Slide 1: AUB Group Results Announcement for the Full Year Ended 30 June 2020
25 August 2020 The Manager Market Announcements Office Australian Securities Exchange Ltd Level 6, Exchange Centre 20 Bridge Street Sydney NSW 2000 FOR RELEASE TO THE MARKET Dear Sir / Madam, Re: AUB Group Results Announcement for the Full Year Ended 30 June 2020 Please find attached for immediate r
Slide 2: FY20 Performance Overview
FY20 Performance Overview Strong result and momentum positioning AUB Group for sustained growth Summary — Underlying NPAT1 $53.4mn (FY19: $46.4mn) up 15.2%. — Underlying earnings per share 72.45 cents up 8.7%. — A strong FY20 result that exceeded guidance, strongest YoY growth since FY13. — Reported
Slide 3: Highlights by operating division
Highlights by operating division Australian Broking2 14.6% increase in pre-tax profit contribution from Australian Broking to $62.1mn (FY19: $54.2mn). Profit improvement and organic growth was assisted by an increase in Commercial Lines Insurance premiums averaging 6.3% and higher average premiu
Slide 4: Dividends
Dividends The Board has declared a fully franked final dividend of 35.5 cents per share (FY19: 32.5 cps), a 9.2% increase. The fully franked FY20 interim dividend on ordinary shares of 14.5 cents per share, was deferred from 3 April 2020 and will be paid on 3 September 2020. This dividend totall
Slide 5: FY21 Outlook and Guidance Upgrade
FY21 Outlook and Guidance Upgrade The AUB Group expects to deliver FY21 Underlying NPAT of $58.5mn - $61.0mn, representing growth of 9.5% - 14.2% over FY20. In estimating FY21 Underlying NPAT, the Group has assumed the following: o Premium rates for Australia are expected to increase in the rang
Slide 6: Financial Results Summary
AUB FY20 PRESENTATION OF FINANCIAL RESULTS TABLES Table 1 Financial Results Summary FIN AN C IAL R ESU L TS SU MMAR Y F Y20 F Y19 Var ianc e $ 000 $ 000 % 1 Revenue from ordinary activities 335,355 307,178 9.2% Underlying NPAT 2 53,415 46,379 15.2% Profit before tax 67,399 62,130 8.5% Net profit aft
Slide 7: Reconciliation of Underlying NPAT to Reported NPAT
Table 2 Reconciliation of Underlying NPAT to Reported NPAT1 The reported profits of the business include non-operational items, such as profits and losses on sale of equity interests, fair value adjustments to carrying values on ownership changes, changes to estimates or payments of deferred conting
Slide 8: Management Presentation of Results
Table 3 Management Presentation of Results A number of the businesses in the AUB Group are associates and are not consolidated in the financial statements. In order to give a more comprehensive view of performance, the following table aggregates 100% of these businesses’ revenues and expenses with t
Slide 9: FY20 Results Investor Presentation
FY20 Results Investor Presentation 25 August 2020 Mike Emmett CEO and Managing Director Mark Shanahan CFO 1
Slide 10: Key Messages
KEY MESSAGES Pleasing result and momentum positioning AUB Group for sustained growth 1 2 3 4 5 A strong FY20 Executed Resilient Strong Continued result, acquisition of business progress focus to deliver strongest BizCover performance in- against FY20 on upgraded UNPAT growth light of COVID- Executio
Slide 11: FY20 Financial Performance: Overview
FY20 FINANCIAL PERFORMANCE: OVERVIEW Performed above guidance and delivered an Underlying NPAT of $53.42mn, an increase of 15.2% from FY19 – our best year-on-year growth since FY13 FY19 to FY20 Underlying NPAT1 Breakdown ($mns) 15.2% 0.8 1.3 1.8 1.0 1.5 53.4 (1.7%) 2.8% (2.2%) 3.2% (3.9%) 3.6 Proc
Slide 12: FY20 Financial Performance: Divisional
FY20 FINANCIAL PERFORMANCE: DIVISIONAL Strong results in Australian Broking and New Zealand, a significant turnaround in Health and Rehabilitation and reduced revenue in Australian Agencies Vs. FY19 AUSTRALIAN AUSTRALIAN HEALTH AND OPERATING comparative period NEW ZEALAND3 BROKING2 AGENCIES REHABILI
Slide 13: COVID-19 Impact & Response
