Slide 1: FY19 Results Analyst Pack
AUB GROUP . FY19 Results Analyst Pack August 2019
Slide 2: FY19 Financial Performance
FY19 Financial Performance
Slide 3: FY19 Performance Snapshot - Group
FY19 PERFORMANCE SNAPSHOT - GROUP 3.2% Adjusted (3.1%) Underlying 66.64 cents per $541.6mn Earnings per share Revenue1 FY18 FY18 $524.7mn Share3 68.80 cents per share Underlying (1.0%) $88mn in M&A transactions EBITA 25.0% M&A Activity Key Transactions include equity step- Margin1 FY18 ups in Adroit
Slide 4: FY19 Performance Breakdown - Group
FY19 PERFORMANCE BREAKDOWN - GROUP FY18 to FY19 Adjusted NPAT1 Breakdown ($mns) +14% +4% FY19 Canberra and one-off costs 50.8 2.3 0.4 3.7 1.1 0.6 3.1 2.3 46.4 3.6 44.6 Core Insurance Operations FY18 Organic Growth 2 Acquisition Growth 3 FY19 Canberra Health & FY19 FY19 Canberra IT project Corporate
Slide 5: FY19 Performance Snapshot - Divisional
FY19 PERFORMANCE SNAPSHOT - DIVISIONAL Vs. FY18 AUSTRALIAN NEW ZEALAND UNDERWRITING comparative RISK SERVICES2 period BROKING2 BROKING AGENCIES 1.8% Underlying1 Revenue $343.6mn $50.6mn 19.3% $61.4mn 8.5% $85.9mn (2.4%) 4.1% (excl. Canberra) 0.2% Underlying1 EBIT Margin 29.7% 33.6% (3.2%) 33.8% (1.1
Slide 6: FY19 Performance Breakdown - By Divisions
FY19 PERFORMANCE BREAKDOWN – BY DIVISIONS FY18 to 19 Adjusted NPAT1 Divisional Breakdown ($mns) +4% +10% 1.6 4.5 2.8 0.8 0.6 48.7 2.3 46.4 4.3 44.6 44.3 0.3 Core Insurance Operations Pre-Tax FY18 (incl. FY18 Canberra FY18 (excl. Australian New Zealand Underwriting Risk Services Corporate Tax FY19 (e
Slide 7: Strong Balance Sheet And Capital Position
STRONG BALANCE SHEET AND CAPITAL POSITION Consolidated Balance Sheet Overview Movement FY19 FY18 Movement (%) ($mns) ($mns) ▪ Investments (the aggregate of Cash 70.0 58.7 11.3 19.3% Investments in Associates and Intangible Assets and Goodwill) Cash - Trust 150.0 100.0 50.0 50.0% have increased to $5
Slide 8: Effectively Leveraging And Managing Debt
EFFECTIVELY LEVERAGING AND MANAGING DEBT Total Group Debt on a look-through basis1 ($mns) 160.8 36.7 44.0 13.5 134.0 30.9 22% 23.0 24.6 55.5 FY19 AUB Group Gearing4 (FY18 31%) 99.5 55.5 Total AUB Group Debt FY18 Corporate Debt 2 Consolidated Entity Associates Total AUB Group Debt FY19 Associates Deb
Slide 9: Strong Cash Generation
STRONG CASH GENERATION AUB Corporate Entity Cash Movement ($mns) Operating cash generated 63.9 113.2 50.1 17.0 33.1 45.8 17.2 30.4 11.0 Dividends Received Net Corporate Exp. Operating Cash Flow Dividends Paid Capital Raising Net Investing Activity 1 Net Financing Activity FY19 Opening FY19 Closing C
Slide 10: Disciplined Approach To M&A
DISCIPLINED APPROACH TO M&A M&A Transaction Activity, FY14-FY19 ($mns) ▪ AUB has undertaken 54 acquisitions and bolt-ons over the past 6 years valued at 12 257 Acquisitions Bolt-on ~$250mn in M&A activity ▪ AUB intends to continue to supplement organic growth by relevant acquisitions 76 and start-up
Slide 11: Improving Shareholder Returns A Priority
IMPROVING SHAREHOLDER RETURNS A PRIORITY Dividend Per Share (Cents) Adjusted EPS1 (Cents per share) CAGR Interim Dividend CAGR Final Dividend +1% +6% -3.1% +8% 45.5 46.0 68.80 66.64 42.0 63.25 38.5 39.7 40.0 59.83 59.30 59.57 13.5 56.20 35.5 13.5 31.0 12.0 12.0 12.5 49.45 12.0 44.18 25.5 11.0 39.16
Slide 12: Australian Broking - FY19 Performance
AUSTRALIAN BROKING – FY19 PERFORMANCE Profit contribution to AUB Group Movement Movement – Pre-tax1 ($mns) FY19 FY18 ($) (%) Organic Growth (excl. Canberra) 3 ▪ Pre-tax profit contribution to AUB Group of Commission and fee income (net) 286.8 283.3 3.5 1.2% 4.1% $52.8mn, an increase of 3.7% from FY1
Slide 13: Australian Broking - Historical Performance
AUSTRALIAN BROKING – HISTORICAL PERFORMANCE Underlying Revenue1 ($mns and %) Underlying EBIT Margin1,2 (%) CAGR +6% +2% 338 344 30.5 30.2 31.7 30.4 313 313 29.4 28.9 28.9 29.1 29.5 29.7 303 308 16% 17% 273 18% 17% 254 18% 18% 225 18% 19% 206 19% 18% 82% 83% 84% 83% 81% 82% 82% 81% 82% 82% FY10 FY11
