Aub Group Limited · ASX:AUB
Aub — Austbrokers Holdings — FY2014 Earnings Presentation
26 slides from Aub's earnings presentation, Aug 28, 2014
Slide 1: Austbrokers Holdings Ltd FY2014 Results
AUSTBROKERS HOLDINGS LTD FY2014 RESULTS THURSDAY 28 AUGUST 2014
Slide 2: Group Strongly Positioned
GROUP STRONGLY POSITIONED Adjusted NPAT Achieved double-digit Up 10.5% Adjusted NPAT growth Operating revenue For 9th Year Up 18% Underlying EPS Share of broker Up 6.5% AUSTBROKERS profits HOLDINGS LTD. Up 4.2% Dividend per share Underwriting Up 8.5% Agency profits to 38.5 cents Total Shareholder Re
Slide 3: Who We Are
WHO WE ARE Australia’s leading equity based insurance broking, underwriting agency and risk services group. Pioneers of the ‘Owner-Driver’ model. • JV with IBNA • 48 broking groups • 21 agency groups • Leading support • Australia’s largest • 50+ specialised services • Australia’s largest network of
Slide 4: Growth Across All Business Divisions
GROWTH ACROSS ALL BUSINESS DIVISIONS • Commission / fee income • Revenue growth 40% • New division established up 12.1% • 33% net profit growth • Complementary risk • 6.2% profit growth • Significant growth from start-up services and support • Profit commissions up 18.5% agencies • Recent acquisitio
Slide 5: Group Services Investment Delivering Results
GROUP SERVICES INVESTMENT DELIVERING RESULTS AUSTBROKERS HOLDINGS LTD BUSINESS TECHNOLOGY • 80% of operating businesses utilizing common Data Centre • CBS broking system & Citrix environment upgraded • 99.9% system availability • Business Intelligence tools rolled out across all divisions • Technolo
Slide 6: Income to Expense Ratio Held Below 10 Year Rolling Average
INCOME TO EXPENSE RATIO HELD BELOW 10 YEAR AUSTBROKERS HOLDINGS LTD ROLLING AVERAGE 30.0 28.0 26.0 Actual/Projected 24.0 Average 22.0 20.0 18.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 • Corporate expenses as % of income (share pre-tax profits from business operations) • Stated Group object
Slide 7: Financial Performance
FINANCIAL PERFORMANCE 6
Slide 8: Consistent Profitable Growth Since Listing
CONSISTENT PROFITABLE GROWTH SINCE LISTING AUSTBROKERS HOLDINGS LTD $M 45 Reported NPAT Adjusted NPAT 40 35 $35.450 30 $34.655 25 20 15 10 5 0 2007 2008 2009 2010 2011 2012 2013 2014 Increase YoY N/A 15.3% 13.7% 8.5% 11% 14.7% 11.5% 12.1% 17.5% 18.1% 20.0% 15.0% 60.7% 17.1% (18.9)% 10.5% • Adjusted
Slide 9: Earnings Per Share Up 6.5%
EARNINGS PER SHARE UP 6.5% AUSTBROKERS HOLDINGS LTD Cents 80 Reported NPAT Adjusted NPAT 70 58.5 60 cents 50 60.0 cents 40 30 20 10 0 2007 2008 2009 2010 2011 2012 2013 2014 Increase YoY N/A 15.1% 13.6% 18.4% 11.0% 14.5% 11.5% 9.2% 12.2% 12.8% 16.9% 11.9% 56.0% 13.7% (19.0)% 6.5% • 9th consecutive i
Slide 10: Shareholders Benefiting From Success
SHAREHOLDERS BENEFITING FROM SUCCESS AUSTBROKERS HOLDINGS LTD Cents 40 35 30 25 20 Dividend per Share 15 10 5 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 • Dividend per share FY14 38.5 cents up 8.5% • DRP will remain in place. Proposed to fully underwrite DRP • Payout ratio on an Adjusted NPAT ba
Slide 11: Reported NPAT Needs Reconciliation
REPORTED NPAT NEEDS RECONCILIATION AUSTBROKERS HOLDINGS LTD FY14 FY13 Variance $’000 $’000 % Revenue from ordinary activities 198,745 168,040 18.3 Income arising from sale of interests in Associates and controlled entities and adjustments to carrying values of associates and to contingent considerat
Slide 12: Underlying NPAT Remains Robust
UNDERLYING NPAT REMAINS ROBUST AUSTBROKERS HOLDINGS LTD FY14 FY13 Variance $’000 $’000 % Reported Profit attributable to members 34,655 41,203 (15.9) Add (Less) Net Loss (Profit) after tax on sale of interests in associates and controlled entities and contingent consideration adjustments* 512 (276)
Slide 13: Balanced Contribution to Growth Over FY13
BALANCED CONTRIBUTION TO GROWTH OVER FY13 AUSTBROKERS HOLDINGS LTD $’000 $36,000 $35,000 $34,000 $33,000 $32,000 $31,000 $30,000 $29,000 FY2013 Corp Exp Tax Other Insurance & Risk Underwriting Broker Profits FY2014 Services Agencies 32,075 (747) 128 384 421 1,696 1,493 35,450 % of Adjusted NPAT of g
