2024
ANNUAL
REPORT
CONTENTS
Chair’s Message
1
CEO’s Message
3
Directors’ Report
6
Environmental, Social and Governance Report
55
Auditors Independence Declaration
77
Consolidated Statement of Comprehensive Income
78
Consolidated Statement of Financial Position
79
Consolidated Statement of Changes in Equity
80
Consolidated Statement of Cash Flows
82
Consolidated Entity Disclosure Statement
140
Directors’ Declaration
146
Independent Auditor’s Report
147
ASX Additional Information
151
Dividend Details
153
Corporate Information
154
AUB GROUP ANNUAL REPORT 2024
PROGRESS ON STRATEGIC AGENDA
The execution of our strategic priorities has been a key driver
of our financial success. During FY24, we completed several
strategically important and accretive acquisitions, further
strengthening our market position.
The integration of Tysers has provided us with valuable
access to Lloyd’s, and offered a window into new markets
through its broad client base and distribution network.
This strategic acquisition has created a robust pipeline for
expansion into both existing and potential new markets,
aligning with our goal of leveraging the Tysers platform to
capitalise on the value chain and unlock the next stage of
growth.
Our agencies portfolio continues to be a major growth driver,
exceeding our target of $1 billion in premiums for FY24,
marking a 19.6% increase from FY23. The strategically
important acquisition of Pacific Indemnity completed, with
effect from 1 July 2024.
Looking ahead, FY25 will see an increased focus on building
out our UK Retail capability. We also remain committed to
enhancing our strategic investments, optimising Tysers’
wholesale broking operations, and driving further growth
across our key markets. Our strategic priorities will continue
to centre on leveraging these acquisitions to maximise value
and capitalise on emerging opportunities.
Dear Shareholders,
On behalf of the Board of Directors, I am pleased to present
AUB Group’s Annual Report and the performance highlights
for the 2024 Financial Year (FY24).
FY24 has been marked by ongoing challenges, including
persistent inflation, geopolitical tensions, and environmental
disruptions, contributing to economic uncertainties. Over the
past year, the insurance industry’s focus has increasingly
shifted toward enhancing regulatory compliance, driven
by new regulations aimed at boosting transparency and
consumer protection. At the same time, insurers have
been managing underwriting performance as a result of
an expensive claims environment. The broking sector is
contending with heightened competition and evolving client
expectations and AUB Group’s partner businesses have
been instrumental in guiding clients through this complex
landscape. By leveraging our deep industry expertise
and innovative solutions, we have provided essential risk
management, compliance support, and stability, ensuring
our clients are well-equipped to face future challenges.
FINANCIAL PERFORMANCE AND CAPITAL
STRENGTH
Financial Year 2024 has been another successful year for
AUB Group, highlighted by strong financial performance
and significant strategic achievements. Our Underlying Net
Profit After Tax (UNPAT) grew by 32.5% compared to FY23,
reaching $171.0mn, demonstrating our commitment to
delivering strong returns while maintaining financial strength.
We sustained a robust balance sheet, with the corporate
entity being cash generative and access to $471.3mn in cash
and available debt funding at 30 June 2024. Additionally,
we raised $225mn in equity via a $200mn placement to
institutional shareholders announced in May 2024 and a
$25mn share purchase plan in June 2024, to enable our
acquisition pipeline, and fund future growth initiatives.
CHAIR’S MESSAGE
David Clarke
Chair
AUB GROUP ANNUAL REPORT 2024
1
CHAIR’S MESSAGE (CONTINUED)
DIVIDENDS
In FY24, AUB Group is pleased to determine a dividend
reflecting our strong financial performance and
commitment to delivering value to our shareholders. We
are declaring a fully franked final dividend of 59.0 cents
per share, which, combined with the interim dividend of
20.0 cents per share, brings the total full-year dividend
to 79.0 cents per share. This represents an increase of
23.4% compared to the previous year, reflecting our robust
earnings and healthy cash flow. Notably, this dividend
corresponds to a payout ratio of 52.8% of our Underlying
Net Profit After Tax (UNPAT), underscoring our commitment
to pay dividends to our investors while maintaining a
prudent balance sheet to support future growth and
strategic investments. Additionally, our Earnings Per Share
(EPS) for FY24 stands at 156.78 cents, reflecting growth
of 21.2% from the prior year and further highlighting
our successful execution of strategic priorities and our
commitment to enhancing shareholder value.
ENVIRONMENT, SOCIAL, AND GOVERNANCE
(ESG)
Our commitment to improving AUB Group’s ESG practices
has remained steadfast in FY24. We have implemented
several key initiatives and have further plans in place to
enhance our ESG footprint. Highlights include:
–
AUB Group’s recertification as a ‘Great Place to Work.’
–
Continued roll-out of AUB Giving and Community
Day programs, reinforcing our commitment to social
responsibility.
–
Ongoing support through donations and sponsorships
for community and sporting clubs across Australia.
–
Commenced assessment of our approach against
Australian Sustainability Reporting Standard (ASRS 1)
–
Implemented measures to address gender pay equity
- women represented 52% of our workforce, ~52% of
promotions and ~56% of new hires
–
High levels of client trust, evidenced by a premium
retention rate of 93%
Melanie Laing has joined the Board as a Non-Executive
Director and Chair of the People and Remuneration
Committee, following Paul Lahiff’s retirement. Melanie brings
outstanding value with her extensive background, including
roles as a Non-Executive Director for Keypath Education
International and Ridley Corporation, and her experience as
Group Executive of Human Resources at Commonwealth
Bank of Australia. We warmly welcome Melanie to the Board
and look forward to benefiting from her significant expertise
and insights.
I would also like to take this opportunity to foreshadow my
retirement at the Annual General Meeting from the AUB
Group Board after 10 years, including eight as Chair, with
compound annual growth of 17.0% in UNPAT and 10.1% in
EPS over the period. I am deeply grateful for the support and
collaboration of my fellow Board members, our shareholders,
the Management team, and all of AUB’s partners and
teams. It has been an honour to be part of this Company,
and I leave with confidence that AUB is in excellent hands,
well-positioned for continued success. In this regard, I am
pleased to announce that I will be succeeded as Chair by
current Director Peter Harmer. Peter’s extensive experience,
expertise, and deep knowledge of the insurance and broking
industry position him well to guide AUB Group towards its
future aspirations. My retirement will formally occur at the
conclusion of this years’ Annual General Meeting.
CONCLUSION
FY24 has been an exceptional year for AUB Group,
distinguished by significant achievements and commitment
to our strategic objectives, which highlight both our strong
market position and future potential.
I wish to extend my thanks to our dedicated employees
and partners for their unwavering dedication and hard
work throughout the year, whose commitment has been
instrumental in driving the impressive results we achieved
in FY24. I also want to express our sincere gratitude to
our clients and shareholders for their continued trust and
support. As we move forward, we are well-positioned to
build on our successes and tackle the opportunities and
challenges ahead. We look forward to sharing our progress
with you at our Annual General Meeting in October.
David Clarke
Chair
AUB GROUP ANNUAL REPORT 2024
2
CEO’S MESSAGE
Michael Emmett
Chief Executive Officer
and Managing Director
OVERALL FINANCIAL PERFORMANCE
In FY24, underlying revenue grew by 20% to $1.33 billion,
while underlying net profit after tax increased by 32.5%
to $171 million, benefiting from further EBIT margin
expansion to 34%. All divisions contributed to this growth,
with revenue increases ranging from 8.5% to 26.5%, margin
expansion between 170bps and 740bps, and profit before tax
attributable to AUB shareholders rising between 14.7% and
59.2%. As a result, EPS grew by 21.2% compared to the prior
year, and our three-year average Return on Invested Capital
(ROIC) ending on 30 June 2024 was 12.7%.
The business continues to generate strong cash flows,
with underlying NPAT fully converted to cash for FY24.
The Group’s net debt position decreased from $654 million
on 31 December 2023 to $478 million on 30 June 2024,
with our leverage ratio reducing to 1.28x on 30 June 2024.
Cash and undrawn debt on 30 June 2024 amounted to
$471.3 million, providing substantial headroom for future
acquisition activity.
DIVISIONAL PERFORMANCE
Australian Broking remains the engine room of the Group.
We optimised our portfolio by making eight bolt-on
acquisitions and one disposal, restructuring a broking
portfolio, and investing in five equity step-ups, while
continuing to support succession planning by reducing
our equity in four brokerages. The division continues to
deliver strong revenue growth, while widening margin
jaws through effective cost management, progressing
towards our medium-term margin target of 40%. Our
analysis over the past five years reveals that organic profit
growth in Australian Broking, excluding acquisitions, has
outpaced premium rate growth, at times by more than
double, reinforcing our confidence in the sustainability
of future revenues.
Dear Shareholders,
I am pleased to share AUB Group’s outstanding results for
FY24, with strong performance across all divisions. This year
marked significant milestones in revenue growth, margin
expansion, and profit growth, underscoring our collective
strength and strategic execution.
Financial Year 2024 represented a pivotal moment as we
completed five full years under our ambitious strategic
mandate. With a revitalised leadership team, bold ambitions,
and clearly defined priorities, we have achieved substantial
growth, boasting a compound annual Underlying NPAT
growth of 30% and EPS growth of 19% since FY19.
Today, AUB Group manages over $10 billion in premiums
on behalf of our clients, having expanded beyond traditional
broking to include a diverse portfolio of Underwriting
Agencies, Insurtech businesses, and a strong presence in
Wholesale Broking, particularly within the Lloyd’s market.
Our global reach now spans 16 countries, with approximately
5,500 dedicated professionals serving ~one million clients,
expertly placing and managing risks with the world’s leading
insurers. Over the past five years, AUB Group has been
one of the fastest-growing broking groups globally and is
currently ranked as the 18th largest Insurance Broking Group
in the world.
Despite our growth, our unwavering commitment to clients
and partners remains at the core of our operations. Our
owner-driver model, integral to our success, allows key
partners to maintain substantial equity stakes in their
businesses, preserving the entrepreneurial spirit and
fostering a sense of family within the AUB Group. With a
portfolio of approximately 100 unique brands, each with
its own history and culture, united under the AUB Group
umbrella, our proven go-to-market strategy continues to
deliver exceptional results across multiple jurisdictions,
year after year.
AUB GROUP ANNUAL REPORT 2024
3
CEO’S MESSAGE (CONTINUED)
BizCover delivered another fantastic year, achieving revenue
growth of 15% and significant margin expansion to 42%.
The business continues to make strategic investments
to enhance its platform, ensuring sustained growth and
customer satisfaction. Notably, the insurer panel was
strengthened with the addition of Chubb and HDI, expanding
the range of insurance options available to customers, while
the relaunch of BizCover’s cyber insurance offering has
shown encouraging growth.
The Agencies division made an impressive contribution,
crossing the $1 billion premium placement milestone while
making significant progress towards our medium-term
EBIT margin target of 45%. All components of the division
performed strongly, and the addition of Pacific Indemnity
from 1 July will enable us to extend this growth into FY25.
New Zealand’s operations continue to deliver remarkable
results, with another year of strong revenue growth at 25.6%,
compounded by a 740bps margin expansion, resulting in
EBIT growth of 57.4%. FY24 organic profit growth of 26.3%
was bolstered by 10.5% profit growth from acquisitions, an
underlying profit growth of 59.2%. Our ongoing focus on
growth in New Zealand is underpinned by nine acquisitions
during the year, alongside portfolio actions including one
equity step-up and two equity step-downs.
Financial Year 2024 also marked our first full year of Tysers’
performance, contributing positively to our overall results.
On a normalised basis, Tysers EBIT grew by 14.1% to $99.4m
in FY24. We successfully achieved run-rate revenue and
cost synergy targets during FY24 while also making good
progress to restructure the Tysers operations. The ability
to leverage Tysers to access the Lloyd’s Insurance market
to the benefit of our broking and agency networks is a
significant competitive advantage which will increase the
growth potential of AUB Group.
OUTLOOK
In FY25, we forecast underlying net profit after tax to be
in the range of $190 million to $200 million, representing
growth of 11.1% to 16.9% on FY24. The contribution from
acquisitions reflects only those M&A activities that are highly
certain and excludes businesses divested in FY24.
ENVIRONMENT, SOCIAL AND GOVERNANCE
(ESG)
AUB Group’s business model, with distributed ownership
and partnership with hundreds of operating shareholders,
actively supports ESG goals tailored to their respective
communities. Key highlights for FY24 include:
–
Inclusion in Group 1 of the Australian Sustainability
Reporting Standard (ASRS) 1, with an independent
consultant engaged to develop an action plan to enhance
the quality, transparency, and actionability of insights.
–
Adoption of corporate platforms such as the Do Good
Be Better donation matching and volunteering program.
–
A proactive focus on gender diversity targets, including
implementation of specific measures to address gender
pay equity.
–
Accreditation once again as a Great Place to Work.
–
Maintenance of our AA rating for ESG from MSCI.
–
Introduction of a minimum shareholding policy for NEDs
and Group Executives to ensure ongoing alignment with
shareholders.
–
Significant enhancements to the Group’s Risk
Management Framework.