Slide 14: New Zealand Broking - FY19 Performance
NEW ZEALAND BROKING – FY19 PERFORMANCE Profit contribution to AUB Group Movement Movement Organic – Pre-tax 1 ($mns) FY19 FY18 ($) (%) Growth2 ▪ Pre-tax profit contribution to AUB Group of AUD Commission and fee income (net) 44.4 36.6 7.8 21.4% 8.6% $9.2mn, an increase of 41.5% on FY18 primarily due
Slide 15: New Zealand Broking - Historical Performance
NEW ZEALAND BROKING – HISTORICAL PERFORMANCE Underlying Revenue1 ($mns and %) Underlying EBIT Margin1 (%) CAGR +19% +51% 51 36.8 34.8 33.6 42 12% 38 14% 26.8 14% 24 14% 88% 14.2 86% 86% 10 11% 86% 89% FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19 Other Income Commissions and Fees PBT attributabl
Slide 16: Underwriting Agencies - FY19 Performance
UNDERWRITING AGENCIES – FY19 PERFORMANCE Profit contribution to AUB FY19 FY18 Movement Movement Organic ▪ Pre-tax profit contribution to AUB Group of Group – Pre-tax1 ($000s) ($) (%) Growth2 $15.5mn, an increase of 11.6% on FY18 Commission and fee income (net) 55.8 51.9 3.8 7.4% 6.0% Profit commissi
Slide 17: Underwriting Agencies - Historical Performance
UNDERWRITING AGENCIES – HISTORICAL PERFORMANCE Underlying Revenue1 ($mns and %) Underlying EBIT Margin1 (%) CAGR +9% 34.7 35.5 34.9 34.8 34.9 +20% 32.6 33.8 61 29.3 56 57 28.0 28.6 52 51 9% 10% 8% 8% 13% 40 8% 29 23 7% 90% 92% 91% 12 10% 92% 87% 15 92% 15% 11% 93% 90% 85% 89% FY10 FY11 FY12 FY13 FY1
Slide 18: Risk Services - FY19 Performance
RISK SERVICES – FY19 PERFORMANCE Profit contribution to AUB Group – FY19 FY18 Movement ($) Movement (%) ▪ Pre-tax profit contribution to AUB Group of $2.4mn, Pre-tax1 ($mns) a decrease of 66.1% on FY18, with both Health and Underlying Revenue2 85.9 88.1 (2.1) (2.4%) Rehabilitation businesses (Altius
Slide 19: Portfolio Revenue And PBT Diversification
PORTFOLIO REVENUE AND PBT DIVERSIFICATION Underlying Revenue1, Diversification ($mns) 600 16% 5% 450 300 11% FY10 FY19 150 $218m $542m 10% 63% 0 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 95% PBT AUB Share, Diversification ($mns) 100 3% 75 9% 19% 50 FY10 FY19 25 $37m 12% $80m 66% 0 FY10 FY11
Slide 20: A1.0 Reconciliation Of Reported NPAT To Adjusted NPAT
A1.0 RECONCILATION OF REPORTED NPAT TO ADJUSTED NPAT FY19 FY18 Movement (%) ($000) ($000) Net Profit after tax1 attributable to equity holders of the parent 48,361 46,520 4.0% Reconciling items net of tax and non controlling interest adjustments for: Adjustments to contingent consideration for acqui
Slide 21: A2.1 Management Presentation Of Results
A2.1 MANAGEMENT PRESENTATION OF RESULTS 1,2 FY19 FY18 Movement ($) Movement (%) ($000) ($000) Australian Broking revenue 343,580 337,607 5,973 1.8% Australian Broking expenses (241,515) (238,133) (3,382) 1.4% EBIT - Australian Broking 102,065 99,474 2,591 2.6% New Zealand Broking revenue 50,642 42,4
Slide 22: A2.2 Management Presentation Of Results
A2.2 MANAGEMENT PRESENTATION OF RESULTS 1,2 FY19 FY18 Movement Movement FY17 FY16 FY15 FY14 ($000) ($000) ($) (%) ($000) ($000) ($000) ($000) Australian Broking revenue 343,580 337,607 5,973 1.8% 312,720 308,300 312,816 303,316 Australian Broking expenses (245,891) (241,987) (3,904) 1.6% (225,158) (
Slide 23: A3.0 Consolidated Cash Flow Statement
A3.0 CONSOLIDATED CASH FLOW STATEMENT FY19 FY18 ($000) ($000) Cash flows from operations 54,227 46,246 Cash flows from investing activities Acquisitions1 (33,022) (22,472) Sales proceeds / loan repayments (net of cash reduced on 4,773 (1,121) deconsolidation) Plant equipment / Other (2,577) (4,571)
Slide 24: A4.0 Reconciliation Of Operating Segments
A4.0 RECONCILIATION OF OPERATING SEGMENTS Consolidated FY19 Consolidated FY18 Insurance Insurance Risk Services2 Total Risk Services2 Total Intermediary Intermediary ($000) ($000) ($000) ($000) ($000) ($000) Profit before tax and after non-controlling interests from: Insurance broking - Australia 52
