Aub Group Limited · ASX:AUB
Aub — Austbrokers Holdings — FY2010 Earnings Presentation
33 slides from Aub's earnings presentation, Aug 26, 2010
Slide 1: Cover letter to ASX: Presentation on Results
For personal use only 26th August 2010 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 Year ended 30 June 2010 Attached for immediate release is Austbrokers Holdings Lim
Slide 2: Financial Year 2010 Results Presentation
For personal use only AUSTBROKERS HOLDINGS LIMITED Financial Year 2010 Results Presentation Thursday 26th August 2010 Lach McKeough CEO Steve Rouvray CFO
Slide 3: Agenda
Agenda For personal use only • Overview – Business Overview – FY 2010 Business Highlights – FY 2010 Financial Highlights • FY 2010 Financial Performance • FY 2011 Outlook 1
Slide 4: Business Overview
Business Overview For personal use only • Austbrokers is one of top four insurance broking networks in Australia – Over 1,300 personnel engaged in the business – $1.3 billion in gross written premiums placed – Wide geographical spread over 80 locations – Regional presence – Solid SME business base –
Slide 5: Business Overview (con't)
Business Overview (con’t) For personal use only • Insurance Broking owner-driver model – 41 member broker firms • 22 50% owned • 16 51% - 85% owned • 3 100% owned • Underwriting agency business – Austagencies are authorised to write business on behalf of licensed insurers – no underwriting risk • Wr
Slide 6: FY 2010 Highlights
FY 2010 Highlights For personal use only • Acquisitions Direct – 50% Austral Insurance Brokers – Perth on 30 June 2009 • Acquisitions in the Network – North Coast insurance Brokers acquired 80% of Ballina Insurance Brokers – Austbrokers AEI Transport acquired 80% of Chegwyn Corporate Services – SGP
Slide 7: FY 2010 Highlights (con't)
FY 2010 Highlights (con’t) For personal use only • Premium Funding – Continuing promotion and development of Joint Venture with Pacific Premium Funding (GE Company) – contributed $11 million of total premium funding income – up 20% – Exercised option to renew agreement for further 3 years to end of
Slide 8: Network Premium Distribution by Class
Network Premium Distribution by Class For personal use only 6
Slide 9: FY 2010 Highlights
FY 2010 Highlights For personal use only • Synergies / Efficiencies – Continued transfers of brokers to central DataCentre co- located with Telstra – now 32 businesses or 78% – Establishment of Austbrokers Business Centre to provide back office services – now servicing 15 businesses • IBNA Joint Ven
Slide 10: Profit Growth 2006 - 2010
Profit Growth 2006 - 2010 For personal use only 25 20 $20.165 $M 15 10 5 0 2006 2007 2008 2009 2010 Profit – Net profit after tax before amortisation of intangibles and profits on businesses / portfolios sold (Adjusted NPAT) 8
Slide 11: Earnings Per Share FY 2006 - 2010
Earnings Per Share FY 2006 - 2010 For personal use only 40 35 30 Cents 25 20 15 10 5 0 2006 2007 2008 2009 2010 Based on Adjusted NPAT 9
Slide 12: Agenda
Agenda For personal use only • Overview • FY 2010 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 2011 outlook 10
Slide 13: FY 2010 Results – Management Presentation
FY 2010 Results – Management Presentation For personal use only FY 2010 FY 2009 Variance $’000 $’000 % Revenue from ordinary activities 105,610 97,048 8.8 Expenses from ordinary activities (76,562) (71,795) 6.6 Borrowing costs (2,451) (2,289) 7.1 26,597 22,964 15.8 Profit from sale of interests in s
Slide 14: FY 2010 Profit after tax reconciliation
FY 2010 For personal use only Profit after tax Reconciliation of reported result to operating NPAT before profits relating to divestments and amortisation of intangibles. FY FY 2010 2009 $ ‘000 $ ‘000 Reported Profit attributable to members 18,189 15,903 Profits after tax on sale of businesses (572)
Slide 15: FY 2010 Compared to FY 2009 - Highlights
FY 2010 Compared to FY 2009 - Highlights For personal use only • Adjusted NPAT for FY 2010 at $20.2 million (2009 $18.0 million) – Adjusted NPAT excludes $0.6 million profits on sale of businesses and $2.6 million amortisation of intangibles expense – exceeded 2009 Adjusted NPAT by $2.2 million – 12
Slide 16: 1HY Compared to 2HY
1HY Compared to 2HY For personal use only 25 $M 20 15 Adjusted 2HY NPAT 1HY 10 5 0 2006 2007 2008 2009 2010 Financial Year 2HY 64% 65% 59% 60% 61% 1HY 36% 35% 41% 40% 39% 14
Slide 17: Dividend
Dividend For personal use only Dividend • 15.0 cents per share fully franked – up from 13.5 cents last year • Subject to DRP • DRP shortfall to be underwritten subject to satisfactory terms • Shares will be issued at 2.5% discount to five day VWAP • Full year dividend 22.5 cents per share up 9.8% on
Slide 18: FY 2010 Results – Broker Operations
FY 2010 Results – Management Presentation For personal use only FY 2010 FY 2009 VARIANCE VARIANCE $'000 FHY 2009 $'000 FHY 2008 $'000 VARIANCE % VARIANCE BROKER OPERATIONS $'000 $'000 $'000 % COMMISSION ANDCONSOLIDATED FEES BROKERS 169,301 155,784 13,517 8.7% LIFE INCOME 8,107 7,710 397 5.1% COMMISS