COVID-19 IMPACT & RESPONSE The diversity of our portfolio and a relatively defensive business model combined with our financial strength has underpinned the resilience of AUB Group Premium Retention (%)1 Portfolio Premium Mix Impact Diversity of our portfolio and a relatively defensive business 92
Slide 14: AUB Corporate Cashflow Overview
AUB CORPORATE CASHFLOW OVERVIEW Generated an operating cash flow of $50.6m, as strong dividend receipts resulted in an improved cash position in comparison to prior year AUB Corporate Entity Cash Movement ($mns) Operating cash generation of $50.6m 137.5 148.6 14.0 64.6 20.6 36.1 17.2 FY20 Interim di
Slide 15: Shareholder Returns
SHAREHOLDER RETURNS Achieved an uplift of 8.7% in EPS in comparison to FY19, despite the full-year dilutionary impact of equity issued in FY19 Dividend Per Share (Cents) Underlying Earnings Per Share1 (Cents per share) +8.7% +5.9% 50.0 69.59 73.72 45.5 46.0 63.85 63.85 42.0 +8.7% 32.0 32.5 35.5 29.5
Slide 16: FY20 Execution Priorities Update
FY20 EXECUTION PRIORITIES UPDATE Strong progress with execution priorities identified at the start of FY20 has built momentum in the business EXECUTE ON STRATEGICALLY EPS accretive acquisition Expanded market share and scale through 1 ALIGNED ACQUISTIONS of 40% of BizCover multiple bolt-ons across t
Slide 17: Acquisitions Overview – BizCover
ACQUISITIONS OVERVIEW – BIZCOVER Our investment in BizCover expands AUB Group’s market scale, opportunity and accretes underlying earnings Contribution to AUB Group PBT $mns FY20 YTD Performance Overview by New Business & Cancellation Index (post-acquisition, Feb-Jun20) Month (Feb – Jun20) 3.1 1.0 2
Slide 18: Expanding Our Technology Agenda
EXPANDING OUR TECHNOLOGY AGENDA Launched ExpressCover, our high-volume broking platform; Launched Sentinel, our agency management system; delivered enhancements to core broking system CBS+ Customised agency management platform Successfully leveraged with end-to-end policy life cycle capability e
Slide 19: FY21 Priorities - Evolving Our Focus
FY21 PRIORITIES - EVOLVING OUR FOCUS Our strategic focus is to exploit the portfolio’s potential for organic growth while strategically leveraging M&A to accelerate growth Priority FY21 Evolution Includes increased investments in current network businesses, new complementary bolt-ons as well EXECUTE
Slide 20: FY21 – Outlook & Guidance
FY21 – OUTLOOK & GUIDANCE Guidance: Underlying NPAT for FY21 in the range of $58.5mn - $61.0mn, representing growth of 9.5% - 14.2% over FY20 AUB Group Underlying NPAT1 $mns Premium rates for Australia are expected to increase in 58.5 – 61.0 the range of 5% to 6% Impacts of COVID-19 on the econo
Slide 21: Questions?
Questions? Mike Emmett CEO and Managing Director Mark Shanahan CFO
Slide 22: Closing
Closing
Slide 23: Appendices
FY20 INVESTOR PRESENTATION 16 A. FY20 Financial Results Detail 31 B. FY20 Portfolio Overview 39 C. FY20 AUB Group Overview Appendices 15
Slide 24: FY20 Appendices A. FY20 Financial Results Detail
FY20 Appendices A. FY20 Financial Results Detail 16
Slide 25: FY20 Divisional Performance Breakdown
FY20 Divisional Performance Breakdown FY19 to FY20 Underlying NPAT1 Divisional Breakdown ($mns) +15.2% 3.2 2.4 1.9 2.9 2.7 53.4 7.9 46.4 Pre-Tax FY19 Australian Broking New Zealand Australian Agencies Health and Net Corporate result2 Tax FY20 Rehabilitation 1. Underlying NPAT is used by management a
Slide 26: Australian Broking
Australian Broking Profit contribution to AUB Group – Pre-tax Pre-tax profit contribution to AUB Group of $62.1mn, an increase of 14.6% from FY20 FY19 Movement ($) Movement (%) ($mns) FY19. Commission and fee income (net) 354.4 333.3 21.1 6.3% Premium Funding 30.9 27.6 3.3 12.0% Profit Improveme
Slide 27: New Zealand
New Zealand Profit contribution to AUB Group – Pre-tax Pre-tax profit contribution $12.1mn, an increase of 31.9% on FY19. FY20 FY19 Movement ($) Movement (%) ($mns) Significant portion of profit growth arising from the acquisition of a Commission and fee income (net) 53.4 45.8 7.6 16.6% Premium
