Aub Group Limited · ASX:AUB
Aub — Austbrokers Holdings — FY2015 Earnings Presentation
31 slides from Aub's earnings presentation, Aug 27, 2015
Slide 1: Austbrokers Holdings Ltd FY15 Results
AUSTBROKERS HOLDINGS LTD FY15 Results 27 August 2015 Page 1 – Austbrokers Holdings Ltd FY15 Results
Slide 2: Performance Summary FY15 – financials
PERFORMANCE SUMMARY FY15 Delivering growth in a challenging market - financials YEAR-ON-YEAR GROWTH. Result within guidance, above consensus forecast, Adjusted NPAT up 2.5% on FY14 to $36.3M. ↑2.5% DIVIDEND INCREASED. Increase of 3.1% over FY14 to 39.7c per share. ↑3.1% DIVIDEND YIELD FULLY FRANKED
Slide 3: Performance Summary FY15 – key highlights
PERFORMANCE SUMMARY FY15 Delivering growth in a challenging market – key highlights Biggest year to date New market – New Zealand. for acquisitions. Manager of largest cluster group. Now third largest broking group by GWP. New brand, NZbrokers, and collaborative approach provides Over $70M committed
Slide 4: The Group's Strategic Goal
THE GROUPS’ STRATEGIC GOAL To be the leading provider of risk management advice and solutions to our clients. CLIENT RISK RISK ASSESSMENT SOLUTIONS BREAKDOWN BROKERS CLIENT RISKS PHYSICAL BUSINESS INSURERS FINANCIAL PEOPLE CLIENTS POST EVENT PERSONAL SOLUTIONS Page 4 – Austbrokers Holdings Ltd FY15
Slide 5: Diversification in Support of Strategy
DIVERSIFICATION IN SUPPORT OF STRATEGY Focused on the delivery of risk management advice and solutions to our clients. AUSTBROKERS HOLDINGS AIMS INSURANCE SPECIALIST RISK NZbrokers BROKING U/W SERVICES NZbrokers: >$0.5Bn GWP 50+ broking businesses 22 agency groups 4 leading businesses Manager of New
Slide 6: The Group's Strategic Objective
THE GROUP’S STRATEGIC OBJECTIVE Long term sustainable growth. SUSTAINABLE GROWTH INCOME DISCIPLINED DIVERSIFICATION FOCUS APPROACH OWNER-DRIVER INSURANCE & RISK BUSINESS MODEL ADVICE/BROKING CLIENT RISK SPECIALIST UNDERWRITING STRATEGY PRODUCT PROVISION RISK SERVICES PARTNERSHIP OPERATING MODEL INTE
Slide 7: Delivering Against Our Strategy
DELIVERING AGAINST OUR STRATEGY Demonstrating measurable success to date. SUSTAINABLE GROWTH DISCIPLINED FOCUS INCOME DIVERSIFICATION APPROACH OUTPERFORMING INDUSTRY DYNAMICS INCOME FROM 23% BROKING COMMISSION & FEES ↑3.1% NON-BROKING SOURCES CLIENT NUMBERS ↑4.9% RISK SERVICES CONTRIBUTION $1.5M PRE
Slide 8: Bringing Strategy to Life – Broking
BRINGING STRATEGY TO LIFE Area highlights: Broking. Demonstrated resilience. Acquisition activity. In the face of declining commercial lines premium rates. Level Both standalone and bolt-on activity continued, including acquisition of of broking income decline less than the average market rate Nexus
Slide 9: Bringing Strategy to Life – Specialist Underwriting Agencies
BRINGING STRATEGY TO LIFE Area highlights: Specialist Underwriting Agencies. Strong growth continues. Excellent leverage Revenue increased by 29%. with insurer partners. NPBT increased 35% over FY14 and 127% over FY12 Secured long term insurer commitments. Improved remuneration (FY12 $6M – FY15 $13.
Slide 10: Bringing Strategy to Life – Risk Services
BRINGING STRATEGY TO LIFE Area highlights: Risk Services Strong growth throughout year. Increasing collaboration with Division delivered over $2M NPBT within the year and growing. supporting broking businesses. Good evidence of collaboration delivering results for clients and partners - risk consult
Slide 11: Bringing Strategy to Life – Group Services
BRINGING STRATEGY TO LIFE Area highlights: Group Services. Technology continues to underpin Building group competencies. our propositions. Continuing to build group competencies within cost:income parameters: Marketing, HR, Back Office, Risk & Compliance, iClose placement work complete. iClose platf
Slide 12: Bringing Strategy to Life – New Zealand
BRINGING STRATEGY TO LIFE Area highlights: New Zealand. Third largest broking group in NZ. Leveraging Group experience. From a standing start, NZbrokers has become the Leveraging Group experience and expertise third largest broking group in NZ by GWP and manager of for benefit of partners. largest c
Slide 13: Financial Performance
FINANCIAL PERFORMANCE Page 13 – Austbrokers Holdings Ltd FY15 Results
Slide 14: Key Results
KEY RESULTS Growth in challenging market. • Adjusted NPAT increased to $36.3M continuing the trend of year FY15 FY14 VARIANCE on year growth since listing. REVENUE FROM ORDINARY • Earnings per share, impacted by share issues in a low growth ACTIVITIES ($000S) 217,347 198,745 9.4% environment. ADJUST
Slide 15: Reported NPAT
REPORTED NPAT 2015 2014 Increase $’000 $’000 % Revenue from ordinary activities 1 2 217,347 198,745 9.4 Expenses from ordinary activities 2 (167,550) (148,087) 13.1 49,797 50,658 (1.7) Net Profit before tax on sale of interests in associates, portfolios and controlled entities 2,088 - - Adjustment t
Slide 16: Adjusted NPAT Reconciliation
