Aub Group Limited · ASX:AUB
Aub — H1 2021 Earnings Presentation
40 slides from Aub's earnings presentation, Feb 23, 2021
Slide 1: 1H21 Results Investor Presentation
1H21 Results Investor Presentation 23 February 2021 Mike Emmett CEO and Managing Director Mark Shanahan CFO 1
Slide 2: Key Messages
KEY MESSAGES 1 2 3 4 5 6 Very strong Strong Ongoing Underwriting Strategic Exit Upgrade to 1H21 result, progress with growth in Agencies from Health & profit guidance underlying Execution BizCover, restructured, Rehabilitation, reflecting NPAT growth Priorities leading acquired 360 sale of Altius ex
Slide 3: Financial Highlights 1H21
FINANCIAL HIGHLIGHTS 1H21 Underlying NPAT growth and EBIT Margin expansion underpinned by strong revenue growth 1H21 1H20 Movement Underlying Revenue1 $310.9mn $272.1mn 14.3% Underlying Expenses1 $213.6mn $204.4mn 4.5% Underlying EBIT Margin1 31.3% 24.9% 640bps Underlying NPAT2 $30.7mn $21.3mn 44.2%
Slide 4: 1H21 Financial Performance: Divisional
1H21 FINANCIAL PERFORMANCE: DIVISIONAL Excellent results in Australian Broking with a 740bps improvement in margins as benefits of strategic initiatives begin to be realised AUSTRALIAN AUSTRALIAN HEALTH AND OPERATING Vs. 1H20 NEW ZEALAND REHABILITATION comparative period BROKING2 AGENCIES4 BUSINESSE
Slide 5: Australian Broking: Reaping Rewards
AUSTRALIAN BROKING: REAPING REWARDS The performance in Australian Broking is a result of recent initiatives that will continue to drive sustainable improvement in revenue and underlying cost drivers Austbrokers Revenue and Expense “Jaws”: Calendar Year 18 - 20 CY18 to CY20 Revenue1 Revenue Growth 20
Slide 6: Exceptional Performance
EXCEPTIONAL PERFORMANCE Strong growth trajectory: 29% revenue & 67% profit growth since investment with significant potential for further growth via expansion into growth markets Since AUB Group’s investment in Feb’20 (excludes JobKeeper) New Growth Opportunities Cumulative Revenue 1H21 AUB PBT sh
Slide 7: Vision: To Be The Way SMEs Insure Their Business
VISION: TO BE THE WAY SMEs INSURE THEIR BUSINESS MISSION: TAKE THE HASSLE OUT OF BUSINESS INSURANCE 1 Leading full lifecycle SME insurance platform in AU and NZ – operates across entire value chain, no underwriting risk Lifetime Value/Customer 2 Massive addressable market, strong growth tailwinds in
Slide 8: Channel Products
ESTABLISHED IN SME INSURANCE MARKET Positioned for ongoing growth – multi-channel presence underpinned by a comprehensive offering BizCover Channel Multi-channel market penetration leverages market leading platform while investment in brand drives operational leverage BizCover Direct White-label Biz
Slide 9: Reinvigorating the Agencies Division
REINVIGORATING THE AGENCIES DIVISION Restructure will deliver growth while acquisition of 360 Underwriting will accelerate outcomes and unlock synergy benefits Austagencies Restructure of Austagencies aligns capabilities (Underwriting Agencies) to better support Austbrokers and other broking clien
Slide 10: Exit From Health & Rehabilitation On Track
EXIT FROM HEALTH & REHABILITATION ON TRACK Sale of Altius completes exit from non-core division enabling increased focus on Broking & Agencies Transaction Overview AUB Group agreed on 20 January 2021 to sell its shareholding in Altius Group Holdings to Cash proceeds from sale The Riverside Company
Slide 11: 1H21 Financial Performance: Overview
1H21 FINANCIAL PERFORMANCE: OVERVIEW UNPAT growth in 1H21 underpinned by strong organic growth complemented by healthy profits from acquisitions 1H20 to 1H21 Underlying NPAT1 Breakdown ($mns) 1H17 to 1H21 Underlying NPAT1 Growth vs Prior Comparative Periods (%) 44.2% 36.2% 30.7 44.2% 1.1 29.0 1.7 4.