Slide 19: FY 2010 Results – Consolidated Brokers
FY 2010 Results – Management Presentation For personal use only $'000 FY 2010 FY 2009 VARIANCE VARIANCE $ % FHY 2009 FHY 2008 VARIANCE VARIANCE CONSOLIDATED BROKERS $'000 $'000 $'000 % CONSOLIDATED BROKERS COMMISSION AND FEES 59,665 53,950 5,715 10.6% LIFE INCOME COMMISSION AND FEES 4,668 53,950 4,0
Slide 20: Increase in NPAT FY 2010 vs FY 2009
Increase in NPAT FY 2010 vs FY 2009 For personal use only $’000 20500 20000 19500 19000 18500 18000 17500 17000 s 09 10 s es p st x st it Ex Ta 20 20 ci re of Co en te FY FY Pr rp In g ag Co er in e st ok w m Au ro co Br Bo In rp Co Notes 1. Corporate income impacted by lower interest rates and fund
Slide 21: Analysis of Contribution to Growth in NPAT
Analysis of Contribution to Growth in NPAT For personal use only Growth in Adjusted NPAT $’000 % of Growth Share of broker profits Direct acquisitions 562 3.1 Existing network 1,949 10.8 Austagencies 392 2.2 Offset by Corporate interest earnings (356) (2.0) Corporate expenses (250) (1.4) Borrowing c
Slide 22: Increase in Pre-Tax Share Broker Profits FY 2010 from FY 2009
For personal use only $’000 23000 25000 27000 29000 31000 33000 35000 37000 FY In 20 te 09 re st Ea r ni ng s Ex Co pe m ns m es is si on AI & M Fe S es Pr em C om iu m m is Fu si nd on i ng In co m e Li fe In Di co re m ct e Ac qu is iti on O s th er In co m e FY Increase in Pre-Tax Share Broker Pr
Slide 23: Increase in Share of Broker Pre-Tax Profits FY 2010 vs FY 09
Increase in Share of Broker Pre-Tax Profits FY 2010 vs FY 2009 For personal use only $’000 % of Growth Increase in Commission and fees 5,600 Increase in premium funding 1,000 Increase in AIMS commission 550 Increase in Life income 350 Increase in other income 1,100 Direct acquisitions profit 460 Off
Slide 24: Broker Profits as % of Broker Income
Broker Profits as % of Broker Income For personal use only Profits (before tax) as a percentage of Broker Income Including Austagencies Insurance Broking only 2010 28.5% 28.6% 2009 28.3% 28.4% 2008 26.7 % 26.8% 2007 24.8% 24.2% 2006 25.2% 2005 23.4% 2004 22.3% 2003 20.8% Base commission and fees rep
Slide 25: Austagencies Results
Austagencies Results For personal use only PROFIT IMPACT FHY 2009 FHY 2008 VARIANCE VARIANCE $’000 FY 2010 FY 2009 INCR / (DECR) $'000 $'000 INCR $'000 / (DECR) % % CONSOLIDATED BROKERS Commission and fees 9,758 8,446 1,312 15.5 COMMISSION AND FEES 53,950 Profit commission LIFE INCOME 1,176 988 4,09
Slide 26: Balance Sheet (con't)
Balance Sheet (con’t) For personal use only 30 June 2010 30 June 2009 Assets $000 $000 Current Assets Cash at Bank 23,840 17,047 Cash at Bank – Trust 57,147 51,611 Receivables 90,350 87,594 Short term investments 1,461 703 Total Current Assets 172,798 156,955 Non Current Assets Receivables 163 27 Pl
Slide 27: Balance Sheet (con't)
Balance Sheet (con’t) For personal use only 30 June 2010 30 June 2009 Liabilities $000 $000 Current Liabilities Payables 138,196 141,488 Tax Liabilities 3,326 3,316 Provisions 7,452 6,822 Interest bearing loans and borrowings 481 611 Total Current Liabilities 149,455 152,137 Non Current Liabilities
Slide 28: Cash Flow
Cash Flow For personal use only 2010 2009 $’000 $’000 Cash flows from operations 29,784 28,139 Cash flows from investing activities - Acquisitions (14,800) (23,402) - Sales proceeds / loan repayments 151 5,687 - Plant equipment (756) (1,726) (15,405) (19,441) Cash flows from financing activities - D
Slide 29: Funding
Funding For personal use only • Facility from St George Bank– limit $44.3 utilised at June 2010 – $26.4 million at holding company level – $6.8 million in subsidiaries • Facility term is 5 years to August 2013 • Estimated $1.4 million committed for future payments for completed acquisitions will be
Slide 30: Agenda
Agenda For personal use only • Business Overview • FY 2010 Financial Performance • FY 2011 Outlook – Market conditions – Strategy – Outlook 28
Slide 31: Market Conditions FY 2011
Market Conditions FY 2011 For personal use only • Premium rates – Moderate increases flowing through – Competition dampens extent of increases desired by underwriters – Premium rate movements vary across classes • Relatively stable interest rate environment (probable increase) • Moderate economic gr
Slide 32: Strategies FY 2011
Strategies FY 2011 For personal use only • Growth – acquisition activity to continue – business development – marketing strategies – marketing initiatives implemented to increase cross sell of insurance products • Expand underwriting agency capability • Centralised services to create efficiencies –
Slide 33: Outlook FY 2011
Outlook FY 2011 For personal use only • Premium rate environment stable with only moderate premium rate increases • Insurance broking industry consolidation – continuing acquisition opportunities • Organic growth expected to continue to emerge through broker network initiatives and at least some rat