ADJUSTED NPAT1 Reconciliation. 2015 2014 Increase $’000 $’000 % Net Profit after tax attributable to equity holders of the parent 34,887 34,655 0.7 Reconciling items net of tax and non controlling interest adjustments for: Reduction in contingent consideration for acquisitions of controlled entities
Slide 17: Benefits of Diversification Strategy Delivering
BENEFITS OF DIVERSIFICATION STRATEGY DELIVERING Strong growth contribution from Underwriting Agencies and Risk Services demonstrates benefits of diversification strategy. $39M $38M $37M $36M $35M $34M $33M FY2014 Tax Corp Exp Other Risk Underwriting Broker FY2015 Services Agencies Profits* $000s 35,4
Slide 18: Insurance Broking Growth in Life & Profit Commissions
INSURANCE BROKING GROWTH IN LIFE & PROFIT COMMISSIONS • Overall broker profit growth down 1%, in context of premium rate reductions of circa 9%. • Improved contribution in second half as indicated in 1H15 results announcement. • Good growth in profit commissions and life income. • Premium funding in
Slide 19: Insurance Broking Margin Impact
INSURANCE BROKING MARGIN* IMPACT • Margins decreased versus FY14 in context of pressure on broker income in FY15 and costs relatively flat excluding acquisitions. • Margins increased from 24.4% in 1H15 to 28.2% for the full year. • Before stand alone acquisitions, commissions and fees were down 1.1%
Slide 20: Underwriting Agencies
UNDERWRITING AGENCIES • 35% growth in net profit contribution to $13.1 million. • Circa 25% of profit before tax was generated from start up agencies seeded in last 3 years. • Commission and fee income increased 29% benefiting from securing long term insurance contracts on improved terms for FY15 an
Slide 21: Risk Services – Growing Profit & Capability
RISK SERVICES – GROWING PROFIT & CAPABILITY • Market has strong growth prospects across workers’ compensation, injury management and ancillary risk management activities and is less impacted by the insurance cycle. • Austbrokers has acquired 4 key businesses since February 2014 under the ‘owner-driv
Slide 22: Disciplined Cost Focus Delivering Results
DISCIPLINED COST FOCUS DELIVERING RESULTS • Solid corporate cost discipline with overall income: expense ratio 30 ACTUAL improving from 22.9% in FY12 to 18.9% in FY15. 7 YEAR AVERAGE 2015 • Rolling seven year average cost: income ratio reduced from 22.9% 7 YEAR AVERAGE 2014 (FY12) to 20.6% (FY15). 7
Slide 23: Balance Sheet
BALANCE SHEET • Exposure to interest rates balanced across cash and debt. BALANCE SHEET ($M) FY15 FY14 • Investments in associates and intangible assets and goodwill CASH have increased due to acquisitions in the current year, changes 50.5 44.0 in shareholdings and carrying value adjustments. CASH -
Slide 24: Funding Position
FUNDING POSITION • Total consolidated entities debt $66 million (including subsidiaries which have separate facilities). • Undrawn facilities of $8 million with extended credit under discussion. • NZ dollars $13 million facility drawn in February 2015. • Acquisition capacity from cashflow and curren
Slide 25: Dividends Per Share
DIVIDENDS PER SHARE • Final dividend per share of 27.7 cents brings full year dividend to 39.7 cents up 3.1% on FY14. • DRP remains in place for final dividend, however will not be underwritten. • Payout ratio on adjusted NPAT is 67% (FY14 64%). 40 CENTS PER SHARE 35 30 25 20 15 10 5 0 2006 2007 200
Slide 26: FY16 Outlook
FY16 OUTLOOK • The commercial lines insurance market outlook remains challenging, and while premium rates are expected to stabilise in FY2016 in Australia and New Zealand, premium growth is unlikely before late FY2016. Drivers of revenue in Risk Services remain positive and are not impacted by the s
Slide 27: Disclaimer
DISCLAIMER This release 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 Group to be material
Slide 28: Appendices
APPENDICES Page 28 – Austbrokers Holdings Ltd FY15 Results
Slide 29: Appendix 1 – FY15 Results: Management Presentation
APPENDIX 1 – FY15 RESULTS: Management presentation. FY 2015 FY 2014 VARIANCE VARIANCE $’000 $’000 $’000 % BROKER OPERATIONS Commission And Fees 256,890 248,883 8,007 3.2% Life Income 12,401 11,939 462 3.9% Profit Commissions 3,616 3,431 185 5.4% Premium Funding 25,522 25,326 196 0.8% Interest 8,436
Slide 30: Appendix 1 – FY15 Results: Management Presentation
APPENDIX 1 – FY15 RESULTS: Management presentation. FY 2015 FY 2014 VARIANCE VARIANCE $’000 $’000 $’000 % CONSOLIDATED BROKERS Commission and Fees 112,461 115,164 (2,703) (2.3%) Life Income 8,704 7,966 738 9.3% Profit Commissions 1,565 1,299 266 20.5% Premium Funding 8,746 8,308 438 5.3% Interest 3,
Slide 31: Appendix 2 – Cash Flow
APPENDIX 2 – CASH FLOW: 2015 2014 $‘000 $‘000 CASH FLOWS FROM OPERATIONS 41,520 36,455 CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions 1 (35,861) (13,477) Sales proceeds / loan repayments 2 (3,519) 7,594 Plant equipment / other (2,695) (2,500) (42,075) (8,383) CASH FLOWS FROM FINANCING ACTIVITIES