Slide 25: A5.0 Realignment Of Corporate Expense
A5.0 REALIGNMENT OF CORPORATE EXPENSE 1 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Pre-alignment for operating entities ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000) Expenses Australian Broking 144,397 155,363 175,786 184,981 209,921 220,496 216,739 218,967 235,624 238
Slide 26: AUB Group Business Review And Outlook
AUB Group Business Review and Outlook
Slide 27: FY20 Execution Priorities
FY20 EXECUTION PRIORITIES Enhance our core business partner proposition with improved product and capacity 1 offerings 2 Implement best-in-house technology features across the Group 3 Reduce Corporate costs and drive efficiency through cross-network synergies Consolidate our core businesses for scal
Slide 28: Stable And Predictable Operational Drivers
STABLE AND PREDICTABLE OPERATIONAL DRIVERS ~3.2bn Premium under influence across the AUB network 90% ~8% increase FY19 Premium in average premium per client Retention (excl. rate increases) CAGR over the last 3 years ~1.2mn …supported by a small but consistent increase in average policies per client
Slide 29: Track Record Of Delivering Growth
TRACK RECORD OF DELIVERING GROWTH Underlying Revenue1 ($mns) Underlying EBITA Margin1 (%) CAGR +3% +11% 29.1 27.8 28.1 27.9 26.5 25.9 25.6 25.6 26.0 525 542 25.0 488 445 402 351 302 276 218 240 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Adjust
Slide 30: Core Insurance Operations - Our Scale And Reach
CORE INSURANCE OPERATIONS - OUR SCALE AND REACH NT 4 locations QLD 72 locations ~11% ~450 AUB Share of the Locations Intermediated GI WA Market (AU) 28 locations NSW 124 locations SA ACT 24 locations 7 locations VIC 47 locations >3,000 ~21% staff TAS New 4 locations Zealand AUB Share of the GI 140 S
Slide 31: Taking Control Of Our Core Capabilities
TAKING CONTROL OF OUR CORE CAPABILITIES Austbrokers Insurance Member Services (AIMS) AUB Group will take 100% control of AIMS in Q2 FY20 AIMS will serve as the member UNDERWRITING ACCOUNTING services division with four key areas of CAPACITY AND AND responsibility PLACEMENT COMPLIANCE ▪ Sourcing and
Slide 32: FY20 Outlook And Guidance
FY20 OUTLOOK AND GUIDANCE During FY20 the group anticipates strong growth from Insurance Broking in Australia and New Zealand as well the Underwriting Agencies. This will be reduced by several factors: ▪ Reduced interest rates; ▪ Lease Accounting Changes; ▪ Reduced revenues in Canberra, post restruc
Slide 33: Market Environment
MARKET ENVIRONMENT Insurance Market Cycle ▪ As an industry, commercial General Insurers and brokers have gained from pricing tailwinds in the past few years as premiums have hardened and continues to grow but at a Strong Profits slower rate Capital flows A Seller’s market into market ▪ AUB has a pos
Slide 34: AUB Group Business & Portfolio Overview
AUB Group Business & Portfolio Overview
Slide 35: AUB Group Overview
AUB GROUP OVERVIEW ▪ 61 Partner businesses, with ~20% Commercial AUSTRALIAN BROKING Insurance Market Share with primary SME focus ▪ Established complementary capabilities in Life Insurance Broking, Premium Funding, Claims $3.2B+ GWP 15 STRATEGIC INSURANCE BROKING OF $2.8B VIA EQUITY AND Management a
Slide 36: Proposition - Market Leadership And Scale
PROPOSITION – MARKET LEADERSHIP AND SCALE Comprehensive Product Exclusive products, wording Ongoing investment in Offerings and arrangements technology Our partners have access to a comprehensive Our partners have been able to access market The Group leverages the consolidated pool of suite of >100
Slide 37: Divisional Overview: Australian Broking