Slide 12: AUB Corporate Cashflow Overview
AUB CORPORATE CASHFLOW OVERVIEW Operating cash generated of $33.5mn (excluding impact of Altius sale) AUB Corporate Entity Cash Movement ($mns) Operating cash generated of $33.5mn3 40.0 11.1 61.7 44.6 25.8 24.6 13.0 FY21 Opening Dividend Received Net Corporate Expenses Increased Borrowings2 Acquisit
Slide 13: Shareholder Returns
SHAREHOLDER RETURNS Strong uplift of 43.2% in underlying EPS underpinned by excellent organic and acquisition growth Underlying Earnings Per Share1 (Cents per share) 43.2% 12.0% 0.2% 41.47 25.80 25.86 28.96 1H18 1H19 1H20 1H21 Dividend Per Share (Cents) 32.0 32.5 35.5 10.3% 7.4% 13.5 13.5 14.5 16.0
Slide 14: FY21 Guidance: Upgrade
FY21 GUIDANCE: UPGRADE Guidance: Underlying NPAT for FY21 in the range of $63.0mn - $65.0mn, representing growth of 17.9% - 21.7% over FY20 FY21 Underlying NPAT1 by Half ($mns) Guidance upgrade driven largely by 1H21 63.0 - 65.0 outperformance, previous 2H21 forecast 3.4 26.0 – 28.0 2.9 maintained
Slide 15: Thank You
Thank You 15
Slide 16: Appendices
1H21 INVESTOR PRESENTATION 17 A. 1H21 Financial Results Detail 29 B. AUB Group Portfolio Overview 37 C. AUB Group Business Overview Appendices 16
Slide 17: Appendices A. 1H21 Financial Results Detail
Appendices A. 1H21 Financial Results Detail 17
Slide 18: 1H21 Divisional Performance Breakdown
1H21 Divisional Performance Breakdown 1H20 to 1H21 Underlying NPAT1 ($mns) 44.2% 0.3 0.3 1.0 1.8 4.6 30.7 14.8 21.3 Pre-Tax 1H20 Australian Broking New Zealand Australian Agencies Health and Net Corporate result2 Tax 1H21 Rehabilitation 1. Underlying NPAT is used by management and the board to asses
Slide 19: Australian Broking
Australian Broking Profit contribution to AUB Group – Pre-tax 60.1% increase in pre-tax profit contribution from Australian Broking to $39.3mn 1H21 1H20 Movement ($) Movement (%) (1H20: $24.6mn), underpinned by excellent organic and acquisition growth ($mns) Commission and fee income (net) 201.4 1
Slide 20: New Zealand
New Zealand Profit contribution to AUB Group – Pre-tax Pre-tax profit contribution $5.2mn, an increase of 5.9% on 1H20 1H21 1H20 Movement ($) Movement (%) ($mns) Flat premium rates observed towards the end of 1H21 Commission and fee income (net) 25.1 24.8 0.3 1.2% Premium Funding (5.3%) NZbrok
Slide 21: Australian Agencies
Australian Agencies Profit contribution to AUB Group – Pre- Movement Movement 4.8% decrease in pre-tax profit contribution from Australian Agencies to $5.3mn 1H21 1H20 tax ($mns) ($) (%) (1H20: $5.5mn) Commission and fee income (net) 28.1 28.4 (0.3) (1.1%) COVID-19 impacted our clients in the Ho
Slide 22: Health and Rehabilitation
Health and Rehabilitation Profit contribution to AUB Group – Pre- Movement Movement 58.4% increase in pre-tax profit from Health and Rehabilitation to 1H21 1H20 tax ($mns)3 ($) (%) $2.8mn (1H20: $1.8mn) Underlying Revenue1 20.9 27.5 (6.6) (23.9%) The improved performance was the result of increa
Slide 23: Strong Balance Sheet and Capital Position
Strong Balance Sheet and Capital Position The business continues to be strongly cash-generative. Consolidated Balance Sheet Overview Cash generated from operations, together with Corporate ($mns) 1H21 FY20 Movement debt facilities have been invested in quality growth assets Cash – Corporate 13.0 3
Slide 24: AUB Group Debt
AUB Group Debt Total AUB Group Debt on a look-through basis1 ($mns) 286.6 (7.2) (1.6) 255.2 20.0 40.2 18.4 36.0 34.0% 43.2 1H21 AUB Group Gearing Ratio4 192.0 232.2 (FY20 34.2%) Total AUB Group Corporate Debt2 Consolidated Entity Associates Total AUB Group Debt Debt 30 June 2020 31 December 20206 As
Slide 25: A1.0 Reconciliation of Reporting NPAT to Underlying NPAT
A1.0 Reconciliation of Reporting NPAT to Underlying NPAT1 1H21 1H20 Movement (%) ($000) ($000) Net Profit after tax attributable to equity holders of the parent 23,981 16,596 44.5% Add back non controlling interest as per financial statements 5,273 2,325 Add back tax expense as per financial stateme
Slide 26: A2.1 Management Presentation of Results
A2.1 Management Presentation of Results1 1H21 ($’000) 1H20 ($’000) Movement ($’000) Movement (%) Australian Broking revenue 233,407 187,952 45,455 24.2% Australian Broking expenses (156,676) (140,036) (16,640) 11.9% EBIT - Australian Broking 76,731 47,916 28,815 60.1% New Zealand revenue 27,288 27,4
