Broker network banks $13m in six months

Broker network banks $13m in six months | Insurance Business

Broker network banks $13m in six months
Austbrokers has announced mid-year net profit after tax (NPAT) of $12.8m for the period July-December 2013.

While this represents a 48% decrease from the same period in 2012, the company highlighted that the previous year’s figures were due to a fair value adjustment to the carrying value of associates and an adjustment to the contingent consideration for acquisitions. With these elements taken out of the equation, this year’s profit is actually a 6.2% increase on 2012.

“This has been a very pleasing and successful half year for Austbrokers continuing our strategy of acquisition and investing in organic growth,” said Austbrokers CEO and managing director Mark Searles. “The past six months have been a period of consolidation and integration of our FY13 acquisitions in addition to seeking out new opportunities.”
A statement from the company revealed that the increase in net profit after tax was achieved largely through organic growth.
The company’s share of broker profits increased 3.5% in a flat premium market with a small contribution from acquisitions. Compared to the prior period, total commission and fee income increased by 14.6% (6.5% excluding direct acquisitions) and total income by 12.4% (5.2% excluding acquisitions). However, expenses increased by 14.6% - with 8.6% of this due to acquisition costs.
Austbrokers also highlighted that solid growth was negatively impacted by the slowdown in mining in WA, which materially affected the results of one larger broker. The firm’s underwriting arm Austagencies continued its strong growth during the period with profit contribution up 20.5% on July-December 2012.

The acquisitions made by Austbrokers over the last few months are expected to make a larger contribution in the second half of the financial year. The recent acquisition of the Procare Group, for example, is expected to add 1.5% earnings per share growth over a full year. Austbrokers has completed five acquisitions totalling over $14m in the past six months.

Corporate expenses increased by $635,000 as a result of additions to the management team and the program of systems development to underpin future growth. Lower interest rates also reduced broker interest earnings by 15.7% (before acquisitions).

Austbrokers expects the second half [of the financial year] to show a growth in commission and fee income similar to the first half. While Austbrokers expects an improvement in results in the second half, it is maintaining its earnings guidance for FY2014 at 5% to 10% increase in adjusted NPAT over FY2013 (before taking account of the impact of the Procare Group acquisition).

“The outlook remains positive for the next six months and we expect to build upon the growth achieved to date in the second half of the financial year,” adds Searles. “The Austbrokers owner-driver equity model underpins our success from an organic growth perspective, in addition to being a significant contributing factor during acquisitions. Austbrokers will continue to focus on all growth opportunities throughout the remainder of the year.”
Austbrokers will pay an interim dividend of 12.0 cents per share fully franked for the half year. The results follow a day after competitor Steadfast released its half-year results, in which it reported net profit after tax of $14.5m.