Aub Group Limited · ASX:AUB
Aub — Austbrokers Holdings — FY2007 Earnings Presentation
25 slides from Aub's earnings presentation, Aug 30, 2007
Slide 1: FY 2007 Results Presentation
For personal use only AUSTBROKERS HOLDINGS LIMITED FY 2007 Results Presentation 30 August 2007 1
Slide 2: Agenda
Agenda For personal use only • Overview • FY 2007 highlights • Developments since 30 June 2007 • Profit growth 2003 - 2007 • FY 2007 financial performance • FY 2008 outlook 2
Slide 3: Overview
Overview For personal use only • Operations – 38 Member broking businesses • 24 50% owned • 11 60% - 80% owned • 3 100% owned – Distribution of life insurance and superannuation – Premium Funding – Underwriting Agencies – Austagencies • Specialist underwriting agencies • Scale – Client base of over
Slide 4: Overview (cont) - Model
Overview (cont) For personal use only • Model – Owner driver model predominate strategy • 50% or more equity interest • Co-shareholder manage business day to day – Co-shareholder equity incentive to grow business and value – Austbrokers provides centralised support, compliance, IT, marketing – Trend
Slide 5: Overview (cont) - Strategies
Overview (cont) For personal use only • Strategies – Grow general insurance broking • Acquisitions – new partners and bolt ons • Growth and expansion of existing businesses • Leverage buying power with underwriters – alliance with IBNA ($1.8 billion premiums) – Expand products • Develop life insuran
Slide 6: Highlights
FY 2007 Highlights For personal use only Acquisitions FY2007 • 50% interest Insurance Advisernet Australia • 100% interest Marc Webster Insurance Agencies (through MGA 50% owned) • 50% interest in DF McGarry Insurance Brokers • 50% interest in Ferdi Nel Insurance Brokers • 15 other small portfolios
Slide 7: Highlights (cont)
FY 2007 Highlights (cont) For personal use only • Restructures – Divested 25% of Austbrokers Canberra and 32.5% of Austbrokers AEI Transport from Austbrokers Sydney but still using back office platform – Reinstatement of owner driver model • Underwriting Agencies – Acquisition of Shield Underwriting
Slide 8: Developments Since June
Developments Since 30 June 07 For personal use only Acquisitions • 50% interest in Strathearn Insurance Brokers – $125 million premium placed – Specialist in corporate, mining, construction, surety, professional risks – Perth, Brisbane, Sydney offices – $12.8 million in income • 100% of Gosford Insu
Slide 9: Profit Growth 2003 - 2007
Profit Growth 2003 - 2007 For personal use only 14 $13.244 12 10 8 Profit $M 6 4 2 0 2003* 2004* 2005* 2006 2007 Profit – Net profit after tax before amortisation of intangibles before profits on businesses / portfolios sold (Adjusted NPAT) * From Prospectus dated 30 September 2005 adjusted for prof
Slide 10: Financial Performance
FY 2007 Financial Performance For personal use only Actual Actual % change $’000 2007 2006 2006 Broker Revenue 143,749 127,270 12.9 Broker Profit (AHL 23,948 11.0 21,581 share) Profit (before tax and amortisation of 18,931 16,783 12.8 intangibles) NPAT (before amortisation of 13,244 11,484 15.3 inta
Slide 11: Profit & Loss Statement – ASX Reporting
Profit & Loss Statement – ASX Reporting For personal use only AUSTBROKERS HOLDINGS LIMITED A.B.N. 60 000 000 715 INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2007 Consolidated 2007 2006 $'000 $'000 Revenue 58,788 52,524 Other income 5,173 5,128 Share of profit of associates 8,620 7,021 Other expenses
Slide 12: Financial Performance - Reconciliation to Adjusted NPAT
FY 2007 Financial Performance For personal use only Reconciliation Reported Profit to Adjusted NPAT Actual Actual % Change 2007 2006 on 2006 Reported Net profit after tax 12,590 18,110 N/A Profits associates / broker on sale of registers 672 8,108 11,918 10,002 19.2% Amortisation of intangibles 1,32
Slide 13: Profit and Loss Statement
Profit and Loss Statement For personal use only PROFIT SUMMARY SHOWING 100% CONTRIBUTION FROM ASSOCIATES (EQUITY ACCOUNTED IN STATUTORY FINANCIAL STATEMENTS) 2007 2006 VARIANCE VARIANCE % CONSOLIDATED BROKERS COMMISSION AND FEES 47,495 43,759 3,736 8.5% LIFE INCOME 2,616 2,614 2 0.1% PROFIT COMMISSI