CONCLUSION
Financial Year 2024 was a year of numerous priorities and
initiatives, and our strong progress is a testament to the
AUB team’s remarkable ability to navigate complexity and
consistently deliver on our strategic objectives. I extend my
deepest gratitude to our clients for their continued trust in
us to manage their most critical business risks, to our teams
for their unwavering dedication, and to our business partners
for their commitment to our success. As we look forward,
I am confident that AUB is well-positioned for sustained
outperformance in the years ahead, and I look forward to
keeping you updated on our future achievements.
Michael Emmett
Chief Executive Officer
and Managing Director
AUB GROUP ANNUAL REPORT 2024
4
DIRECTORS’
REPORT
AUB GROUP ANNUAL REPORT 2024
5
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
BOARD OF DIRECTORS
Your Directors submit their report for the year ended 30 June 2024. The names and details of the Company’s Directors in
office during the financial year and until the date of this report are as follows. Directors were in office for this entire period
unless otherwise stated.
David C. Clarke
LLB, MAICD
Independent Non-Executive Chair
Appointed: Non-Executive Director from 3 February 2014;
Chair from 26 November 2015
Board Committees: Board Audit & Risk, Nomination (Chair),
People & Remuneration (Interim Chair 23 August – 2
November 2023)
Background and experience:
David Clarke was Chief Executive Officer of Investec Bank
(Australia) Limited from 2009 to 2013. Prior to joining
Investec Bank, he was the CEO of Allco Finance Group and
a Director of AMP Limited, following five years at Westpac
Banking Corporation where he held a number of senior
roles, including Chief Executive of BT Financial Group. David
has 40 years’ experience in investment banking, funds
management, property and retail banking. He was previously
employed at Lend Lease Corporation Limited where he was
an Executive Director and Chief Executive of MLC Limited.
David is the Chair of Charter Hall Group Limited, Fisher
Funds Management Limited and Resolution Life Australasia
Limited.
Directorships of other listed entities (last 3 years):
–
Charter Hall Group Limited (April 2014 to present)
Michael P.C. Emmett
B Com, H.Dip. Acc CA (SA)
CEO and Managing Director
Appointed: 11 March 2019
Board Committees: Nil
Background and experience:
Mike Emmett is a Director of various companies within the
Group, including Tysers Insurance Brokers Limited. Prior
to joining AUB Group, he was Group CEO for Cover-More,
previously an ASX-listed global travel insurer and now part of
the Zurich Group. Earlier, Mike was QBE Group Executive of
Operations and EY Managing Partner for Financial Services
Advisory. Prior to moving to Australia, Mike held senior roles
in Finance and Consulting in the UK and South Africa.
Directorships of other listed entities (last 3 years):
–
Nil
6
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
BOARD OF DIRECTORS (CONTINUED)
Richard D. Deutsch
B Econ, FCA
Independent Non-Executive Director
Appointed: 3 November 2022
Board Committees: Board Audit & Risk (Chair from
2 November 2023), Nomination, People & Remuneration
Background and experience:
Richard Deutsch was the Chief Executive Officer of Deloitte
Australia from 2018 to 2021. Prior to the CEO role, Richard
was the Managing Partner of the Audit & Advisory Practice
and a member of the Global Audit & Advisory Leadership
Team. Richard’s career also includes more than 25 years
working with PwC, including nine years on PwC’s Australian
executive team. Richard is a Non-Executive Director of
Bendigo & Adelaide Bank Limited and Hollard Holdings
Australia Pty Limited. He is the Chair of the Movember
Foundation and a Champions of Change Coalition Convenor
and Advisor to CEOs and Boards.
Directorships of other listed entities (last 3 years):
–
Bendigo and Adelaide Bank Limited (September 2021
to present)
Peter G. Harmer
Harvard Advanced Management Program
Independent Non-Executive Director (from 22 July 2021)
Appointed: 22 July 2021
Board Committees: Board Audit & Risk, Nomination,
People & Remuneration
Background and experience:
Peter Harmer was previously Managing Director and Chief
Executive Officer of Insurance Australia Group (IAG) Limited
and is currently a Non-Executive Director of Commonwealth
Bank of Australia Limited and nib holdings limited, and is the
Chair of Lawcover Insurance Pty Ltd. Peter is also a member
of the Advisory Council for Bain & Company, an Executive
Mentor with Merryck & Co ANZ, and a member of the
Advisory Council of EXL Services Asia Pacific. Prior to IAG he
was Chief Executive Officer of Aon Limited UK and a member
of Aon’s Global Executive Board, and spent seven years as
Chief Executive Officer of Aon’s Australian, New Zealand
and Pacific operation. Peter has over 40 years’ experience in
the industry spanning insurance, reinsurance broking, and
insurance broking. He is a Non-Executive Director of Tysers
Insurance Brokers Limited.
Directorships of other listed entities (last 3 years):
–
Commonwealth Bank of Australia Limited (March 2021
to present)
–
nib holdings limited (July 2021 to present)
7
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
BOARD OF DIRECTORS (CONTINUED)
Andrew J. Kendrick
Independent Non-Executive Director
Appointed: 27 January 2023
Board Committees: Board Audit & Risk, Nomination,
People & Remuneration
Background and experience:
Andrew Kendrick is a former Non-Executive Director of
Lloyd’s of London and the Lloyd’s Market Association.
He has more than 40 years’ experience in the insurance
industry in the UK, Europe and Bermuda. Andrew’s executive
career includes leadership positions with Chubb and Ace,
culminating in the role of President & Chairman, Chubb
European Group. He began his career at Sturge Syndicate
210, and held a number of senior underwriting positions
with Ockham Underwriting. Andrew is the Chair of Everest
Insurance (Ireland) DAC and the Chair of Tysers Insurance
Brokers Limited.
Directorships of other listed entities (last 3 years):
–
Nil
Melanie S. Laing
BA (Hons), FAICD, FAHRI, CEW
Independent Non-Executive Director
Appointed: 2 November 2023
Board Committees: Board Audit & Risk, Nomination,
People & Remuneration (Chair) (from 2 November 2023)
Background and experience:
Melanie Laing is a Non-Executive Director of global, ASX-
listed (US domiciled) digital education provider, Keypath
Education International, and of ASX-listed Ridley Corporation,
one of Australia’s leading agricultural companies.
Melanie was group executive of HR at Commonwealth Bank
of Australia, where she was responsible for the strategic
planning, transformation and implementation of the bank’s
global people agenda and HR operations. Previously, she
was global head of people and culture at Origin Energy, and
has held senior HR leadership roles with Unisys, Vodafone,
General Re and Times Mirror, in Australia and overseas.
Directorships of other listed entities (last 3 years):
–
Keypath Education International Inc. (May 2021 to
present)
–
Ridley Corporation Limited (September 2023 to present)
8
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
Cath L. Rogers
CFA, B Com, MBA, GAICD
Independent Non-Executive Director
Appointed: 3 May 2018
Board Committees: Board Audit & Risk, Nomination,
People & Remuneration
Background and experience:
Cath was previously a Non-Executive Director of fintech Digital
Wallet Pty Limited which trades as Beem It (2018-2021),
McGrath Limited (2016-2018) and the Heart Research Institute
(2014-2019).
Cath has a background in financial services, private equity and
venture capital investment, most recently with global venture
capital firm Antler, as well as AirTree Ventures, Anchorage
Capital Partners, and a middle eastern sovereign wealth
fund. Cath also held roles in Sydney and New York with Credit
Suisse, involved in M&A and equity capital markets advisory.
Directorships of other listed entities (last 3 years):
–
Nil
BOARD OF DIRECTORS (CONTINUED)
Former Directors:
Paul A. Lahiff retired as a Non-Executive Director
on 23 August 2023.
Robin J. Low retired as a Non-Executive Director
on 2 November 2023.
9
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
INTERESTS IN THE SHARES AND RIGHTS OF THE COMPANY
As at the date of this report, the interests of the Directors in the shares and rights of AUB Group Limited were:
Director
Shares
Performance
Share Rights
Share
Appreciation
Rights
David Clarke
31,927
–
–
Michael Emmett
170,573
396,123
508,388
Richard Deutsch
4,340
–
–
Peter Harmer
4,505
–
–
Andrew Kendrick
–
–
–
Melanie Laing
2,296
–
–
Cath Rogers
9,313
–
–
DIRECTORS’ MEETINGS
The number of Directors’ meetings held (including meetings of Committees of Directors) and attendance of Directors during the
year ended 30 June 2024 is as follows:
Board Scheduled
Board Unscheduled
Board Audit
& Risk Committee
People &
Remuneration
Committee
Nomination
Committee
Director
Held1
Attended
Held1
Attended
Held1
Attended
Held1,2
Attended
Held1
Attended
David Clarke
6
6
13
13
8
8
8
8
5
5
Michael Emmett3
6
6
13
13
–
–
–
–
–
–
Richard Deutsch
6
6
13
13
8
8
8
8
5
5
Peter Harmer
6
6
13
11
8
8
8
6
5
5
Andrew Kendrick
6
6
13
10
8
8
8
8
5
5
Paul Lahiff4
1
1
4
2
2
2
4
4
1
1
Melanie Laing5
4
4
6
6
5
5
3
3
3
3
Robin Low6
2
2
7
7
3
3
5
5
2
2
Cath Rogers
6
6
13
12
8
8
8
8
5
5
1
The number of meetings held during the time the Director was a member of the Board or of the relevant Committee.
2
Includes a concurrent meeting of the People & Remuneration and Board Audit & Risk Committees to support the determination of remuneration outcomes.
3
Michael Emmett was not a member of any Committee and attended Committee meetings as an invitee.
4
Paul Lahiff retired as a Director on 23 August 2023.
5
Melanie Laing was appointed as a Director on 2 November 2023.
6
Robin Low retired as a Director on 2 November 2023.
COMPANY SECRETARIES
Richard H. Bell
BBus, LLB, B.Comm (Law)
Chief Legal & Risk Officer and Company Secretary
Richard Bell joined AUB Group on 15 June 2021 as Group General Counsel and was appointed Company Secretary on 29 June
2021 and Chief Legal & Risk Officer on 22 November 2022. Before joining AUB Group, he was General Counsel (Corporate) &
Group Company Secretary at Aristocrat Leisure Limited and previously in private practice specialising in Mergers & Acquisitions
at Allens Linklaters.
Elizabeth M. McGregor
BA, MBA, FGIA, FCG, GAICD
Group Head of Company Secretarial and Joint Company Secretary
Elizabeth McGregor joined AUB Group on 1 October 2021 and was appointed Joint Company Secretary on 29 October 2021 and
Group Head of Company Secretarial on 14 September 2023. She was previously company secretary of a number of ASX listed
entities, through her work with the professional services companies Automic Group and Mertons Corporate Services.
10
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
OUR PURPOSE AND VALUES
We place clients at the heart of everything we do – providing products, services and solutions that help protect them from
harm, damage and financial burden. Our partners and advisers provide trusted support and guidance to clients on the optimal
combination of physical, people and financial risk solutions. Our approach is backed by the same commitment to high-quality
service that we have had from the start. Our services are designed to help our partners operate safely, manage the business
more profitably and achieve better outcomes for clients. Together we are providing a safer and stronger future for all.
At AUB Group we are guided by a universal set of values that describe the focus of our efforts.
People
Finance
Legal
Compliance
Acquisition
Investment
Marketing
Technology
Partner
development
support
P
hy
si
ca
l
Ri
sk
P
e
o
pl
e
Ri
sk
Fi
n
a
nc
ia
l
Ri
sk
PARTNERS
& ADVISORS
AUB GROUP
SERVICES
SOLUTIONS
& PRODUCTS
CLIENTS
Our goal is for all of our decisions and actions to reflect these core values. We believe that putting our values into practice
creates the greatest benefits for our shareholders, partners, employees, suppliers and communities in which we serve.
For further information on our stakeholders and measurements of success please refer to our ESG Report on page 55.
11
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
PRINCIPAL ACTIVITIES
AUB Group Limited (ASX: AUB) is an ASX200 listed group comprising insurance brokers and underwriting agencies operating in
~595 locations. Over ~5,500 team members work with our ~1,000,000 clients to place more than $10bn in insurance premiums
with local and foreign insurers.
AUB Group operates through five key business segments. The Group’s core revenue is derived from arranging insurance policies
and from related products and services. The amount of revenue earned is determined by premiums placed, sums insured and
the general level of economic activity.
Australian Broking businesses provide insurance broking and advisory services primarily to SME clients. The division
encompasses broking businesses, complemented by established capabilities in member services, life insurance broking,
premium funding, and claims management.
In New Zealand Broking our businesses provide insurance broking and advisory services primarily to SME clients. AUB Group
holds equity stakes in 5 major insurance broker partners, as well as ownership of NZbrokers (the largest broking management
group in New Zealand).
Agencies distribute and manage insurance products on behalf of licensed insurance companies through General Commercial,
Strata and Specialty sub-divisions through underwriting agencies with access to delegated underwriting capacity. These
products and services are available to customers of insurance brokers, in and outside AUB Group’s broking networks.
Tysers/International includes Wholesale and Retail broking and Managing General Agents (‘MGA’). Tysers is headquartered in
London. This is a separately reportable segment, given Tysers and other International businesses operate mainly in markets
outside Australia.
