AUB Group 1HY16 Results

Summary:

  • 72% increase in Reported consolidated Net Profit After Tax for 1HY16 to $23.8m (1HY15: $13.9m)1, benefiting from the $6.2m after tax profit on the sale of an associate.
  • 3.5% increase in Adjusted NPAT2 to $12.9m (1HY15 $12.4m).
  • Fully franked interim dividend maintained at 12 cents per share.
  • AUB expects FY16 Adjusted NPAT growth to be in the range of 0% – 5%3.

AUB Group Limited (ASX: AUB) announced a consolidated Net Profit After Tax (Reported NPAT) of $23.8m up 72% on the prior year. This includes the profit on the sale of AUB Group Limited’s (AUB Group) entire investment in Strathearn Insurance Group Pty Ltd (Strathearn) announced in December 2015, of $6.2m after tax, crystallising strong investment returns to shareholders.

Adjusted NPAT2, which reflects the underlying operating profit of the AUB Group, was $12.9m in 1HY16 (1HY15: $12.4m), an increase of 3.5%, which is pleasing in the context of a continued challenging insurance market.

This result demonstrates the strength of the AUB Group’s disciplined approach to its’ business model, operating model and strategy. Strong contributions have been made from the expansion in Risk Services and New Zealand, more than offsetting the impact of the reducing insurance premium rates in the insurance broking and underwriting agencies sectors. Importantly key underlying business drivers evidenced positive growth including client numbers; insurance and premium funding, policy count and life income.

On a Reported NPAT basis, earnings per share increased to 38 cents per share, an increase of 67% over the prior half year, with a ten cents per share contribution from the sale of Strathearn. On an underlying basis, earnings per share increased by 0.4% (based on Adjusted NPAT).

The interim dividend has been maintained at 12 cents per share and is payable on 29th April 2016.

As foreshadowed at our AGM, we continue to focus on the execution of our client-centric Total Risk Solutions strategy, aimed at enhancing the client value proposition and diversifying income generation, through our core ‘owner-driver’ business model. As our products and services mix and systems capability continue to expand, this will underpin growth across our business divisions building value for our partners and for our clients across Australia and New Zealand.

The AUB Group continued acquisition activity aligned to the strategies of each market segment, and enhanced its portfolio through the divestment of Strathearn and the re-investment of proceeds into higher returning and less volatile investments. Financial year to date the AUB Group committed $61.0m of acquisition spend (1HY15 $45m), or $29.2m net of proceeds from disposals.
AUB Group updated its funding facility, increasing the facility limit to $79.45m on improved terms, and extending the tenure to 30th November 2018.

1 All comparisons are 1HY16 compared to the prior comparable period (pcp) 1HY15 unless otherwise stated. 2. Adjusted NPAT excludes adjustments to carrying values of associates and controlled entities, after tax profits and losses on sale and deconsolidation of controlled entities, contingent consideration adjustments, impairment charge and amortisation of intangibles. 3 The achievement of targets is subject to prevailing economic conditions.