Slide 28: Australian Agencies
Australian Agencies Profit contribution to AUB Group – Pre- FY20 FY19 Movement Movement Pre-tax profit contribution to AUB Group of $13.6mn, a decline of 12.2% on FY19. tax ($mns) ($) (%) This was partially due to the impact of COVID-19 on the hospitality industry as Commission and fee income (net
Slide 29: Health and Rehabilitation
Health and Rehabilitation Profit contribution to AUB Group – Pre- Movement Movement Pre-tax profit contribution to AUB Group of $4.2mn increased by FY20 FY19 tax ($mns) ($) (%) 330.3% on FY19, as a result of improved utilisation, reduced costs Underlying Revenue1,2 51.4 51.2 0.2 0.5% and a more di
Slide 30: Strong Balance Sheet and Capital Position
Strong Balance Sheet and Capital Position Consolidated Balance Sheet Overview ($mns) FY20 FY19 Movement Cash – Corporate 36.1 17.2 18.9 $103.4mn $86.3mn FY20 EBITDA Cash – Consolidated 84.4 70.0 14.4 FY20 EBITDA Consolidated AUB Share Cash – Trust (Consolidated) (FY19 $75.6m) and Associate 158.8 150
Slide 31: AUB Group Debt
AUB Group Debt Total AUB Group Debt on a look-through basis1 ($mns) 255.2 (12.3) (3.0) 20.0 43.2 34.2% 136.5 FY20 AUB Group Gearing 134.0 23.0 Ratio4 55.5 192.0 (FY19 21.7%) 55.5 Total AUB Group Corporate Debt2 Consolidated Entity Associates Total AUB Group Debt 30 June 20196 Debt 30 June 20206 Asso
Slide 32: AASB16 Leases – FY20 Impact of Underlying NPAT
AASB16 Leases – FY20 Impact of Underlying NPAT The new lease standard (AASB16) has become effective for the Group commencing FY20 Impact: 1 July 2019. OLD NEW NEW NEW All leases are now recognised on the balance sheet at inception of the lease, with the exception of short-term leases and leases of l
Slide 33: Reconciliation of Reporting NPAT to Underlying NPAT
A1.0 Reconciliation of Reporting NPAT to Underlying NPAT1 FY20 FY19 Movement (%) ($000) ($000) Net Profit after tax attributable to equity holders of the parent 47,254 48,361 (2.3%) Add back non controlling interest as per financial statements 8,846 811 Add back tax expense as per financial statemen
Slide 34: Management Presentation of Results
A2.1 Management Presentation of Results1,2 FY20 ($’000) FY19 ($’000) Movement ($’000) Movement (%) Australian Broking revenue 409,091 378,339 30,752 8.1% Australian Broking expenses (289,488) (272,823) (16,665) 6.1% EBIT - Australian Broking 119,603 105,516 14,087 13.4% New Zealand revenue 58,537 50
Slide 35: Management Presentation of Results
A2.2 Management Presentation of Results1,2 FY20 ($’000) FY19 ($’000) Movement ($’000) Movement (%) Australian Broking revenue 409,091 378,339 30,752 8.1% Australian Broking expenses (293,684) (277,427) (16,257) 5.9% Net profit - Australian Broking 115,407 100,912 14,495 14.4% Profit attributable to
Slide 36: Consolidated Cash flow Statement
A3.0 Consolidated Cash flow Statement FY20 FY19 ($’000) ($’000) Cash flows from operations 79,190 54,271 Cash flows from investing activities Acquisition (151,971) (33,022) Net Sales proceeds (net of cash reduced on deconsolidation) (2,147) 4,773 Plant equipment / Other 2,021 (4,633) Payments for de
Slide 37: Reconciliation of Operating Segments
A4.0 Reconciliation of Operating Segments 30 June 2020 30 June 2019 Australian Australian Support Australian Australian Support Broking3 Agencies New Zealand Services Total Broking3 Agencies New Zealand Services Total (#039;000) (#039;000) (#039;000) (#039;000) (#039;000) (#039;000) (#039;000) (#039;000) (#039;000) (#039;000) Se
Slide 38: Realignment of Corporate Expenses and Risk Services restructure
A5.0 Realignment of Corporate Expenses and Risk Services restructure FY19 FY18 FY17 FY16 Post-alignment NPBT attributable to equity holders of parent entity ($000) ($000) ($000) ($000) Australian Broking 55,411 53,458 49,166 47,955 Risk Services 3,252 7,753 7,520 7,158 Corporate Expenses re-alignmen
Slide 39: FY20 Appendices B. FY20 Portfolio Overview
FY20 Appendices B. FY20 Portfolio Overview 31