Support service businesses provide a diverse range of services to support the Australian Broking, Agencies, New Zealand
Broking and Tysers segments, and external clients. Services include:
a) Platforms division: automated quoting & binding, white-labelling, and technological support. This division includes BizCover,
Australia’s leading digital SME insurance platform with multi-channel presence and a comprehensive insurance offering. The
business also provides the Austbrokers network with ExpressCover, Australia’s newest SME insurance platform utilising the
BizCover quote and bind engine; and
b) Corporate: AUB Group Head office.
These sub segments are not individually reportable.
1
Total Income is presented on a statutory basis, whilst Underlying Net Profit Before Tax is a non IFRS measure. Refer to Note 3 to the Financial Statements for
further information.
The Group owns equity stakes in its partner businesses, which in turn provide trusted support and guidance to clients relating
to physical, people and financial risks. This is backed by services the Group provides that help our partners operate with less
risk, manage their businesses more profitably and ultimately achieve better client outcomes. These services include broker
member services, claims and loss adjusting businesses, technology support, a centralised data-center and related infrastructure
support, common broking and back-office platforms, finance, tax, M&A, human resources, risk, compliance and other operational
support services.
14%
International
Support Services
New Zealand
Australian Broking
Agencies
TOTAL INCOME1 BY SEGMENT
UNDERLYING PROFIT BEFORE TAX
BY SEGMENT1
34%
8%
2024
39%
17%
38%
36%
2023
7%
50%
2024
(28)%
58%
43%
2023
8%
40%
23%
9%
(23)%
2%
2%
17%
International
Support Services
New Zealand
Australian Broking
Agencies
19%
12
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
OPERATING AND FINANCIAL REVIEW
Reconciliation of Reported Net Profit After Tax (‘Reported NPAT’) to Underlying Net Profit After Tax
(‘UNPAT’)
The following reconciliation from Reported NPAT to UNPAT is presented on the basis attributable to equity holders of the parent:
Notes
2024
$’000
2023
$’000
Net Profit after tax attributable to equity holders of the parent
SOCI
137,072
65,253
Add back / (less) (net of NCI and income tax):
– Amortisation of broking registers
39,604
30,352
– Adjustments to value of entities (to fair value) on the day they became
controlled entities
(17,794)
(29,796)
– Remeasurement of put option liability (net of interest unwind)
(1,463)
3,620
– Impairment charge
–
5,473
– Movements in contingent consideration (net of interest unwind)
(18,734)
39,912
– (Profit) / loss on deconsolidation of controlled entity, sale / dilution of
associates and portfolios
(2,503)
(25,315)
– Impairment of the right-of-use asset and onerous lease expense
153
251
– Costs in relation to Syndicated Debt Facility restructuring
9,748
–
– Expenses incurred for acquisitions in the current and prior period
24,932
39,355
Underlying Net Profit After Tax
171,015
129,105
Operating results for the year
In the year ended 30 June 2024 (‘FY24’) Reported Net Profit After Tax attributable to equity holders of the parent was $137.07m
(FY23: $65.25m). Reported NPAT included the cost of amortisation of broking registers, debt restructuring costs and the effects
of M&A activity.
On a Reported NPAT basis, earnings per share was 125.65 cents for the full year (FY23: 65.35).
Underlying Net Profit After Tax is the key measure used by management and the board to assess and review business
performance. Underlying NPAT is after non-controlling interests and excludes the cost of amortisation of intangibles, fair value
adjustments on of entities on consolidation or deconsolidation, movements in contingent consideration, impacts of reduction in
interest in associates and disposals of controlled entities, and debt restructuring and acquisition related costs.
Underlying NPAT increased 32.56% to $171.02m in FY24 (FY23: $129.11m) due to a mixture of strong organic and acquisition
growth.
13
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
OPERATING AND FINANCIAL REVIEW (CONTINUED)
Operating results for the year (continued)
0
20
40
60
80
100
120
140
160
180
Underlying NPAT ($’m)
FY20
FY21
FY22
FY23
FY24
53.15
74.02
129.11
Underlying NPAT
171.01
65.30
On an Underlying NPAT basis, earnings per share (‘EPS’) increased by 21.24% over the prior year to 156.78 cents.
Dividend per share paid for FY24 totaled 0.79 cents.
0
20
40
60
80
100
120
140
160
180
Underlying EPS (cents) Dividend per share (cents)
FY20
FY21
FY22
FY23
FY24
70.61
86.12
55.00
Underlying EPS and Dividend Growth
96.70
55.00
129.32
156.78
64.00
79.0
50.00
14
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
OPERATING AND FINANCIAL REVIEW (CONTINUED)
Results by operating division
Australian Broking
–
Underlying pre-tax profit for the period increased by 14.7% to AUD 120.2mn (FY23: AUD 104.8mn).
–
EBIT Margin of 36.8% up 170bps from FY23.
–
Driven by:
–
organic growth from increased premiums and growth in client and policy count.
–
disciplined bolt-on acquisitions.
BizCover
–
Underlying pre-tax profit for the period increased by 20.9% to AUD 15.1mn (FY23: AUD 12.5mn).
–
This increase was due to revenue growth and margin expansion, with initiatives underway to further enhance products,
the insurer panel and sources of new business.
–
EBIT Margin of 42.0% up 190bps from FY23.
Agencies
–
Underlying pre-tax profit for the period increased by 57.9% to AUD 55.4mn (FY23: AUD 35.1mn).
–
Strong organic growth in gross written premium (GWP) across most agencies complemented by the establishment of new
agencies as well as acquisitions such as Strata Unit Underwriters.
–
EBIT margin of 42.6% up 420bps from FY23 (up 220bps excluding profit commissions in both periods).
New Zealand Broking
–
Underlying pre-tax profit for the period increased by 59.2% to AUD 22.7mn (FY23: AUD 14.3mn).
–
Revenue and profit growth for all businesses, supported by increased commercial lines premiums, and reduced technology
spend.
–
EBIT Margin of 36.5% up 740bps from FY23 (up 200bps excluding Lola technology platform spend in both periods).
Tysers / International
–
Underlying pre-tax profit contributed by Tysers / International for the 12 months to 30 June 2024 was AUD 96.8mn vs AUD
76.9mn for 9 months of FY23.
–
Revenue and profit on track with changes to operating model and portfolio mix underway to position Tysers for future
growth and margin expansion.
–
Tysers constant currency revenue for the 12 months to 30 June 2024 was up 1.0% vs pcp.
FINANCIAL CONDITION
Total equity increased to $1,749.21m from $1,513.37m at 30 June 2024, due to the impact of the current year financial
performance, as well as issue of shares during the period.
The Group generated positive cash flow from operating activities before customer trust account movements of $129.21m (2023:
$113.37m). Cash outflow of $82.81m from investing activities in FY24 was due a number of acquisitions in current year and the
payment of contingent consideration related to prior year acquisitions. Net cash flows from financing activities were $89.21m
primarily from a capital raising and increased borrowings, offset by dividends and distributions paid to shareholders and non-
controlling interests. Cash held at the end of the period totaled $377.37m (2023: $260.35m), excluding monies held in trust.
Interest-bearing loans and borrowings increased by $61.77m to $646.00m. This is driven by acquisition activity. Please see
details of the debt facility outlined in Note 17 of the Financial Statements.
Subsidiaries had debt of $96.00m and the look through share of borrowings by associates (including contingent obligations)
of $41.68m (2023: $25.52m) are not included in the Group balance sheet as these entities are not consolidated.
The borrowings by subsidiaries and associates relate largely due to funding of acquisitions and other financing activities.
15
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
BUSINESS STRATEGY
AUB Group’s strategy remains consistent – exploit the latent potential in our existing business supplemented with strategically
aligned and disciplined inorganic growth:
–
Deliver a market leading proposition for our brokers, and in turn our clients, by investing in processes and technologies that
drive efficient outcomes;
–
Continued focus on optimising our portfolio through consolidation and targeted involvement to improve underlying business
performance; and
–
Manage our active pipeline of external M&A opportunities through a disciplined and strategic approach to investment.
In FY25, the business will continue to evolve its focus from FY24 priorities with specific accountability for the following:
Optimise our network
–
Continue to optimise our portfolio of businesses to outperform by consolidating into more efficient operating entities or to
expand specialisation.
Execute on strategically aligned acquisitions
–
Disciplined and targeted approach to acquisitions, either bolt-ons that deliver synergy benefits or to expand capabilities and
footprint; and
–
Increased investments in current network businesses to aid consolidation and optimisation.
Tysers Optimisation
–
Continue to evolve the operating model to allow successful delivery of strategic objectives and to further optimise costs.
UK Retail
–
Leverage the newly expanded UK Retail platform for growth replicating the successful Australian model with an enhanced
broker proposition.
–
Building a portfolio of complementary MGAs.
Agencies
–
Leverage increased and enhanced binder capacity, achieved with Tysers.
–
Leverage the acquisition of Pacific Indemnity in Specialty while continuing to grow Strata and General Commercial
organically and by acquisition.
PROSPECTS FOR FUTURE FINANCIAL YEARS
AUB Group has benefited from investment in our core capabilities, cost management and pricing tailwinds. The Group continues
to hold a modest outlook on the underwriting cycle with a premise that we are in the midst of a positive phase with potential for
extension considering recent ongoing losses in key global underwriting markets.
CORPORATE GOVERNANCE
The 2024 Corporate Governance Statement can be found at the AUB Group website: aubgroup.com.au/corporate-governance.
16
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
RISK MANAGEMENT
Risk is an inherent part of AUB Group’s business model and effective management of that risk is therefore an important
foundation of our success, business growth and delivering sustainable value to shareholders.
Effective risk management is a strategic priority at AUB Group and risk is embedded in Board discussions regarding strategy
and execution, and risk appetite is considered as part of major strategic decisions. AUB Group’s risk management strategy
adopts a philosophy of not seeking to eliminate all risks, but to identify, understand, assess and effectively manage the risks
and opportunities arising from our businesses. We proactively identify opportunities to create and protect shareholder value but
ensure that our decisions are risk aware, informed and consider both financial and reputational impact.
Overseen by the Board and the Board Audit and Risk Committee (‘BARC’), the Risk Management Framework underpins
identification and management of enterprise-wide and emerging risks and allows for effective decision-making that is within the
Board approved risk appetite and specific limits.
The content and status of risk profiles and mitigation plans is considered and updated, in line with changes to the environment
and operations, through regular reviews by management.
The Board reviews the Group’s key risks and assesses the effectiveness of the risk management framework bi-annually in
accordance with the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations.
Enterprise Risk Framework
AUB Group has its own risk framework and policies that reflect the strategic, financial, operational, regulatory, legal and people
risks specifically associated with its operations and investments. A key part of this framework is clear identification of risk roles
and responsibilities represented by ‘three lines of accountability’.
Management. The primary responsibility for risk management lies with management which form the first line of accountability.
They are responsible for identifying, managing and reporting risks within the business. They also need to ensure that risks
are managed appropriately with reference to regulatory environment, the risk appetite statement and other limits as agreed.
Promoting and implementing a culture of risk ownership and awareness is also a key responsibility.
Legal, Risk and Compliance. AUB’s Risk, Legal and Compliance teams are the second line of accountability. They are responsible
for the design and maintenance of the Enterprise Risk and Compliance Frameworks, and provide tools/advice to assist the
business manage risks. The AUB Chief Legal and Compliance Officer is a member of the Group Executive, attends Board
meetings and is responsible for Senior Management and Board risk reporting.
Independent Review. The third line of accountability is independent review. This encompasses internal and external audit and
other independent assessments conducted on AUB Group risk management processes, controls and systems. AUB Group has a
co-sourced internal audit function that reports to the Board Audit and Risk Committee at least quarterly.
Risk Oversight
Risk is the responsibility of everyone at AUB Group. Below are key actions for each level of AUB:
Board Oversight
The AUB Board is responsible for the overall risk oversight of AUB Group, including:
–
Assist Management to identify principal financial and non-financial risks (including strategic, operational and macro risks
and opportunities, and including both current and emerging risks) and to oversee and monitor these risks.
–
Review and approve the risk appetite within which the Board expects AUB Group to operate, as well as AUB Group’s risk
management policy.
–
Ensuring that AUB Group has an appropriate ERM framework and internal control systems which are in compliance with
AUB Group’s risk management policy.
–
Monitor the effectiveness and adequacy of AUB Group’s risk management systems, including reviewing of processes for
identifying areas of significant business risk and oversight of internal controls.
–
Ensuring that risk management practices enable the Board to maintain current knowledge and understanding of AUB
Group’s risks and any changes to these risk (including emerging risks).
–
Evaluating the overall effectiveness of the implementation of the ERM Framework.
The BARC assists the Board in fulfilling its responsibilities by overseeing the design and implementation of the risk framework,
and the monitoring of compliance with the risk framework.
17
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
Senior Management Oversight
AUB Senior Management, comprising the AUB Group Executive, Group Technology Officer and Tysers CEO are responsible for:
–
Establish and implement a sound system of risk management for the Group including ensuring adequate resources are in
place.
–
Driving AUB Group’s risk management strategy and activities.
–
Identifying the key risks to the business and ensuring that AUB Group has implemented appropriate and effective risk
management controls to manage these risks and escalate to the AUB Board in a timely manner.
–
Reporting to the Risk Management Executive Committees (RMECs) and AUB Board, including results of risk self-assessment
workshops, risk trends, control performance, operational issues and operational losses.