Slide 27: A2.2 Management Presentation of Results
A2.2 Management Presentation of Results1 1H21 ($’000) 1H20 ($’000) Movement ($’000) Movement (%) Australian Broking revenue 233,407 187,952 45,455 24.2% Australian Broking expenses (158,247) (143,033) (15,214) 10.6% Net profit - Australian Broking 75,160 44,919 30,241 67.3% Profit attributable to ot
Slide 28: A3.0 Consolidated Cash flow Statement
A3.0 Consolidated Cash flow Statement 1H21 1H20 ($’000) ($’000) Cash flows from operations 50,643 32,861 Cash flows from investing activities Acquisitions (35,324) (8,929) Net Sales proceeds (net of cash reduced on deconsolidation) 2,395 3,184 Plant equipment / Other (1,895) (1,421) Payments for def
Slide 29: Appendices B. AUB Group Portfolio Overview
Appendices B. AUB Group Portfolio Overview 29
Slide 30: Market Sizing and AUB Group Share
Market Sizing and AUB Group Share Australian Insurance Market AUB ~11% AUB Share of the 27% Intermediated GI Market Total 2020 Premium $92bn 46% ~22% 27% AUB Share of the GI SME AUB Segment General Insurance Life Insurance Health Insurance Data sources: APRA Quarterly General Insurance Performance S
Slide 31: Insurance Portfolio – Premium and Size
Insurance Portfolio – Premium and Size Annual Premium1 ($bns) 3.4 3.2 ~$3.6bn2 Premium under 2.8 influence across the AUB 1.8 network 1.8 2H 1.5 1.8 ~1.4mn Australian Broking Policies written 1.8 within the AUB 1.6 network (FY20) 1.4 1H 1.3 FY18 FY19 FY20 FY21 1. Total includes premium and commissio
Slide 32: 1H21 Premium Retention
Stable and Predictable Operational Drivers ~$3.6bn1 Premium under influence across ~9% 89% the AUB network increase in average premium 1H21 Premium per client CAGR over the last 3 years2 Retention3 ~1.4m …supported by a small but (excl. rate increases) Policies written consistent increase in average
Slide 33: Diversified Australian Broking Portfolio Mix
Diversified Australian Broking Portfolio Mix1 Client Segment Mix Product Line Mix Geography Mix Insurer Mix Corporate Business PI NSW WA NT Allianz National Transport Insurance 26% 19% 6% 38% 12% 2% 12% 3% Medium Enterprise Liability Motor - Fleet VIC SA TAS QBE SURA 25% 11% 5% 20% 9% 1% 12% 3% Smal
Slide 34: Group Insurance Portfolio Mix: Product and Insurer
Group Insurance Portfolio Mix: Product and Insurer Portfolio Mix – Premium by Product / Risk Line Portfolio Mix – Premium by Insurer 11% 19% 24% 32% 10% 4% 11% 8% 4% 2% 4% 2% 8% 8% 4% 2% 4% 3% 7% 8% 4% 5% 5% 5% 6% Business Workers Comp QBE CGU Ando Liability Motor - Private Allianz Millenium AIG Mot
Slide 35: Insurance Portfolio Mix: Category and Geography
Insurance Portfolio Mix: Category and Geography Portfolio Mix – by Category (%) Portfolio Mix – by Geography (%) 12% 13% NT 2% QLD 12% WA 8% NSW SA 29% 8% ACT 2% 87% 88% VIC 15% Commercial Lines Personal Lines NZ TAS 1% 23% Portfolio mix is based on available data from key Australian Broking, New Ze
Slide 36: Insurance Operations: Reach and Scale
Insurance Operations: Reach and Scale >450 NT ~11% 5 locations AUB Share of the QLD locations 13% 75 locations Intermediated GI Market (AU) WA 29 locations SA NSW 29 locations 139 locations >3,000 ACT 8 locations ~22% AUB Share of the GI staff 87% VIC SME Segment (AU) 54 locations TAS NZ 5 locations
Slide 37: Appendices C. AUB Group Business Overview
Appendices C. AUB Group Business Overview 37
Slide 38: AUB Group – An Overview
AUB Group – An Overview1 $3.6BN+ GWP2 17 STRATEGIC INSURANCE 64 broking partner businesses. INSURANCE BROKING OF $3.0BN VIA EQUITY PARTNERSHIPS AUSTRALIAN Established complementary capabilities in Life AND NETWORK PARTNERS | SPECIALIST Insurance Broking, Premium Funding, Claims AGENCIES $545MN B
Slide 39: Our Board of Directors
Our Board of Directors David Clarke Robin Low Cath Rogers Non-Executive Chair, Chair of the Nominations Committee Non-Executive Director, Chair of the Audit & Risk Committee Non-Executive Director 40 years experience in investment Former PwC partner with over 30 Previously held senior roles in
Slide 40: 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.