DIVISIONAL OVERVIEW: AUSTRALIAN BROKING Our Australian broking business ~$2.1 billion in 63% contribution to encompasses some of Australia’s largest and most reputable brokerage business, premium group revenue with specialist expertise, market penetration and quality client portfolios. The portfolio
Slide 38: Divisional Overview: New Zealand Broking
DIVISIONAL OVERVIEW: NEW ZEALAND BROKING AUB Group’s expansion into New Zealand in 2015 has grown significantly, providing a key source of growth opportunities for the ~$700 million in 10% contribution to Group. premium group revenue AUB Group New Zealand, which selectively invests into high-perform
Slide 39: Divisional Overview: Underwriting Agencies
DIVISIONAL OVERVIEW: UNDERWRITING AGENCIES Our Underwriting Agencies division comprises some of Australia’s leading specialist underwriters who distribute and ~$350 million in 11% contribution to manage niche insurance products on behalf of domestic and internationally licensed premium group revenue
Slide 40: Core Insurance Operations - Our Scale And Reach
CORE INSURANCE OPERATIONS - OUR SCALE AND REACH NT 4 locations QLD 72 locations ~11% ~450 AUB Share of the Locations Intermediated GI WA Market (AU) 28 locations NSW 124 locations SA ACT 24 locations 7 locations VIC 47 locations >3,000 ~21% staff TAS New 4 locations Zealand AUB Share of the GI 140 S
Slide 41: Underwriting Agencies - Portfolio Overview
UNDERWRITING AGENCIES – PORTFOLIO OVERVIEW Farm and residential strata SME commercial motor vehicle fleet Plant & Equipment Professional Risks Engineering Motor Dealers Specialty Construction Labour Hire Residential, Commercial and Schemes, facilities and single Film and Mixed-Use Strata one-off ris
Slide 42: Market Share And AUB Group Share
MARKET SHARE AND AUB GROUP SHARE Australian Insurance Market ~11% 27% Channel AUB AUB Share of the Intermediated GI Market Total 2019 Intermediated Non-Intermediated Premium $89bn 45% 28% AUB ~21% Client AUB Share of the GI Segment SME Segment General Insurance Life Insurance Health Insurance SME Co
Slide 43: Insurance Portfolio - Premium And Size
INSURANCE PORTFOLIO – PREMIUM AND SIZE Annual Premium1 ($bns) 3.5 3.0 +11% ~3.2bn Premium under influence 2.5 across the AUB network New Zealand Broking 2.0 1.5 1.0 Australian Broking ~1.2mn Policies written within the AUB network 0.5 0.0 FY17 FY18 FY19 1. Total includes premium and commission from
Slide 44: Stable And Predictable Operational Drivers
STABLE AND PREDICTABLE OPERATIONAL DRIVERS ~3.2bn Premium under influence across the AUB network 90% ~8% increase FY19 Premium in average premium per client Retention (excl. rate increases) CAGR over the last 3 years ~1.2mn …supported by a small but consistent increase in average policies per client
Slide 45: Insurance Portfolio Mix: Category And Geography
INSURANCE PORTFOLIO MIX: CATEGORY AND GEOGRAPHY Portfolio Mix – By Category (%) Portfolio Mix – By Geography (%) 13% Personal Lines NT 2% QLD 12% WA 9% NSW 28% ACT 2% SA 9% 87% Commercial Lines VIC 14% TAS NZ 1% 23% ▪ Portfolio mix is based on available data from key Australian and New Zealand Broki
Slide 46: Insurance Portfolio Mix - Product And Insurer
INSURANCE PORTFOLIO MIX – PRODUCT AND INSURER Portfolio Mix – Premium by Product / Risk Line (%) Portfolio Mix – Premium by Insurer (%) 19% 17% 29% 31% 12% Product Mix 11% Insurer Mix 3% 4% 7% 6% 11% 4% 3% 4% 6% 4% 5% 10% 4% 4% 6% Business ISR Motor - Fleet IAG Allianz Zurich Liability Householders
Slide 47: Insurance Value Chain / Business Model
INSURANCE VALUE CHAIN / BUSINESS MODEL Risk Advice, Support and Broker Partners Panel Products Products Insurers AUB’s network of broking businesses, Commissions leveraging the placement scale of a AUB Group Insurance Premium and consolidated AUB Group to deliver market insurance partners Service Fe
Slide 48: Thank You
THANK YOU
Slide 49: Notice
NOTICE 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 purport to be complete.