–
Conducting diligence for appointment and monitoring of outsourced arrangements; and
–
External risk reporting protocols and disclosures where required by regulation and governance.
The Risk Management Executive Committee (RMEC) of AUB and Tysers assist Senior Management in discharging their risk
responsibilities.
AUB Board
AUB Board Audit &
Risk Committee
Group Risk
Management
Executive Committee
Group Financial Risk
Management
Committee
Group Risk & Internal
Audit
Tysers
RMEC
AUB ANZ
RMEC
Co-Sourced
Internal
Audit
AUB Risk
Assurance
GSI Audit
External
Audit
Tysers Risk
Owners
AUB Risk
Owners
ERM Online
Reporting
Tysers Risk
Compliance
Committee
Consolidated and standardised risk reporting
Consolidated and standardised risk reporting
Consolidated and standardised financial risk reporting
18
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
KEY BUSINESS RISKS
The Group is exposed to various risks during its operations and achievement of its strategic objectives. Broad risk categories,
which may impact the Group’s business strategy and prospects for the future financial year, include:
Strategic
Clearly defining and successfully executing the AUB strategy.
Risk Description
Strategy is unclear, misaligned or fails to take into account the changing competitive, regulatory and technological landscape.
Failure to successfully execute the strategy, including M&A, and deliver strategic objectives and outcomes.
2024 Commentary
Management and Mitigation
Business model of acquiring and holding equity
in operating business
An important part of AUB’s business model and its growth
strategy is to acquire and hold equity in insurance broking and
underwriting agency businesses.
Key considerations include the acquisition multiple, the likely
future performance of the business being acquired and
the extent to which the business will fit strategically within
the AUB Group. A priority is the integration of Tysers which
represents a significant acquisition for the Group.
When due diligence related to acquisitions, mergers or
when AUB makes a strategic or financial investment in an
entity, fails to detect substantial issues, the transactional
documents may not contain corresponding safeguards,
including representations, warranties or indemnities, to
protect AUB against existing and potential liabilities of the
target businesses.
AUB can be made financially liable and subjected to legal
proceedings for past non-compliances with laws and
regulations. These may affect AUB’s business operations and
hinder its corporate growth. A failed merger and acquisition
transaction may also damage AUB’s reputation.
While AUB ordinarily has veto rights on most decisions
concerning AUB group members, it may not have the capacity
to implement its decisions in all cases.
There can be no assurance that the anticipated benefits
and synergies expected to result from all or some of the
integrations of these acquisitions will be realised.
As part of the annual assessment of strategic risks, the
Board and Management team assess potential risks from
both external and internal factors. Actions to mitigate these
risks are designed as appropriate. Changes to these key
risks and status of actions are reviewed quarterly at the Risk
Management Executive Committee and Board Audit and Risk
Committee meetings.
Specific mitigation actions include:
–
Annual strategy and priorities approved by the Board with
bi-annual updates and review;
–
Board approved appetite for strategic risks;
–
Assessment criteria (operational, financial, reputation) for
all M&A activity which is reviewed by senior management
and Board (if required);
–
Risk assessment completed for all material transactions,
expected returns, outlining key risks, mitigants, action
plans. It also includes the impact the transaction will have
on risk appetite;
–
Investment and acquisition approach involving skilled
resource, due diligence and negotiated representations
and warranties;
–
Post acquisition review, including capital and returns
analysis;
–
Engagement with relevant government stakeholders,
regulators, insurers and industry bodies; and
–
Experienced senior leadership team with global sector
knowledge, industry connections and reputation.
19
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
2024 Commentary
Management and Mitigation
Increased competition or market change
An increase in competition or deterioration in the competitive
positioning of AUB may have an adverse impact on AUB
network members and could potentially result in a reduction
in gross written premium placed through AUB network
members due to a loss of market share; a reduction in fees
and commissions; and/or a reduction in margins which may
adversely impact the revenue and earnings of AUB network
members.
Increased competition from new entrants and existing
market participants, including increased commoditisation of
business insurance products, may have an adverse impact
on partner network and AUB earnings. If there are changes in
the remuneration model for, or the use of, insurance brokers,
underwriting agencies, or risk services businesses, this may
adversely impact AUB’s earnings and/or financial position and
performance.
AUB in some cases acts as agent of the insurers. Insurers
may choose to reduce their reliance on insurance brokers and
underwriting agencies, including through an increase in their
direct web-based distribution models.
Continued consolidation in the general insurance industry
may result in a more limited product set and/or greater pricing
power for insurers which may result in downwards pressure
on commissions and fees.
The Board and Senior Management are constantly assessing
market dynamics and conduct formal strategic planning
sessions twice a year. Specific additional mitigants include:
–
Annual strategy and priorities approved by the Board with
bi-annual updates and review;
–
Specialist advisors (eg Sector, banks, legal) provide
market insights, competitor analysis (threats,
opportunities) and regulatory updates;
–
Engagement with relevant government stakeholders,
regulators, insurers and industry bodies; and
–
Experienced senior leadership team with global sector
knowledge, industry connections and reputation.
Environmental, social and governance (‘ESG’) risks
and expectations
Evolving community attitudes towards, and increasing
regulation and disclosure in relation to ESG issues may
impact the operation of AUB’s business. Increased
expectations, and in particular the failure to meet those
expectations, with respect to ESG may impact on the
profitability or value of AUB’s business, restrict AUB’s ability
to attract financing or investment, result in heightened
compliance costs associated with meeting prevailing
regulatory and disclosure standards, or adversely impact on
the reputation of AUB, which may have an adverse effect on
AUB’s business, financial position and prospects.
The manner in which ESG risks and opportunities are
embedded in the day-to-day business activities continues to
evolve and improve. The following key mitigants have been
implemented over the last 18 months:
–
Independent specialists conducted an ESG materiality
assessment, engagement and reporting program;
–
ESG considerations are included as part of stakeholder
engagement plans;
–
ESG risks are included as part of each M&A business
assessment;
–
ESG reporting is provided to senior management and the
Board; and
–
Conducting a detailed assessment on Climate Related Risk
and Opportunities (CRROs) in FY25 to ensure compliance
with the disclosure requirements of ASRS 1 and 2.
KEY BUSINESS RISKS (CONTINUED)
20
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
Financial
Risks relating to funding and liquidity management, expected return on investments and mitigation of fraud, client disputes and
professional indemnity claims.
Risk Description
Multiple factors could lead to the Group having insufficient capital or cash flow to meet its obligations including unfavourable
outcomes from inappropriate management of interest rate, foreign exchange, counterparty credit, liquidity and self-insurance
risks, adverse effects from capital structure and funding or losses associated with fraud, claims or disputes.
2024 Commentary
Management and Mitigation
Market risk
The operating and financial performance of AUB is influenced
by a variety of general economic and business conditions,
including levels of consumer spending, inflation, interest
rates, exchange rates and government fiscal, monetary and
regulatory policies.
Changes in general economic conditions may result from
many factors, including government policy, international
economic conditions, significant acts of terrorism, hostilities
or war or natural disasters. A prolonged deterioration in
general economic conditions could be expected to have an
adverse impact on AUB’s operating and financial performance
and financial prospects.
The ability of AUB to secure debt financing, or financing on
acceptable terms, may be affected by volatility in the financial
markets, globally or within a particular geographic region,
industry or economic sector. An inability to obtain, or increase
in the costs of obtaining, financing on acceptable terms could
adversely impact AUB’s financial position and performance.
AUB is exposed to movements in interest rates through its
debt facility.
Fraudulent or inappropriate conduct
AUB has in place policies and procedures implemented in
relation to the risk of fraud. However, particularly in relation
to businesses where AUB does not control the day-to-day
operations, there is a risk that funds of the business or
of those held on behalf of clients may be the subject of
fraudulent behaviour. Any such fraudulent behaviour would
likely have an adverse impact on AUB’s financial position,
performance and reputation.
AUB Group proactively manages these risks and
opportunities through its established corporate governance
structures, the Compliance Framework, Risk Management
Framework, and Assurance program supported by company
policies, standards and procedures.
We employ specialised and experienced resources and teams
to oversee and educate stakeholders of relevant regulatory
requirements and monitor potential changes. Where required,
we also engage specialist advisors to support internal
resources.
Other specific mitigation plans include:
–
Finance specialists undertake forecasting and financial
scenario testing activities;
–
The organisation operates with the segregation of duties
and Board approved delegation of authority;
–
Actions to improve fraud reporting and dashboards to
facilitate more effective oversight; and
–
Implementation of external advisory channels for
improved accessibility, accuracy and consistency.
The AUB Group Financial Risk Management Committee
(‘FRMC’) is accountable for assessing key existing and
emerging financial risks, including whether there are
appropriate and effective risk management controls in
place to manage these risks. The Committee meets at least
quarterly and reports significant findings to the BARC.
KEY BUSINESS RISKS (CONTINUED)
21
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
Compliance and regulatory risk
Risk of non-compliance with obligations (legal, regulatory, contractual) or failure to identify or appropriately respond to changes
in the regulatory environment.
Risk Description
AUB operates in a highly regulated environment which has been and continues to be subject to regulatory review and change.
2024 Commentary
Management and Mitigation
Failure to act in accordance with regulation, licences, industry
standards and codes, internal policies and procedures and
principles of good governance could result in regulatory
or legal action, licences being suspended or withdrawn,
significant fines, penalties, other costs, reputation damage
and/or reduced investor confidence. This, in turn, may
adversely impact AUB’s reputational, financial performance
and position.
AUB may be exposed to violations of financial crime laws,
including fraud, anti-bribery and corruption, sanctions and
anti-money laundering and terrorism financing. The M&A
strategy (eg Tysers, MexBrit) has further exposed AUB to
some jurisdictions which can be higher risk for breach of
such financial crime laws. A breach of financial crime laws
or other applicable laws or regulatory requirements could
lead to enforcement action by regulators, and/or significant
fines and/or other penalties, litigation, as well as the risk of
reputational damage.
Regulatory changes may also impact AUB and/or its
operating entities through costly and burdensome regulation
and may have consequences which cannot be foreseen.
Additionally, compliance with these regulatory obligations
may require considerable investment into the establishment
of compliance systems and the monitoring and maintenance
of such systems to minimise the risk of non-compliance in
the future.
AUB Group proactively manages these risks and
opportunities through its established corporate governance
structures, the Compliance Framework, Risk Management
Framework, and Assurance program supported by company
policies, standards and procedures.
We employ specialised and experienced resources and teams
(Legal, Compliance, Finance). Risk to oversee and educate
stakeholders of relevant regulatory requirements and monitor
potential changes. Where required, we also engage specialist
advisors to support internal resources.
Other specific mitigation plans include:
–
Board and sub-committee oversight of current and
emerging regulatory risks Senior Management oversight
via risk management executive committee and financial
crime committee (Tysers);
–
Policies, Frameworks and Procedures; and
–
Assurance activities (Compliance Monitoring and Internal
Audit) to assess implementation of core regulatory
requirements.
AUB also faces the risk of failing to identify or appropriately
respond to changes in the regulatory environment or of
damaging AUB’s standing with its regulators as a result of
AUB not meeting regulatory expectations.
–
Legal advisors identify any potential changes in
legislation, including the impact on AUB business;
–
Structured approach for Regulatory change
implementation, including training and education of
relevant AUB and broker stakeholders; and
–
Quarterly Board reporting which includes “Horizon
Scanning” of potential regulatory changes and their
impact on the business.
KEY BUSINESS RISKS (CONTINUED)
22
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
Operational
A disruption that impacts the ability of AUB to operate effectively.
Risk Description
AUB may be unable to continue to operate effectively due to inadequate or failed internal systems and processes, disruption
including inability to access premises, inability to use technology or systems (may be information security or cyber related), an
infrastructure failure, impact to people and third-party disruption (including loss of Binder arrangements).
2024 Commentary
Management and Mitigation
Loss of capacity for underwriting agencies
Unexpected loss of underwriter capacity, whereby an
underwriter fails to renew a binder or withdraws capacity
for strategic reasons (such as exiting lines of business or a
specific country exit) is likely to result in a significant loss of
income.
Further risk may be as a result of an underwriter withdrawing
capacity due to uneconomic underwriting results. This would
severely constrain the ability of underwriting agencies to write
new business and may restrict them from renewing existing
business. Any such scenario would have an adverse impact
on the financial performance of AUB’s underwriting business.
There are a number of key mitigation strategies to managing
this risk including:
–
Binder agreements are subject to layered review by key
and external legal advisors;
–
Key binder obligations are identified, communicated to
relevant stakeholders and monitored on a regular basis;
–
Peer to peer review reviews in accordance with
underwriting guidelines;
–
Insurer claims and underwriting audits conducted to
identify any control weaknesses or non-performance of
binder agreements; and
–
Internal assurance activities are conducted to identify
control weaknesses, the results of which are tabled at key
management and Board meetings.
Specific mitigation actions to manage binder compliance
include:
–
Binder management approach;
–
Business Continuity Framework and Plans;
–
Disaster recovery plans and annual disaster recovery
tests;
–
Information security strategy, framework, roadmap; and
–
Tactical controls such as malware, multi-factor
authentication, network segmentation among others.
