sell of insurance products – continue to expand underwriting agency capability through product and acquisition growth •
Slide 27: Outlook FY 2013
Outlook FY 2013 • Premium rate increases being sought by underwriters • Economic outlook remains uncertain – impact on SME sector • Insurance broking industry consolidation – continuing acquisition opportunities • Further growth and development in underwriting agency business with continued investme
Slide 28: Appendix 1
Appendix 1 ra | BS austbrokers
Slide 29: 1HY 2013 Results – Management Presentation
1HY 2013 Results – Management Presentation 1HY 2013 1HY 2012 VARIANCE VARIANCE $'000 $'000 $'000 % BROKER OPERATIONS COMMISSION AND FEES 105,074 97,897 7,177 7.3% LIFE INCOME 6,018 4,827 1,191 24.7% PROFIT COMMISSIONS 241 202 39 19.3% PREMIUM FUNDING 11,654 10,217 1,437 14.1% INTEREST 5,434 6,014 (5
Slide 30: 1HY 2013 Results – Management Presentation
1HY 2013 Results – Management Presentation $'000 1HY 2013 1HY 20112 VARIANCE VARIANCE $ % CONSOLIDATED BROKERS COMMISSION AND FEES 44,238 30,852 13,386 43.4% LIFE INCOME 4,025 2,468 1,557 63.1% PROFIT COMMISSIONS 207 166 41 24.7% PREMIUM FUNDING 4,121 2,684 1,437 53.5% INTEREST 1,812 1,769 43 2.4% O
Slide 31: Appendix 2
Appendix 2 ra | BS austbrokers
Slide 32: Austagencies Results – 1HY 2013
Austagencies Results – 1HY 2013 PROFIT IMPACT $’000 1HY 2013 1HY 2012 INCR / (DECR) INCR / (DECR) % Commission and fees 12,238 8,913 3,325 37.3 Profit commission 290 30 260 866.7 Claims handling fees 69 45 24 53.3 Interest 348 402 (54) 13.4 Other income - - - - 12,945 9,390 3,555 37.9 Expenses (9,07
Slide 33: Appendix 3
Appendix 3 ra | BS austbrokers
Slide 34: Balance Sheet
Balance Sheet 31 Dec 2012 30 June 2012 Assets $000 $000 Current Assets Cash at Bank 44,800 40,743 Cash at Bank – Trust 89,033 74,859 Receivables 96,747 117,167 Other financial assets 1,321 1,316 Total Current Assets 231,901 234,085 Non Current Assets Receivables 50 261 Plant Equipment 7,338 5,058 In
Slide 35: Balance Sheet (con’t)
Balance Sheet (con’t) 31 Dec 2012 30 June 2012 Liabilities $000 $000 Current Liabilities Payables 179,196 181,420 Tax Liabilities 3,659 3,655 Provisions 8,942 8,418 Interest bearing loans and borrowings 32,178 1,130 Total Current Liabilities 223,975 194,623 Non Current Liabilities Provisions 2,132 1
Slide 36: Cash Flow
Cash Flow 1HY2013 $’000 1HY2012 $’000 Cash flows from operations 21,215 15,292 Cash flows from investing activities - Acquisitions (7,011) (1,709) - Share issues to non controlling entities 2,243 - - Proceeds received from new consol ent. 9,859 - - Plant equipment (698) (1,110) - Sales proceeds / lo