Aub Group Limited · ASX:AUB
Aub — Austbrokers Holdings — H1 2011 Earnings Presentation
30 slides from Aub's earnings presentation, Feb 24, 2011
Slide 1: Cover letter to ASX: Presentation on Results
For personal use only 24th February 2011 The Manager Company Announcements Australian Securities Exchange Level 6, Exchange Centre, 20 Bridge Street Sydney, NSW 2000 Dear Sir / Madam, Re: Presentation on Results for the Half Year Ended 31 December 2010 Attached for immediate release is Austbrokers H
Slide 2: First Half Year 2011 Results Presentation
For personal use only AUSTBROKERS HOLDINGS LIMITED First Half Year 2011 Results Presentation Thursday 24th February Lach McKeough CEO Steve Rouvray CFO
Slide 3: Agenda
Agenda For personal use only • Overview – Business Overview – 1HY 2011 Business Highlights – 1HY 2011 Financial Highlights • 1HY 2011 Financial Performance • FY 2011 Outlook 1
Slide 4: Business Overview
Business Overview For personal use only • Austbrokers is one of top four insurance broking networks in Australia – Over $1.35 billion in premiums placed – Over 1,300 personnel engaged in the business – Wide geographical spread over 80 locations – Regional presence – Solid SME base – Corporate capabi
Slide 5: Business Overview: Insurance Broking owner-driver model
Business Overview For personal use only • Insurance Broking owner-driver model – 40 member broker firms • 21 50% owned • 16 51% - 80% owned • 3 100% owned • Underwriting agency business – Entities are authorised to write business on behalf of licensed insurers – no underwriting risk – Austagencies •
Slide 6: Business Overview (con't): Joint Venture with IBNA – AIMS
Business Overview (con’t) For personal use only • Joint Venture with IBNA – A&I Member Services (AIMS) – $2.3 billion premium and 116 businesses (combined Austbrokers / IBNA) – AIMS value proposition to underwriters to develop products and closer relationships – Quality products – Potential source o
Slide 7: NPAT Growth 1HY 2006 - 2011
NPAT Growth 1HY 2006 - 2011 For personal use only % increase 14.6% 38% 12.6% 7.1% 25.9% NPAT – Net profit after tax before amortisation of intangibles before profits on business / portfolios sold (Adjusted NPAT) 5
Slide 8: Earnings Per Share 1HY2006 - 2011
Earnings Per Share 1HY2006 - 2011 For personal use only Cents Cents per Share 8.2 9.3 12.9 14.5 15.3 18.4 Based on adjusted NPAT calculated on same basis as Basic Earnings per share 6
Slide 9: 1HY 2011 Financial Performance
1HY 2011 Financial Performance For personal use only $’000 1HY 1HY % change 2011 2010 Broker Revenue (net of commission 107,392 96,520 11.3 Paid) Brokers & Agencies Profit 18,501 15,497 19.4 (AHL share) Profit (before tax and amortisation 14,128 11,214 26.0 of intangibles and sales of businesses) NP
Slide 10: 1HY2011 Highlights: Broking Business
1HY2011 Highlights For personal use only • Broking Business – Improved market conditions – Increasing interest rates – Achieving organic growth • Acquisitions in Network – Austbrokers Coast to Coast acquired two small portfolios – income $150,000 – Austbrokers RWA acquired a small portfolio – income
Slide 11: 1HY2011 Highlights: Equity Movements
1HY2011 Highlights For personal use only • Equity Movements – Acquired additional shareholdings • 10% Austbrokers Trade Credit • 10% SPT Insurance Brokers (in progress) – Divested Adroit Hume to Adroit reducing equity from 80% to 45% • Underwriting Agencies – Increased commission and fees income by
Slide 12: Agenda
Agenda For personal use only • Overview • 1HY2011 Financial Performance: – Income statement – as per ASX reporting – Reconciliation to Adjusted NPAT – Profit and loss statement – detailed – Balance sheet – Funding • FY 2011 outlook 10
Slide 13: Income Statement 1HY2011
Income Statement 1HY2011 For personal use only 1HY2011 1HY2010 Variance % $’000 $’000 Revenue from ordinary activities 53,477 49,162 8.8 Expenses from ordinary activities (39,520) (37,984) (4.0) Borrowing costs (1,224) (1,218) (0.5) 12,733 9,960 27.8 Profit from sale of interests in subsidiaries * 2
Slide 14: Reconciliation to Adjusted NPAT
1HY2010 Reconciliation to Adjusted NPAT For personal use only Profit after tax Reconciliation of reported result to operating NPAT before profits relating to divestments and amortisation 1HY 1HY 2011 2010 $’000 $’000 Reported Profit attributable to members 8,695 7,168 Profits on sale of interest in