Slide 14: Compared to FY 2006
FY 2007 Compared to FY 2006 For personal use only • Adjusted NPAT for FY 2006 at $13.2 million – Adjusted NPAT excludes $0.7 million profits on sale of businesses and $1.4 million amortisation of intangibles expense – exceeded 2006 Adjusted NPAT by $1.76 million – 15.3% – 2HY contributed $8.5 millio
Slide 15: Compared to FY 2006 - Broker Income
FY 2007 Compared to FY 2006 For personal use only Broker Income • Increase overall 12.9% to $143.7 million, 9% from acquisitions • Commission and fees up 9.5% to $116.5 million, 8.1% from acquisitions • Life income up 6% to $5.4 million • Profit commissions up 34% to $3.7 million, 3% from acquisitio
Slide 16: Broker Profits as % of Broker Income
Broker Profits as % of Broker Income For personal use only Brokers Profits (before tax) as a percentage of Broker Income 2007 24.7% 2006 25.2% 2005 23.4% 2004 22.3% 2003 20.8% Slight erosion in margin due to • Pressure on commission and fees from lower premium rates • Pressure on expenses – particul
Slide 17: Compared with 2006 - Broker Expenses and Profits
FY 2007 Compared with 2006 For personal use only Broker Expenses • Broker expenses excluding acquisitions were up 3.7% • Contained despite pressures on employment costs Broker Profits • Increase of 11.5% to $35.5 million • Acquisitions contributed 10.2% of increase • Net of divestments acquisitions
Slide 18: Compared with 2006
FY 2007 Compared with 2006 For personal use only • Premiums placed (excluding acquisitions) in line with 2006 • Insurance broking commission and fees (excluding acquisitions) up 0.8% • Net income broking commission and fees 19.6% of pure premium (2006: 19.4%) • Fees in 2006 7.4% of premium (2006: 7.
Slide 19: Compared with 2006
FY 2007 Compared with 2006 For personal use only • Corporate income – One off income – offset similar one off expenses • Corporate expenses – increase $219,000 (net of increase in income) – Some one off expenses offset by recoveries / corporate income – Net increase in personnel costs – Increase in
Slide 20: Balance Sheet
Balance Sheet For personal use only 30 June 2007 30 June 2006 Assets $000 $000 Current Assets Cash at Bank 25,250 28,378 Cash at Bank – Trust 32,732 29,667 Receivables 55,586 52,746 Short term investments 5,057 4,177 Total Current Assets 118,636 114,968 Non Current Assets Receivables 84 - Plant Equi
Slide 21: Balance Sheet (cont)
Balance Sheet (cont) For personal use only 30 June 2007 30 June 2006 Liabilities $000 $000 Current Liabilities Payables 89,241 83,473 Tax Liabilities 1,307 3,095 Provisions 3,562 3,676 Interest bearing loans and borrowings 404 689 Total Current Liabilities 94,514 90,893 Non current liabilities Provi
Slide 22: Cash Flow
Cash Flow For personal use only 2007 $’000 Cash flows from operations 12,312 Cash flows from investing activities – Acquisitions (13,236) – Sales proceeds / loan repayments 9,387 – Plant equipment (1,853) (5,702) Cash flows from financing activities – Dividends (7,204) – Net borrowings 711 (6,793) N
Slide 23: Other Financials
Other Financials For personal use only Funding Market Capitalisation • $20 million (estimate) committed • At 30 June: $218 million; current: to acquisition payments post 30 $220 million June (including Strathearn $13 million) • Cash available for acquisitions at Dividend per Share 30 June 2007 appro
Slide 24: Outlook 2008
Outlook 2008 For personal use only • Market conditions unlikely to change significantly in immediate future – premium rates soft and likely to remain that way through 2008 • Consolidation of insurance broker market to continue and provide steady acquisition opportunities • Pursue current strategies
Slide 25: For personal use only
For personal use only This presentation may contain forward looking statements relating to future matters, which are subject to known and unknown risks, uncertainties and other important factors which could cause the actual results, performance or achievements of Austbrokers and the Austbrokers Grou