Technology and cyber security risk
AUB’s information technology systems (including those
provided by third party technology vendors) are vulnerable
to damage or interruption from a number of sources.
Information security breaches or Cyber incidents could
significantly curtail AUB’s ability to conduct its business
and generate revenue and lead to losses associated with
investigation, rectification and remediation activities. Loss of
sensitive (personal or organisational) information can lead to
reputational damage, client distrust and regulatory inquiries
or actions.
Group has designed and implemented a suite of core
capabilities to manage cyber security and cyber risk. From
the establishment of a set of strategic objectives, to an
industry aligned cyber security framework, to a roadmap
focused on embedding solid foundations, we have developed
an ecosystem whereby our cyber posture is continually
assessed and enhanced. Taking a risk-based approach to
prioritising the cyber roadmap initiatives, we are focused
on meeting our strategic information security objectives
and managing risk within the enterprises risk appetite and
tolerance levels. Mitigation plans include:
–
A security operations center with technologies such as
managed detection and response (‘MDR’) and security
information and event management (‘SIEM’);
–
Cyber awareness training;
–
Phishing simulation exercises;
–
Vulnerability and patch management;
–
Risk and threat assessments;
–
Third party audits;
–
Penetration testing; and
–
Incident and disaster recovery exercises.
KEY BUSINESS RISKS (CONTINUED)
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AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
2024 Commentary
Management and Mitigation
Personal and Confidential Information
AUBs operations rely on the secure processing, transmission
and storage of confidential, proprietary and other information.
In addition to information loss from technology and cyber
security breaches, personal and confidential information may
be lost due to theft, misplacement of data, human error or
other similar events.
Any loss, unauthorised disclosure or use of confidential
information, including financial data, commercially sensitive
information or other proprietary data whether by AUB or a
third party could have a material adverse effect on AUB.
The loss of confidential information could result in
interruptions to operations, reputational damage and
regulatory action.
Specific mitigation actions include:
–
Data protection framework including policies, standards
and procedures;
–
Third party contracts include privacy and data loss
provisions;
–
Use of incident management and responses plans;
–
Physical and system controls to ensure information is
secure and available only to approved personnel;
–
Staff training on data and privacy requirements; and
–
Privacy due diligence checklist for M&A transactions.
Partnering and Outsourcing
AUB failing to identify, develop and manage Broker partnerships and third party relationships to best deliver the long-term
strategy.
Risk Description
Inability to identify, onboard and effectively manage insurers and third parties by AUB may result in missed opportunities,
financial losses, inability to deliver the strategy, reputation damage and increased concentration risk.
2024 Commentary
Management and Mitigation
An important part of AUB’s business model and its growth
strategy is to acquire and hold equity in insurance broking,
underwriting agency or risk services businesses. These
relationships are a significant contributor to AUB Group
success. Failure to manage these relationships effectively
could lead to reduced revenues, increased costs and inability
for AUB Group to deliver its strategy.
Third Party Risk
AUB utilises third party suppliers to bring external expertise
and support to the business. Insufficient or uncommercial
contractual arrangements may impact the Group’s ability
to maintain efficiency and ensure third parties meet their
obligations.
The risks associated with engaging third parties include
reputational damage, operational disruption, and risks to
AUB’s compliance with laws and regulations.
Specific mitigation actions include:
–
Contract development and review approach;
–
Third party Service Level Agreements (‘SLAs’)/Key
Performance Indicators (‘KPIs’) embedded in contracts
and monitored;
–
Partner Development Manager Roles; and
–
Delegations of authority are in place, outlining who can
bind AUB into agreements.
KEY BUSINESS RISKS (CONTINUED)
24
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
People
AUB relies on the recruitment, retention and engagement of skilled personnel.
Risk Description
Ineffective recruitment, retention and engagement of skilled/key personnel, or failure to appropriately manage work health
and safety, may result in AUB being unable to operate efficiently and effectively, leading to potential financial and reputational
impacts and inability to successfully execute its strategy.
2024 Commentary
Management and Mitigation
A loss of key personnel by AUB may lead to material business
interruption and loss of key customer or partner relationships.
AUB also relies on the need to be able to attract staff with the
right experience and expertise to assist AUB with successful
execution of its strategic priorities and growth plans.
Particularly given the presently competitive labour market,
there can be no certainty that AUB will be able to attract the
people it desires.
Skilled/key personnel may include key persons noted on
Binder Authorities, Responsible Managers as noted on
Australian Financial Services Licences (‘AFSLs’), incumbents
in key roles or individuals who hold business critical
knowledge.
Specific mitigation plans include:
–
Succession plans and review approach;
–
KPI setting and performance reviews;
–
Regular monitoring of staff hours and skills gaps to
identify recruitment needs;
–
Workforce planning including recruitment and employee
development plans to assist achieve the organisation’s
future goals and keep talent engaged; and
–
Use of employee engagement surveys and anonymous
feedback to be pro-active in employee satisfaction, work-
life balance, and mental health.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs of the consolidated entity during the financial year, other than
acquisitions and disposals disclosed above.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
On 1 July 2024, the Group completed the acquisition of Pacific Indemnity for $105.0m, with a potential further deferred
consideration of $35m subject to FY25 performance.
On 16 August 2024, the Group executed an agreement to acquire a significant equity stake in UK based Movo group, which is
subject to regulatory approval.
On 21 August 2024, the Directors of AUB Group Limited determined a final fully franked dividend on ordinary shares of 59.0
cents per share in respect of the 2024 financial year. Based on the current number of ordinary shares on issue, the total amount
of the dividend is estimated to be $68.8m.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Directors are satisfied that adequate systems are in place for management of the Company’s environmental responsibility
and compliance with various requirements and regulations. The Directors are not aware of any material breaches to these
requirements, and to the best knowledge, all activities have been undertaken in compliance with environmental requirements.
Refer to the Environmental, Social and Governance Report for more details.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
During or since the end of the financial year, the Company has paid premiums in respect of a contract insuring all the Directors
and Officers of AUB Group Limited against liabilities, past, present and future.
In accordance with normal commercial practice, the disclosure of the total amount of premiums under and the nature of the
liabilities covered by the insurance contract is prohibited by a confidentiality clause in the contract.
INDEMNIFICATION OF AUDITOR
To the extent permitted by law, the Company has agreed to indemnify its auditor, Ernst & Young Australia, as part of the terms of
its audit engagement agreement, against claims by third parties arising from the audit (for an unspecified amount). No payment
has been made to indemnify Ernst & Young during or since the financial year.
KEY BUSINESS RISKS (CONTINUED)
25
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
PEOPLE & REMUNERATION COMMITTEE CHAIR’S LETTER.
Dear Shareholders
On behalf of the Board of AUB Group Limited (AUB Group), I am pleased to present our Remuneration Report for the financial
year ended 30 June 2024.
The purpose of this report is to describe AUB Group’s remuneration strategy and framework for its Key Management Personnel
(KMP), in particular the links between AUB Group’s executive remuneration framework and business strategy, performance and
reward.
Key financial highlights for FY24
Key FY24 financial highlights include:
–
Underlying revenue of $1,331.7m, representing growth of 19.8% from FY23.
–
Underlying NPAT of $171.015m, representing growth of 32.5% from FY23.
–
Underlying earnings per share of 156.78 cents, an uplift of 21.2% in comparison to FY23.
–
FY24 final dividend of 59 cents per share, representing an increase of 25.5% compared to FY23.
Changes to remuneration and key governance measures
The Board continually monitors AUB Group’s incentive framework to ensure it appropriately reflects the Group’s profile, is
effective in driving business strategy and financial performance to create sustainable shareholder value, and continues to reflect
our ‘pay for performance’ philosophy. The Board’s proactive management of the incentive framework has been instrumental in
a disciplined approach to M&A and focusing management on seeking out and executing value accretive and inorganic growth
strategies, including the BizCover, 360 Underwriting Solutions, Tysers and Pacific Indemnity acquisitions, while maintaining
steady levels of dividend growth.
The Board considers current remuneration and incentive opportunity levels appropriate for AUB Group’s strategy, so there will
be no increase to fixed remuneration or variable pay opportunities for Executive KMP in FY25. Non-executive Director fees were
increased on 1 July 2023, and will also remain unchanged in FY25.
Following external stakeholder feedback, this year’s Remuneration Report provides more transparency regarding the CEO’s STI
scorecard objectives and the Board-assessed level of achievement against each objective. The Board’s policy of continuously
improving and providing clear and transparent disclosure highlights that the CEO’s STI performance is heavily weighted to the
achievement of financial and quantitative metrics.
The Board aligns our risk, remuneration and consequence management frameworks, with the People & Remuneration
Committee and Board Audit & Risk Committee meeting concurrently to consider if there were risk-based or other adjustments
that may warrant consideration in the Board’s determination of remuneration outcomes. The Board is pleased to confirm that no
risk-based or other adjustments to remuneration were recommended by the Committees as a result of their review of systemic
or ad hoc risks and employee behaviours.
Long-term Incentive (LTI) performance measures
I am taking this opportunity to provide shareholders and other stakeholders with an overview of the Board’s considered
approach to the setting of LTI performance measures.
The LTI measures need to be set for performance through time, in both good and challenging markets, and with regard to
acquisitions and disposals. The Board sets the LTI measures on a consistent basis to achieve sustainable growth over the
longer term, in order to provide a degree of flexibility to allow for opportunistic inorganic growth that may occur during any
one performance period, while maintaining a disciplined approach to M&A and not encouraging excessive risk-taking.
This approach has worked extraordinarily well in the past and for the benefit of shareholders. Our TSR is a testament to AUB
Group’s effectiveness at utilising and adapting our LTI plans to deliver on strategy. Our LTI grants have typically received
overwhelming support from shareholders. The lower level of support at the 2023 AGM has been attributed to what was
perceived as a low EPS performance threshold for initial vesting. However, the EPS measure was appropriate as it ensured
that management is encouraged to consider growth opportunities which might otherwise impact shorter term EPS towards
the end of an LTI cycle.
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AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
The Board’s recent increase of the EPS hurdle (from an AAGR of 5-10% to a Compound Annual Growth Rate (CAGR) of 7-12%),
together with the addition last year of a new Return on Invested Capital (ROIC) performance hurdle, is aligned over the long-
term with group strategy, shareholder expectations, focusing management to seek out, consider, and act on inorganic growth
opportunities during any point in a LTI performance period cycle, while negating excessive risk-taking.
An issue previously raised was that the significant EPS increase from the Tysers’ acquisition would result in management
meeting threshold vesting for the FY24 grant with only 2-3% CAGR in FY25 and FY26. However, this issue considered the
FY24 grant in isolation and did not have regard for the fact that the EPS outperformance effectively set a high base for future
LTI grants.
If the Board were to act on this issue, it would change the EPS and Return on Invested Capital (ROIC) hurdles every year. To do
so would represent poor governance and not reflect the Board’s requirements for consistent and sustainable growth over the
longer term. This is achieved by continued performance improvements to meet EPS growth within a realistic range.
Alignment between performance and remuneration outcomes
AUB Group’s remuneration strategy and framework is based on a philosophy of ‘pay that varies with performance’ to support
sustainable value for our shareholders.
Group Executives received on average 91.7% of their maximum STI opportunity, based on Underlying NPAT increasing by 32.5%
to $171.015m in FY24, along with above target achievements of other scorecard measures. This sound Underlying NPAT growth
exceeded consensus forecasts and was driven by underlying organic growth across all operating businesses, and acquisition
driven growth.
Finally, this Remuneration Report discloses the outcome of the FY22 LTI grant, and the CEO’s sign-on grant for the performance
period ending 30 June 2024. Based on sustained long-term performance over this period 100% of the CEO’s Performance Share
Rights (PSRs) will vest after testing of the TSR and EPS performance measures. This is a result of the outstanding sustained
performance over the entire 5-year period as shown in the graphs in section 1 and section 3 - strong EPS growth, combined
with high TSR performance resulting in AUB Group ranking in the top quartile of its Comparator Group.
We invite you to read the Remuneration Report and welcome your feedback.
Melanie Laing
People & Remuneration Committee Chair
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AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
REMUNERATION REPORT OVERVIEW
This Remuneration Report for the financial year ended 30 June 2024 has been prepared in accordance with section 300A of the
Corporations Act and has been audited as required by section 308(3C) of the Corporations Act.
Terms used in this Remuneration Report are defined in the Glossary within Section 7 of this report.
List of KMPs – Reporting Period
Table 1 below outlines the KMP during the Reporting Period.
Name
Position
Term as KMP
Non-Executive Directors
David Clarke
Chair; Non-Executive Director
Full financial year
Richard Deutsch
Non-Executive Director
Full financial year
Peter Harmer
Non-Executive Director
Full financial year
Andrew Kendrick
Non-Executive Director
Full financial year
Melanie Laing
Non-Executive Director
From 2 November 2023
Paul Lahiff
Non-Executive Director
To 23 August 2023
Robin Low
Non-Executive Director
To 2 November 2023
Cath Rogers
Non-Executive Director
Full financial year
Executive KMP
Michael Emmett
Chief Executive Officer and Managing Director
Full financial year
Mark Shanahan
Chief Financial Officer
Full financial year
Contents
This Remuneration Report is set out in the following sections:
Section 1 – Group Executive Remuneration Framework
Section 2 – How variable remuneration is structured
Section 3 – Remuneration Outcomes and Alignment to Performance
Section 4 – Remuneration Governance
Section 5 – Non-Executive Director Remuneration
Section 6 – Statutory Remuneration Tables and Data
Section 7 – Glossary of terms commonly used in this Remuneration Report
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AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
AT RISK
SECTION 1 GROUP EXECUTIVE REMUNERATION FRAMEWORK
OUR REMUNERATION PRINCIPLES
GROUP EXECUTIVE REMUNERATION STRUCTURE
VALUE DETERMINED BY
HOW DOES IT LINK WITH STRATEGY & PERFORMANCE
The following principles guide AUB Group’s remuneration strategy and ‘pay for performance’
philosophy, which are designed to attract, retain and motivate highly skilled individuals.