Slide 40: 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 $92bn 46% ~22% 27% AUB Share of the GI SME AUB Segment General Insurance Life Insurance Health Insurance Data sources: APRA Quarterly General Insurance Performance S
Slide 41: Insurance Portfolio – Premium and Size
Insurance Portfolio – Premium and Size Annual Premium1 ($bns) 3.5 +11% 3.0 ~$3.4bn Premium under influence across the AUB 2.5 network 2.0 1.5 ~1.4mn Australian Broking Policies written 1.0 within the AUB network 0.5 0.0 FY17 FY18 FY19 FY20 1. Total includes premium and commission from AUB Network br
Slide 42: Stable and Predictable Operational Drivers
Stable and Predictable Operational Drivers ~$3.4bn Premium under influence across the AUB network ~9% 92% increase in average premium per client CAGR over the last FY20 Premium 3 years1 ~1.4m …supported by a small but Retention1 Policies written consistent increase in average (excl. rate increases)
Slide 43: Diversified Australian Broking Portfolio Mix
Diversified Australian Broking Portfolio Mix1 Client Segment Mix Product Line Mix Geography Mix Insurer Mix Corporate Business Householders NSW WA NT Allianz National Transport Insurance 26% 19% 5% 38% 12% 2% 12% 3% Medium Enterprise Liability Motor - Fleet VIC SA TAS QBE SURA 25% 11% 5% 20% 9% 1% 1
Slide 44: 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 45: 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% 37 Portfolio mix is based on available data from key Australian Broking, New
Slide 46: 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 47: FY20 Appendices C. AUB Group Business Overview
FY20 Appendices C. AUB Group Business Overview 39
Slide 48: AUB Group – An Overview
AUB Group – An Overview $3.4B+ GWP 17 STRATEGIC INSURANCE 64 broking partner businesses. INSURANCE BROKING OF $3.0B VIA EQUITY PARTNERSHIPS AUSTRALIAN Established complementary capabilities in Life AND NETWORK PARTNERS | SPECIALIST Insurance Broking, Premium Funding, Claims AGENCIES $375M BROKIN
Slide 49: Divisional Overview: Australian Broking
Divisional Overview: Australian Broking • Our Australian broking business encompasses some of Australia’s largest and most reputable brokerage business, with specialist expertise, market penetration and quality client portfolios. • The portfolio consists of ~ 2,100 staff with 71% 64 capabilities acr
Slide 50: Divisional Overview: New Zealand
Divisional Overview: New Zealand • AUB Group New Zealand has grown significantly since commencement in 2015, providing a key source of growth opportunities for the Group. • AUB Group New Zealand, selectively invests in high-performing broking and underwriting agency businesses and also owns NZbroker
Slide 51: Divisional Overview: Australian Agencies
Divisional Overview: Australian Agencies • Our Australian Agencies division comprises some of Australia’s leading specialist underwriters who distribute and manage niche insurance products on behalf of domestic and internationally licensed insurers, including Lloyd’s. • The business includes 18 part
Slide 52: Partner Services: AMS
Partner Services: AMS Austbrokers Member Services Deliver market-leading products, services and business support to AUB Group’s partner brokers Insurance Technology Claims and Loss Business Education, Placements Services Adjusting Services Training & Advocacy 44
Slide 53: Australian Agencies – Portfolio Overview
Australian Agencies – Portfolio Overview Farm and residential strata SME commercial motor vehicle fleet Plant & Equipment Professional Risks Specialty Motor Dealers Construction Engineering Residential, Commercial and Mixed- Schemes, facilities and single one- Film and Entertainment Labour Hire Use
Slide 54: Our Board of Directors
Our Board of Directors David Clarke Robin Low Cath Rogers Non-Executive Chairman, Chair of the Nomination Non-Executive Director, Chair of the Audit & Risk Non-Executive Director Management Committee 40 years experience in investment Former PwC partner with over 30 Previously held senior roles
Slide 55: 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.