Slide 14: Broker Profits Up 6.2%
INSURANCE BROKER PROFITS UP 6.2% SPECIALIST INSURANCE BROKING UNDERWRITTING & RISK NETWORK AGENCIES SERVICES $’000 $90,000 $89,000 $88,000 $87,000 $86,000 $85,000 $84,000 $83,000 $82,000 $81,000 $80,000 FY2013 Interest Life Premium Profit Increase in FY2014 Funding Income Commissions Other inc net o
Slide 15: Insurance Broking Margin Impact
INSURANCE INSURANCE BROKING MARGIN* IMPACT SPECIALIST INSURANCE BROKING UNDERWRITTING & RISK NETWORK AGENCIES SERVICES 32 30 28 26 24 22 20 2007 2008 2009 2010 2011 2012 2013 2014 % 24.2 26.8 28.4 28.6 29.5 29.2 30.8 29.4 * Profits as a percentage of income • Decline due to lower interest earnings a
Slide 16: Specialist Underwriting Agencies
SPECIALIST UNDERWRITING AGENCIES INSURANCE INSURANCE BROKING UNDERWRITTING & RISK NETWORK SERVICES AGENCIES 33% growth in NPBT after profit attributable to other parties to $9.778 million • Approximately one third growth from acquisitions and start up businesses • Increase in total income excluding
Slide 17: Insurance & Risk Services – A First
INSURANCE INSURANCE & RISK SERVICES – A FIRST INSURANCE SPECIALIST BROKING UNDERWRITTING & RISK NETWORK AGENCIES SERVICES Contributed 1.3% to overall growth of 10.5% (adjusted NPAT) • Commenced February 2014 with acquisition of 50% of Procare group • Early in development of opportunities to grow in
Slide 18: Funding Costs Reduced & Gearing Remains Low
FUNDING COSTS REDUCED & GEARING REMAINS LOW AUSTBROKERS HOLDINGS LTD • Total consolidated entities debt $54 million – includes subsidiaries which have separate facilities • Austbrokers Holdings facility from St George Bank - $15 million available (term to 30/05/16) • Estimated $14 million committed
Slide 19: Outlook
OUTLOOK 18
Slide 20: Market Conditions FY15
MARKET CONDITIONS FY15 AUSTBROKERS HOLDINGS LTD • Premium rates Stable to soft premium rate environment in commercial lines Competition maintains pressure on rates • Lower interest rate environment likely to continue • Moderate economic growth forecast but patchy economic outlook may have impact on
Slide 21: Strategies FY15
STRATEGIES FY15 AUSTBROKERS HOLDINGS LTD Growth across all 3 divisions • Continue acquisitions across all divisions, as well as start-up opportunities in Underwriting and Insurance & Risk Services pillars • Increased central support for growth opportunities at local level • Utilise trusted advisor s
Slide 22: Well Positioned for FY15
WELL POSITIONED FOR FY15 AUSTBROKERS HOLDINGS LTD FY15 will benefit from • Groundwork undertaken in FY14 in developing systems and processes • Organic growth expected to continue to emerge through broker network initiatives • Insurance broking industry consolidation – continuing acquisition opportun
Slide 23: Appendices
APPENDICES 22
Slide 24: Appendix 1 – FY14 Results: Management Presentation
APPENDIX 1 – FY14 RESULTS: AUSTBROKERS HOLDINGS LTD MANAGEMENT PRESENTATION FY 2014 FY 2013 VARIANCE VARIANCE $'000 $'000 $'000 % BROKER OPERATIONS COMMISSION AND FEES 248,883 222,113 26,770 12.1% LIFE INCOME 11,939 11,721 218 1.9% PROFIT COMMISSIONS 3,431 2,895 536 18.5% PREMIUM FUNDING 25,326 21,8
Slide 25: Appendix 1 – FY14 Results: Management Presentation
APPENDIX 1 – FY14 RESULTS: AUSTBROKERS HOLDINGS LTD MANAGEMENT PRESENTATION $'000 FY 2014 FY 2013 VARIANCE VARIANCE $ % CONSOLIDATED BROKERS COMMISSION AND FEES 115,164 96,977 18,187 18.8% LIFE INCOME 7,966 8,003 (37) -0.5% PROFIT COMMISSIONS 1,299 533 766 143.7% PREMIUM FUNDING 8,308 6,967 1,341 19
Slide 26: Appendix 2 – Cash Flow
APPENDIX 2 – CASH FLOW AUSTBROKERS HOLDINGS LTD 2014 2013 $’000 $’000 Cash flows from operations 36,455 27,940 Cash flows from investing activities - Acquisitions* (13,477) (2,350) - Sales proceeds / loan repayments 7,594 4,197 - Plant equipment / other (2,500) (1,816) (8,383) 31 Cash flows from fin