FIXED
FIXED REMUNERATION
Base salary, superannuation
& other benefits
STI
SHORT-TERM INCENTIVE (STI)
Reward for strong individual and
group performance during the
performance period
LTI
LONG-TERM INCENTIVE (LTI)
Reward for sustainable longer-term
AUB Group performance
–
Experience, position and
responsibilities
–
Competitive fixed
remuneration in the market
Achievement of annual financial
and non-financial performance
hurdles at a:
–
Group level
–
Business unit level
–
Individual level
–
Relative TSR – 40% weighting
–
EPS – 40% weighting
–
ROIC – 20% weighting
–
Provides competitive ongoing
remuneration in recognition
of day-to-day responsibilities
and accountabilities
–
Supports annual delivery of
key strategic and operational
targets and to recognise and
reward individual performance
–
Deferred STI supports
retention and more closely
aligns the interest of
executives and shareholders
–
Focuses on multi-year metrics
that support sustained
shareholder value creation
–
Delivered in equity to align
the interests of executives
and shareholders
–
Supports retention
AT RISK
Reflect the markets
we recruit from
and need to be
competitive in.
Alignment to shareholder
interests & sustainable
shareholder returns
Performance based –
link rewards to business
results and strategy
Encourage behaviours consistent
with values & deliver good
partner outcomes
Robust governance
with focus on risk
management
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AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
SECTION 1 GROUP EXECUTIVE REMUNERATION FRAMEWORK (CONTINUED)
Group Executive Remuneration Mix
Total remuneration includes both a fixed component and an at-risk or performance-related component, comprising both short-
term and long-term incentives. The Board views the at-risk component as an essential driver of a high-performance culture and
one that contributes to achievement of sustainable shareholder returns.
The following illustration shows the remuneration mix for the Group Executives in FY24. It has been modelled on the average
of the Group Executive’s target opportunity (but excluding the one-off grant of Share Appreciation Rights (SARs) under the
Outperformance Plan).1
The Board aims to achieve a balance between fixed and performance-related components of remuneration. The actual
remuneration mix for the Group Executives will vary depending on the level of performance achieved by the AUB Group as
well as the realised value of PSRs that vest and convert into shares.
CEO Target Remuneration Mix (%)
Group Executive (ex-CEO) Target Remuneration Mix (%)
* 30% of STI is deferred as an equity award of PSRs, of which half vests after 12 months and half vests after 24 months.
Minimum Shareholding Policy
A minimum shareholding policy is in place for Group Executives to provide strong ongoing alignment of executive interests with
the long-term interests of shareholders and support long-term sustained value creation for AUB Group. The CEO is required to
hold AUB Group shares equivalent to 150% of base salary, and other Group Executives are required to acquire AUB Group shares
equivalent to 100% of base salary. Group Executives have a five-year period commencing on the later of 1 July 2023 or the
date of their appointment (hire or promotion) to meet the minimum shareholding expectation. Further details of Executive KMP
shareholdings are provided in Table 9.
1
See section 7 of this report for a definition of SARs.
0
20
40
60
80
100
30%
Target Remuneration
Maximum Remuneration
STI Cash
STI Deferred
Fixed
LTI
STI Cash
STI Deferred
Fixed
LTI
0
20
40
60
80
100
40%
35%
Target Remuneration
Maximum Remuneration
17%
7%
46%
27%
23%
10%
40%
17%
7%
36%
22%
10%
33%
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AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
CEO remuneration
A summary of CEO & Managing Director remuneration arrangements for the Reporting Period is as follows:
Item
$
Fixed remuneration
1,250,000
STI (at target)*
1,000,000
LTI opportunity**
1,875,000
Total target remuneration
4,125,000
*
Maximum Short-Term Incentive opportunity is capped at 150% of target STI award.
**
Face value of LTI award. The FY25 LTI grant is subject to being approved by shareholders at the Annual General Meeting in October 2024.
The Board considers current remuneration and incentive opportunity levels appropriate, so there will be no increase to fixed
remuneration or variable pay opportunity for the CEO in FY25.
SECTION 1 GROUP EXECUTIVE REMUNERATION FRAMEWORK (CONTINUED)
Group Executive remuneration time horizon
The following diagram provides an illustrative indication of how remuneration is delivered to Group Executives.
Date granted
Date of vesting
End of holding lock
Year 1
Year 2
Year 3
Year 4
Fixed Remuneration
STI Cash Component (70%)
STI Deferred Component (30%)
LTI
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AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
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SECTION 1 GROUP EXECUTIVE REMUNERATION FRAMEWORK (CONTINUED)
REALISABLE REMUNERATION
The following table sets out the remuneration for which the CEO qualified during the period 1 July 2023 to 30 June 2024, but
was not necessarily paid in that period. Further details are shown in the Basis of Preparation table below.
Fixed Remuneration
Variable Remuneration
Realisable Remuneration
KMP
Base
Salary
Super
STI Cash
STI Deferred
LTI
Notional
dividends on
vested DSTI
Grants
Non-
monetary
Benefits
Total
M Emmett
(CEO) FY24
$1,221,762
$27,500
$974,750
$423,866
$1,596,712
$19,827
$88,071
$4,352,488
M Emmett
(CEO) FY23
$971,762
$27,500
$767,375
$214,427
$2,110,918
$6,289
$2,922
$4,101,193
Outcome of 5-year testing of FY20 CEO sign-on grant
As previously disclosed, a one-off sign-on award of 200,000 PSRs was granted to Mr Emmett in 2019, after he joined AUB. At
the time of grant, the Board set defined TSR and EPS performance hurdles over a period of three and five years. In addition, the
vesting is subject to a five-year continued employment period. The sign on grant related to compensation when joining AUB
Group and was not part of the CEO’s ongoing employment remuneration.
The sign-on grant was tested for vesting as at 30 June 2022 and 30 June 2024 and, based on the TSR and EPS outcomes over
the performance periods, 100% of the PSRs will vest on or around 31 August 2024, subject to the CEO’s employment conditions.
–
At the time of grant, the value of the sign-on PRSs was $2,080,0001.
–
As at 30 June 2024, the value of the sign-on PRSs is $5,994,0002.
Basis of preparation
Remuneration Component
Explanation
Fixed Remuneration
The sum of base salary, superannuation, and non-monetary benefits paid during the year.
Base Salary
Fixed cash salary paid during the year
Superannuation
Mandatory super contributions paid during the year
Non-monetary Benefits
Cost of additional non-monetary benefits (including applicable fringe benefits tax) resulting
from extended overseas posting to manage the transition and integration of the Tysers
operations into AUB Group.
Variable Remuneration
The sum of short-term incentive (STI) and long-term incentive (LTI) grants that were vested
in respect of the financial year, although the vesting may have occurred after year end.
STI Cash
Represents the proportion of the STI outcome for FY24 that is receivable in cash and will be
paid following release of FY24 results in August 2024.
STI Deferred
Represents the portion of prior year STI outcomes that will vest on 31 August 2024. The
value shown is the number of PSRs that will vest multiplied by the VWAP for the 60 trading
days up to and including 30 June 2024.
LTI
Represents the amount of prior year LTI grants that were tested for vesting as at 30 June
2024 and will vest on 31 August 2024 following release of FY24 results. The value is the
VWAP for the 60 trading days up to and including 30 June 2024 multiplied by the number
of PSRs that will vest on 31 August 2024.
Total Realisable Remuneration
The sum of fixed and variable remuneration.
1
Based on the VWAP of the Company’s shares during the 60 trading days prior to 1 July 2019, adjusted for the expected value of dividends forgone during the
performance period.
2
Based on the VWAP of the Company’s shares during the 60 trading days prior to 1 July 2024.
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AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
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SECTION 1 GROUP EXECUTIVE REMUNERATION FRAMEWORK (CONTINUED)
Figures 1 and 2 below show the increase to VWAP, underlying NPAT and EPS over the past five years.
Figure 1: Financial Year VWAP and Underlying NPAT Growth for the Period FY2020 to FY2024
0
$20,000,000
$40,000,000
$60,000,000
$80,000,000
$100,000,000
$120,000,000
$140,000,000
$160,000,000
$180,000,000
Underlying NPAT (LHS) FY VWAP (RHS)
FY20
FY21
FY22
FY23
FY24
13.4%
74.4%
32.5%
22.9%
$0
$5
$10
$15
$20
$25
$30
$35
Figure 2: Financial Year VWAP and EPS Growth for the Period FY2020 to FY2024
0c
20c
40c
60c
80c
100c
120c
140c
160c
180c
EPS (LHS) FY VWAP (RHS)
FY20
FY21
FY22
FY23
FY24
12.3%
33.7%
21.2%
22.0%
$0
$5
$10
$15
$20
$25
$30
$35
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AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
SECTION 2 HOW VARIABLE REMUNERATION IS STRUCTURED
SHORT TERM INCENTIVE (STI) – HOW DOES IT WORK?
DESCRIPTION
Group Executives can earn an annual incentive award which is delivered in cash. The STI Plan
recognises and rewards short-term performance.
The STI Plan is at-risk remuneration and is not a guaranteed part of Group Executive remuneration.
STI OPPORTUNITY
A target opportunity is set for each Group Executive, which is earned if individual performance is
on target and the participant performs against a scorecard of financial and non-financial KPIs. The
KPIs have weighted allocations and are aligned to AUB Group’s strategic priorities (the Balanced
Scorecard).
Group Executives (including the CEO) have (on average) a target STI opportunity of 70% of fixed
remuneration. The maximum STI payout is capped at a maximum of 150% of a participant’s target
STI opportunity.
PERFORMANCE
CONDITIONS
Group Executive performance is assessed against a Balanced Scorecard (for further details of the
CEO’s Balanced Scorecard, refer to Table 4).
Individual targets for each KPI include consideration of the role-related accountabilities and
responsibilities in the context of business strategy and objectives.
A behavioural gateway is incorporated into the performance review process and operates to
reduce an incentive payment should there be conduct that is inconsistent with AUB Group’s
values, irrespective of performance. The Group CEO’s behaviour is assessed by the Board. Group
Executives’ behaviours are assessed by the CEO, who recommends eligibility for Group Executive
STI outcomes to the Board.
Underlying NPAT is the key financial performance measure in the Balanced Scorecard, is used by
management and the Board to assess operational performance as it is a strong indication of the
underlying health of the business.
WHY WERE THESE
PERFORMANCE
CONDITIONS CHOSEN?
The Board considers that a Balanced Scorecard which contains weighted allocations to both
financial and non-financial performance conditions is appropriate as they are aligned with AUB
Group’s objectives of delivering sustainable growth and returns to shareholders.
Group Executives have a clear line of sight to KPIs and can directly affect outcomes through their
own actions. Group Executives are also assessed on behavior metrics (the ‘how’) which contribute
to that individual’s overall performance rating. This operates to reduce an incentive payment should
there be conduct that is inconsistent with AUB Group’s values, irrespective of performance.
For all individuals, the Board may apply discretion in determining the STI outcomes to ensure they
appropriately reflect performance.
HOW STI OUTCOME
IS THEN DETERMINED
On an annual basis, a rating is determined for each Group Executive based on an evaluation of their
performance against the Balanced Scorecard. This individual performance rating metric is then
applied to the individual’s STI target award.
Individual STI Payment = STI Target Incentive Award x Scorecard Performance Rating
STI outcomes are scaled up or down to reflect performance against the agreed KPIs in their
Balanced Scorecard. The KPIs and respective target and stretch performance requirements are set
and reviewed annually.
Prior to an award, the scorecard outcome is assessed holistically against individual and Group
performance to determine if any negative or positive discretion to vary from scorecard results
should apply. The level of incentive outcome reflects the performance of AUB Group and the
individual, thereby ensuring it is aligned with shareholders’ interests.
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AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
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SHORT TERM INCENTIVE (STI) – HOW DOES IT WORK?
DEFERRAL TERMS
The following STI deferral arrangements have been introduced for Group Executives:
–
70% of STI outcome is paid in cash after the end of the performance period and
–
the remaining 30% is deferred as an equity award of PSRs, with vesting as follows:
–
half of the deferred component vests after 12 months; and
–
half of the deferred component vests after 24 months.
The vesting of the PSRs is contingent on the continued employment of the relevant Group
Executive and no application of forfeiture or clawback.
The number of PSRs is calculated using the VWAP over the 60-trading days immediately prior to
and including the last day of the performance period.
ELIGIBILITY FOR
DIVIDENDS
Unvested PSRs are not eligible for dividends.
PSRs have no voting rights.