Slide 15: 1HY Compared to 2HY
1HY Compared to 2HY For personal use only $M Adjusted NPAT Financial Year 2HY 64% 65% 59% 60% 61% 13 1HY 36% 35% 41% 40% 39%
Slide 16: Dividend
Dividend For personal use only Interim Dividend • 8.5 cents per share fully franked – up from 7.5 cents last year • Eligible for DRP • DRP shortfall not proposed to be underwritten • Shares will be issued at 2.5% discount to five day VWAP • Closing time to make elections – 5pm 11 April 2011 14
Slide 17: 1HY2011 Compared to 1HY2010
1HY2011 Compared to 1HY2010 For personal use only 1HY 2011 1HY 2010 VARIANCE VARIANCE $'000 $'000 $'000 % BROKER OPERATIONS COMMISSION AND FEES 85,393 77,833 7,560 9.7% LIFE INCOME 4,539 4,422 117 2.6% PROFIT COMMISSIONS 114 192 (78) -40.6% PREMIUM FUNDING 9,058 8,087 971 12.0% INTEREST 5,347 3,380
Slide 18: 1HY2011 Compared to 1HY2010: Consolidated and Equity Accounted Brokers
1HY2010 Compared to 1HY2009 For personal use only $'000 1HY 2011 1HY 2010 VARIANCE VARIANCE $ % CONSOLIDATED BROKERS COMMISSION AND FEES 28,666 27,281 1,385 5.1% LIFE INCOME 2,465 2,593 (128) -4.9% PROFIT COMMISSIONS 27 73 (46) -63.0% PREMIUM FUNDING 2,630 2,454 176 7.2% INTEREST 1,608 1,101 507 46.
Slide 19: Increase in NPAT 1HY2011 vs 1HY2010
Increase in NPAT 1HY2011 vs 1HY2010 For personal use only $’000 17
Slide 20: Analysis of Contribution to Growth in NPAT
Analysis of Contribution to Growth in NPAT For personal use only Growth in NPAT $’000 % Growth in NPAT Share of broker profits 2,234 28.7 Borrowing costs 18 0.2 Corporate Income 148 1.9 Offset by Corporate expenses (229) (2.9) Austagencies (132) (1.7) Tax (26) (0.3) Total 2,013 25.9 Notes 1.Existing
Slide 21: Increase in Pre-Tax Share of Broker Profits 1HY2011 from 1HY2010
Increase in Pre-Tax Share of Broker Profits 1HY2011 from 1HY2010 For personal use only $’000 19
Slide 22: Increase in Share of Broker Profits 1HY2011 vs 1HY2010
Increase in Share of Broker Profits 1HY2011 vs 1HY2010 For personal use only $’000 % of Growth Increase in premium funding 556 4.0 Increase in AIMS commission 120 0.9 Interest earnings 1,127 8.0 Increase in other broking income less increase in expenses 1,389 9.8 Total Increase 3,192 22.7 20
Slide 23: 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 Including Austagencies Insurance Broking 1HY11 27.3% 27.6% 1HY10 25.2% 25.1% 1HY09 25.6% 25.4% 1HY08 25.2% 25.0% 1HY07 20.7% 1HY06 19.2% Increase in interest income in brokers acc
Slide 24: Austagencies Underwriting Agencies
Austagencies Underwriting Agencies For personal use only $’000 1HY 2011 1HY 2010 INCR / (DECR) Commission and fees 5,759 4,542 1,217 Profit commission 118 479 (361) Claims handling fee - 232 (232) Interest 247 132 115 Other income 16 - 16 6,140 5,385 755 Expenses 4,848 3,938 (910) Net Profit before
Slide 25: Funding
Funding For personal use only • Facility from St George Bank– limit $44.3 million including subsidiaries $6.4 million • Facilities utilised at December 2010 – $26.4 million at holding company level – $6.4 million in subsidiaries • Facility term is 5 years to August 2013 • Estimated $1 million commit
Slide 26: Agenda
Agenda For personal use only • Business Overview • 1HY 2011 Financial Performance • FY 2011 Outlook – Market conditions – Strategy – Outlook 24
Slide 27: Market conditions
Market conditions For personal use only • Premium rates – Only moderate increase evident – Competitive market limiting underwriters in achieving desired increases – Natural disasters may lead to increases in future • Increases have put 2HY2011 current cash rate ahead of average rate for 2HY2010 • Ti
Slide 28: Strategy
Strategy For personal use only • Growth – acquisition activity to continue – business development – marketing strategies – acquired skilled account executives • Continue to expand underwriting agency capability • Back office synergies and efficiencies – improvement in IT systems and DataCentre, util
Slide 29: FY2011 Outlook
FY2011 Outlook For personal use only • Premium rate increases were likely to continue to only be moderate but recent floods and cyclones may give impetus to increases • Insurance broking industry consolidation – continuing acquisition opportunities but any new acquisition activity unlikely to contri
Slide 30: 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 coul