PSR grants that subsequently vest are eligible for a cash payment equal in value to the value of
dividends paid during the performance period.
MALUS AND
CLAWBACK
The Board has broad malus powers to lapse unvested PSRs in a range of circumstances including
fraud, dishonesty, gross misconduct, breach of duties or obligations, a material misstatement, error
or omission in the financial report, to prevent a participant being entitled to an inappropriate benefit,
or if there is a change of control event.
The clawback policy also permits clawback of any shares allocated on exercise of the PSRs, as well
as cash payments received on vesting and exercise of PSRs.
WHO ASSESSES
PERFORMANCE?
The Board assesses performance of the CEO and Managing Director against the Balanced
Scorecard (as described in Table 4) with the benefit of recommendations from the People &
Remuneration Committee.
The CEO and Managing Director assesses the other Group Executives’ performance based on the
Group Balanced Scorecard outcomes and achievement against individual goals. The CEO and
Managing Director then recommends an STI award for consideration by the People & Remuneration
Committee, which then recommends an STI award for approval by the Board.
In addition, the aggregate of annual STI payments available for all employees is subject to review by
the People & Remuneration Committee and approval of the Board.
CESSATION OF
EMPLOYMENT
A Group Executive will only remain eligible to receive an STI outcome if that person ceases
employment prior to the STI entitlement date and is a ‘good leaver’ (for example, ceases
employment by reason of retirement or bona fide redundancy or by mutual agreement), unless the
Board determines otherwise.
If a Group Executive has ceased employment and is a ‘good leaver’, then unvested PSRs (deferred
STI) will remain on foot and be tested in the ordinary course, unless the Board determines
otherwise.
If a Group Executive has ceased employment and is not a ‘good leaver’, unvested PSRs will
automatically lapse on or around the date of cessation of employment.
RESTRICTIONS
ON TRANSFER
OR HEDGING
PSRs granted under the plan are not transferable and participants are prohibited from entering
hedging arrangements over unvested PSRs.
SECTION 2 HOW VARIABLE REMUNERATION IS STRUCTURED (CONTINUED)
35
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
FY24 LONG TERM INCENTIVE – HOW DOES IT WORK?
DESCRIPTION
Under the FY24 LTI Plan, annual grants of PSRs are made to eligible participants to align
remuneration outcomes with the creation of sustainable shareholder value over the long term.
Group Executives are eligible to participate, as these employees can impact AUB Group’s longer
term financial performance.
Non-Executive Directors are not eligible to participate in the LTI Plan.
LTI OPPORTUNITY
The number of PSRs granted to a Group Executive is calculated by dividing the Group Executive’s
LTI Opportunity by the VWAP over the 60 trading days prior to the start of the relevant performance
period.
In determining the ‘LTI Opportunity’, the Board will have regard for the responsibilities and
accountabilities of the position, market positioning, the purpose of the LTI and other relevant
information.
VESTING CONDITIONS
PSRs will only vest if the vesting and employment conditions (set out below later in this table) are
satisfied over the three-year performance period.
PSRs are tested against three vesting conditions over a three-year performance period:
–
40% of PSRs are tested against an EPS growth hurdle;
–
40% of PSRs are tested against a Relative TSR hurdle; and
–
20% of PSRs are tested against a Return on Invested Capital (ROIC) hurdle.
EPS – 40% WEIGHTING
The EPS vesting condition is measured by comparing the Compound Annual Growth Rate (CAGR)
of the Underlying EPS from the financial year immediately preceding the start of the performance
period to the Underlying EPS (after tax) for the final year of the performance period. CAGR is
therefore measured using the most recent financial year-end prior to the grant as the base year and
the final financial year in the three-year performance period as the end year.
The percentage of EPS PSRs granted in FY24 that may vest is based on the following vesting
schedule:
Underlying EPS CAGR
% of PSRs vests
Base and required EPS
for FY24 Grant to vest
(cents per share – cps)
Base for EPS CAGR
30 June 2023 Underlying EPS
129.32 cps Base
Less than 7%
0%
Less than 158.42 cps in FY26
7%
50%
At 158.42 cps in FY26
Greater than 7%
to less than 12%
Linear vesting from
50% to 100%
Between 158.42 cps
and 181.68 cps in FY26
12% or more
100%
181.68 cps or greater in FY26
SECTION 2 HOW VARIABLE REMUNERATION IS STRUCTURED (CONTINUED)
36
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
FY24 LONG TERM INCENTIVE – HOW DOES IT WORK?
RELATIVE TSR –
40% WEIGHTING
The Board approves a Peer Comparator Group and has the discretion to periodically review and
adjust the composition of the Peer Comparator Group, including to take into account acquisitions,
mergers, or other relevant corporate actions.
For purposes of calculating the growth in AUB Group’s share price over the performance period, the
following opening and closing share prices will be used:
–
for the opening share price, the VWAP during the 60 trading days ending on the first day of the
performance period, and
–
for the closing share price, the VWAP during the 60 trading days ending on the last day of the
performance period.
Relative TSR performance is assessed over a three-year period which commences at the start of
the financial year during which the PSRs are granted.
For any PSRs to vest pursuant to the Relative TSR vesting condition, AUB Group’s TSR must be
equal to or greater than the median ranking of constituents of the Peer Comparator Group.
The percentage of TSR PSRs that may vest is based on the following vesting schedule:
AUB Group’s TSR ranking
% of PSRs that vests
Below the 50th percentile
0%
50th percentile
50%
Between the 50th and 75th percentile
Linear vesting from 50% to 100%
At or above the 75th percentile
100%
SECTION 2 HOW VARIABLE REMUNERATION IS STRUCTURED (CONTINUED)
37
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
FY24 LONG TERM INCENTIVE – HOW DOES IT WORK?
ROIC – 20%
WEIGHTING
The ROIC vesting condition is based on the average annual return on invested capital (ROIC), which
is assessed over a 3 year performance period.
The percentage of PSRs that may vest is based on the following vesting schedule:
3-year average ROIC
% of PSRs that vests
Less than 11%
0%
11%
50%
Greater than 11% to less than 12%
Linear vesting from 50% to 100%
12% or more
100%
ROIC in each year is calculated as EBITA Less Tax divided by Average Invested Capital, defined as
follows:
EBITA Less Tax –Underlying NPAT plus interest expense related to external borrowings (net of
interest received from operating bank accounts) as per consolidated financial statements after tax.
Invested Capital – The sum of equity attributable to equity holders of the parent plus interest-
bearing loans and borrowings (excluding lease liabilities), less cash and cash equivalents not held in
trust.
Average Invested Capital – (Invested Capital at financial year end + Invested Capital at previous
financial year end) / 2
3-year average ROIC – Simple average of ROIC in each of the 3 years of the performance period
Calculation of invested capital and average invested capital at the end of Reporting Period
($,000)
FY24
FY23
FY22
FY21
Equity attributable to Shareholders
of AUB Group as at 30 June
1,512,320
1,279,853
854,494
478,754
Plus External interest-bearing Loans
and Borrowings (excluding lease
liabilities)
646,001
584,230
47,802
212,283
Less cash and cash equivalents
(excluding cash held in trust)
(377,366)
(260,352)
(259,329)
(76,588)
Invested Capital
1,780,955
1,603,731
642,967
614,449
Average invested capital
1,692,343
1,123,349
628,708
595,561
3-year average ROIC
12.7%
12.6%
11.7%
11.8%
SECTION 2 HOW VARIABLE REMUNERATION IS STRUCTURED (CONTINUED)
38
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
FY24 LONG TERM INCENTIVE – HOW DOES IT WORK?
WHY WERE THESE
PERFORMANCE
CONDITIONS CHOSEN?
The Board determined these measures will support a sustainable long term growth strategy for
reasons including:
EPS
–
is well-defined and understood by stakeholders
–
Is a sound indicator of performance and increases in shareholder value over the medium to
longer term
–
Is at a level to achieve sustainable EPS growth over the long term with annual grants
–
Is based on well-accepted and disclosed earnings measures
–
Can be benchmarked against analysts’ forecasts for validity and robustness
Relative TSR
–
Ensures there is alignment between shareholder returns and executives’ reward
–
Tests AUB Group’s TSR performance against a group of comparable companies
–
Is widely understood and accepted by key stakeholders
–
Is an independent and objective measure of AUB Group’s TSR performance
ROIC
–
Shows alignment between underlying profit and cost of new acquisitions
–
Indicates the company’s ability to generate a return on its invested capital
–
Enables an assessment of how well management is creating value from the Group’s
investments
–
Performance can be measured against acquisition strategy and actual outcomes
–
Can be readily compared to the ROIC performance of comparable companies
–
Is well understood by stakeholders
WHO ASSESSES
PERFORMANCE
AND WHEN?
EPS and ROIC results are calculated by AUB Group and an external remuneration advisor tests the
TSR results as soon as practicable after the end of the relevant three year performance period.
The vesting conditions are tested at the end of the performance period and the Board determines
the relevant number (if any) of PSRs that will vest and become exercisable.
Determination of achievement against the vesting conditions is by the Board in its absolute
discretion, having regard for any matters that it considers relevant (including any adjustments for
unusual or non-recurring items that the Board considers appropriate).
Any PSRs that do not vest following testing at the completion of the performance period, lapse.
VESTING
PSRs vest following testing by the Board at the end of the relevant three-year performance period.
Prior to vesting, the outcome is assessed holistically against individual and Group performance
to determine if any discretion to vary from formulaic results should apply. The Board will have the
discretion to exclude the impact of significant acquisitions or capital raisings that are considered
in the best long-term interest of AUB if these occur within the final 12 months of the performance
period. Any discretion applied will be disclosed.
If PSRs vest, the Board has discretion to issue new shares, acquire shares on-market or to cash
settle to satisfy the vested PSRs.
Participants receive one share for each PSR that vests or, if the Board determines, an equivalent
cash payment.
Shares allocated on vesting of the PSRs are subject to the terms of AUB Group’s Securities Trading
Policy and carry full dividend and voting rights upon allocation.
HOLDING LOCK
There will be a holding lock for a period of one year from the date that the PSRs vest and convert
into shares.
During this period executives will be restricted from dealing with any of the shares allocated on
vesting. The holding lock shares are subject to malus and clawback as set out below.
SECTION 2 HOW VARIABLE REMUNERATION IS STRUCTURED (CONTINUED)
39
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
FY24 LONG TERM INCENTIVE – HOW DOES IT WORK?
MALUS AND
CLAWBACK
The Board has broad malus powers to lapse unvested PSRs in a number of circumstances including
fraud, dishonesty, gross misconduct, breach of duties or obligations, a material misstatement, error
or omission in the financial report, to prevent a participant being entitled to an inappropriate benefit.
The clawback policy also permits the Board to seek repayment of the value of any shares allocated
on exercise of the PSRs, as well as cash payments received on vesting and exercise of PSRs.
ARE PSRS ELIGIBLE
FOR DIVIDENDS?
No. Unvested PSRs are not eligible for dividends.
PSRs have no voting rights.
PSR grants issued after 1 July 2022 that subsequently vest are eligible for a cash payment equal in
value to the value of dividends paid during the performance period.
CESSATION OF
EMPLOYMENT – CEO
AND MANAGING
DIRECTOR
If the CEO and Managing Director ceases employment before his PSRs vest, the following treatment
applies:
–
if employment is terminated in accordance with Mr Emmett’s employment agreement, without
notice, for serious misconduct or by reason of illness, injury or incapacity of Mr Emmett, all
unvested PSRs will automatically lapse; and
–
if employment is terminated with notice given by the Company or Mr Emmett, all unvested PSRs
remain on foot and will be tested in the ordinary course.
CESSATION OF
EMPLOYMENT –
GROUP EXECUTIVES
OTHER THAN THE CEO
If a participant ceases employment before his/her PSRs vest, the following treatment applies,
unless the Board determines otherwise:
–
if employment is terminated for cause, as a result of the participant being unable to perform
duties due to ill health, injury or incapacity or if the participant resigns, then all unvested PSRs
automatically lapse;
–
if employment ceases in any other circumstances, a pro rata portion of the participant’s PSRs
(based on the portion of the performance period that has elapsed up to the date of cessation)
remain on foot and are tested in the ordinary course in accordance with the vesting conditions.
If a participant ceases employment and holds vested PSRs which have not been exercised, then the
following
treatment applies, unless the Board determines otherwise: `
–
if employment is terminated for cause, all vested PSRs automatically lapse; or
–
if employment ceases in any other circumstances, all vested PSRs must be exercised within
three months of cessation of employment. After this time, all vested PSRs are automatically
exercised at a time determined by the Board.
WHAT HAPPENS
IN THE EVENT
OF A CHANGE OF
CONTROL?
There is no automatic vesting of PSRs on a change of control.
The Board has discretion to determine the appropriate treatment of unvested PSRs in the event of a
change of control having regard for the circumstances of the change of control.
Where the Board does not exercise this discretion, there will be a pro-rata vesting of PSRs based
on the proportion of the performance period that has passed at the time of the change of control
event.
RESTRICTIONS
ON TRANSFER
OR HEDGING
PSRs granted under the LTI Plan are not transferable and participants are prohibited from entering
hedging arrangements in respect of PSRs.
SECTION 2 HOW VARIABLE REMUNERATION IS STRUCTURED (CONTINUED)
40
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
SECTION 3 REMUNERATION OUTCOMES AND ALIGNMENT TO PERFORMANCE
Alignment between remuneration and group performance
AUB Group’s remuneration strategy and framework are directly linked to group performance.
Executives are rewarded on a pay-for-performance basis.
Table 2 shows the movements in shareholder wealth for the five financial years 2020 to 2024. The table highlights the significant
growth in shareholder outcomes (TSR, share price, and dividends) and the alignment with Executive incentive outcomes.
Further details about AUB Group’s performance over this period can be found in the Operating and Financial Review section
contained in this Directors’ Report.
Table 2: Summary of movement in shareholder wealth
2024
2023
2022
2021
2020
Underlying NPAT ($m)
171.02
129.11
74.02
65.30
53.15
Underlying EPS (cents)
156.78
129.32
96.70
86.12
70.61
TSR (%)
10.07
69.40
(18.58)
60.99
5.20
Share price ($)
31.69
29.40
17.68
22.39
14.70
Change in share price ($)
2.29
11.72
(4.71)
7.69
4.26
Dividends paid and proposed (cents)
79.0
64.0
55.0
55.0
50.0
Executive remuneration is directly aligned with group performance through STI measures of profitability, and LTI measures of
EPS growth, capital efficiency, and TSR performance relative to constituents of the S&P/ASX Small Ordinaries Industrials Index.
Figure 3: AUB Group Limited (AUB) v S&P/ASX Small Ordinaries Industrials Index (AXSID)
0
50
100
150
200
250
300
350
400
Jun-19
Dec-19
Jun-20
Dec-20
Jun-21
Dec-21
Jun-22
Dec-22
Jun-23
Dec-23
Jun-24
Total Shareholder Return (Indexed to 100)
AUB Group Limited TSR compared to S&P/ASX Small Ordinaries Industrials Index
AUB Group Ltd
Peer Comparator Group 50th Percentile
Peer Comparator Group 75th Percentile
41
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
SECTION 3 REMUNERATION OUTCOMES AND ALIGNMENT TO PERFORMANCE (CONTINUED)
Remuneration outcomes
This section of the Remuneration Report discloses the outcome of awards made under:
–
the FY24 STI award (performance period 1 July 2023 – 30 June 2024);
–
the FY22 LTI grant (performance period 1 July 2021 – 30 June 2024); and
–
the FY20 LTI CEO sign-on grant (performance period 1 July 2019 – 30 June 2024).
FY24 STI Outcomes
The Group’s strong financial performance in FY24 follows management’s execution of strategy and focus on Board approved
performance requirements. The Board assessed FY24 performance against the targets set for management and has provided
an accrual of $4.97m for Group STI participants (including accrued non-equity settled deferred components of STI granted in
prior periods).
Table 3: Group STI accrual outcome
($’m)
2024
2023
2022
2021
2020
Cash STI outcomes
4.97
5.96
4.74
4.01
3.57
Table 4: FY24 CEO Balanced Scorecard
Performance Measures and Weighting
Outcome (% of max)
Financial (77%)
97%
% Growth in Group UNPAT
Network growth, including value of M&A transactions
% NZ Profit Growth
% Tysers Profit Growth
% Tysers financial synergy realisation
Network optimisation and strategy (11%)
95%
Number of business optimisations (consolidations,
simplifications and equity restructuring)
Tysers strategy implementation and structure optimisation
Other (12%)
67%
Board assessment of Network, Customer and Team progress
Partner relationships and staff engagement
Continued uplift in effectiveness of risk management and
compliance processes and reporting
This resulted in an STI award of $1,392,500 of which 70% will be paid in cash with the balance deferred in PSRs which will vest
over 12 and 24 months. See section 2 of this report for further details.
Threshold
Target
Maximum
Threshold
Target
Maximum
Threshold
Target
Maximum
Threshold
Target
Maximum
Threshold
Target
Maximum
Threshold
Target
Maximum
Threshold
Target
Maximum
Threshold
Target
Maximum
Threshold
Target
Maximum
Threshold
Target
Maximum
42
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
LTI Outcomes
FY22 LTI grant outcomes
100% of the total FY22 LTI grant will vest because of the Group’s outstanding performance across the two hurdles:
–
AUB Group’s Total shareholder Return (TSR) was 60.97%. This resulted in AUB’s percentile rank at 85.19th of the comparator
group and, as such, 100% of the tranche vested.
–
AUB Group’s actual EPS Average Annual Growth Rate (AAGR) across the performance period was 22.42%. This average
annual growth in EPS was an excellent result for the Group resulting in 100% of the tranche vested.
–
144,879 PSRs will vest on 31 August 2024 (82,579 attributable to KMPs).
Table 5 : Outcomes of the FY22 LTI grant.*
Performance period for FY22 grant - 1 July 2021 to 30 June 2024
1. TSR outcomes – 40% of total PSR grant* (57,952 PSRs)
Actual outcome
TSR of AUB Group Limited
60.97%
Percentile Rank
85.19th
Total percentage of TSR PSRs vesting
100%
100% vesting where AUB Group’s TSR ranking exceeds 75th percentile.
2. AAGR EPS outcomes – 60% of total PSR grant* (86,927 PSRs)
Threshold
AAGR
Linear vesting
AAGR
Maximum
AAGR
Actual AAGR
achieved (%)
Actual vesting
outcome
5%
5%-10%
10% AAGR
Vesting
50%
50%-100%
100%
22.42%
100%
Total percentage of EPS PSRs vesting
100%
* The vesting conditions in Table 5 apply to the FY22 LTI Plan only. See section 2 for current year vesting performance hurdles.
CEO’s 200,000 PSRs sign-on grant (Performance period 1 July 2019 to 30 June 2024)
As previously disclosed, a one-off sign-on award of 200,000 PSRs was granted to the CEO in 2019. At the time of grant, the
Board set defined TSR and EPS performance hurdles over a period of three and five years. One third of the PSRs were tested and
met the performance hurdles as at 30 June 2022, for which details are shown in the 2023 Annual Report.
Over the five-year testing period, the Company achieved an Annual Average Growth Rate (AAGR) of 19.03% and a TSR percentile
rating of 94.97%. Based on these outcomes, all 200,000 sign-on PSRs will vest on 31 August 2024.
SECTION 3 REMUNERATION OUTCOMES AND ALIGNMENT TO PERFORMANCE (CONTINUED)
43
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
SECTION 4 REMUNERATION GOVERNANCE
Overview
The following diagram illustrates the Company’s remuneration governance framework.
BOARD
The Board reviews, amends and approves the recommendations from the Board’s Committees around governance,
strategy, performance, and the remuneration arrangements for all Group Executives and Non-Executive Directors.
BOARD AUDIT &
RISK COMMITTEE
The People & Remuneration
Committee and Board Audit
& Risk Committee meet
concurrently to consider
if there are risk-based or
other adjustments that may
warrant consideration in the
Board’s determination of
remuneration outcomes.
PEOPLE &
REMUNERATION
COMMITTEE
Oversees our remuneration
philosophy and framework.
The Committee is responsible
for reviewing compensation
arrangements for the Directors,
CEO and Group Executives,
including the Company’s KMP
and making recommendations
in that regard for determination
by the Board. The Committee
comprises all Non-Executive
Directors of the Board.
EXTERNAL
ADVISORS
The Board and the Committee
seek advice from independent
experts and advisors from time
to time on various matters,
including remuneration.
The Committee appoints
remuneration consultants and
external advisors and ensures
independence.
CEO & MANAGING DIRECTOR (CEO) AND MANAGEMENT
The CEO makes recommendations to the Committee regarding Executives’ remuneration. These recommendations
take into account performance, culture and values. Together with management, the CEO also provides information and
recommendations for deliberation and implements arrangements once they have been approved.
Use of remuneration advisors
In making recommendations to the Board, the People & Remuneration Committee seeks advice from external advisors from
time to time to assist in its deliberations. Remuneration advisors are engaged by the Chair of the People & Remuneration
Committee with an agreed set of protocols that determine the way in which remuneration recommendations would be
developed and provided to the Board. This process is intended to ensure there can be no undue influence by Executive KMP to
whom any recommendations may relate. No remuneration recommendations, as defined by the Corporations Act, were made
by the remuneration advisors during the Reporting Period.
44
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
Executive Service Agreements
The remuneration and other terms of employment for the Executive KMP are formalised in Executive Service Agreements, which
have no specified term. Each of these agreements provides for performance-related pay under the STI Plan, and participation,
where eligible, in the LTI Plan. Other major provisions of the service agreements of the Executive KMP are as follows:
Table 6: Executive Service Agreement terms
Name
Notice to be given
by executive
Notice to be given
by AUB Group*
Termination
payment
Post-employment
restraint
CEO and Managing Director
Michael Emmett
12 months
12 months
12 months fixed
remuneration
12 months
Other Executive KMP
Mark Shanahan
6 months
6 months
6 months fixed
remuneration
12 months
*
Payments may be made in lieu of notice period.
Disclosures under Listing Rule 4.10.22
During the Reporting Period, a total of 550,164 shares were acquired on-market by the Austbrokers Employee Share Acquisition
Schemes Trust (at an average price of $30.13 per share) to satisfy AUB Group’s obligations under various equity plans.
Share Trading Policy
AUB Group’s securities trading policy prohibits Group Executives from entering into margin lending or similar arrangements in
relation to AUB Group’s securities, including transferring securities into an existing margin loan account and/or selling securities
to satisfy a call pursuant to a margin loan.
Breaches of AUB Group’s securities trading policy are regarded seriously and may lead to disciplinary action being taken
(including termination of employment).
AUB Group’s securities trading policy can be found at www.aubgroup.com.au/corporate-governance.
SECTION 4 REMUNERATION GOVERNANCE (CONTINUED)
45
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
SECTION 5 NON-EXECUTIVE DIRECTOR REMUNERATION
Details of the Non-Executive Directors of AUB Group during the Reporting Period are provided in the Directors’ Report.
Components and details of Non-Executive Director remuneration
Non-Executive Directors (NED) receive a fixed fee (inclusive of superannuation) for services to the Board and each Board
Committee on which the Director serves.
A further fee is payable to the Chairs of the Board Audit & Risk Committee and the People & Remuneration Committee, and
to Non-Executive Directors who are directors of Tysers Insurance Brokers Limited, which is a wholly owned subsidiary of AUB
Group.
There was an increase to Non-Executive Director remuneration from 1 July 2023. The fees for the Reporting Period are shown in
Table 7.
NED remuneration is reviewed from time to time by the Committee to ensure that fee levels:
–
reflect workloads, expectations and responsibility in connection with the regulated landscape in which AUB operates; and
–
are competitive, providing the Board with the ability to attract and retain high caliber directors, which is important in the
context of the Board’s ongoing orderly renewal and succession planning process.
NED do not receive retirement benefits other than amounts paid by way of the superannuation guarantee, nor do they participate
in any incentive programs. NEDs may be reimbursed for expenses reasonably incurred in the course of carrying out their duties.
AUB Group does not make sign-on payments to new NEDs and does not provide for retirement allowances for NEDs.
Aggregate fee pool approved by shareholders
NED fees are set by the Board within the maximum aggregate amount of $1,500,000 per annum approved by shareholders at
the Annual General Meeting in November 2022.
A resolution to increase this maximum amount by $300,000 to $1,800,000 in order to, among other things, support orderly
Board succession, will be presented for shareholder approval at the Annual General Meeting in October 2024.
Table 7: NED fees payable during the Reporting Period
1 July 2023 to 30 June 2024
Board fees per annum
$ Amount (incl of statutory superannuation)
Board Chair
300,000
Non-Executive Director
155,000
Committee Chair (Board Audit & Risk)
30,000
Committee Chair (People & Remuneration)
25,000
Committee Chair (Nomination)
N/A
Committee member
N/A
Tysers Insurance Brokers Limited: Chair
GBP 100,000
Tysers Insurance Brokers Limited: NED
GBP 50,000
Non-Executive Directors Minimum Shareholding Policy
NEDs are encouraged to hold AUB shares and the Board has endorsed a minimum shareholding policy for NEDs to hold 100%
of the annual director (or Board Chair) base fee within five years, commencing on the later of 1 July 2023 or the date of their
appointment. The value of shares for determining compliance is the higher of cost or market value.
Our NED minimum shareholding policy is intended to align the interests of NEDs with our shareholders. The NEDs do not
participate in any of our performance-based incentive schemes and have to acquire shares out of their own funds.
46
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
SECTION 6 STATUTORY REMUNERATION TABLES AND DATA
Table 8: PSR/SARs movements for the period
The LTI grants for FY24 and movements in all unvested PSRs previously granted to Group Executives are summarised below:
Total PSR/SARs issued (including KMPs)
LTIP Financial
Year (tranche)
Balance at
30-Jun-23
Granted
Lapsed
Exercised
Balance at
30-Jun-24
Earliest
vesting date
Lapse date
Fair value
per PSR at
grant date
($)
Fair value to
be expensed
in the future
($)
2020 (15th
5 year PSRs)
200,000
–
–
–
200,000
31-Aug-24
31-Aug-28
8.91
–
2021 (16th)
164,436
–
–
(164,436)
–
31-Aug-23
31-Aug-27
11.27
–
2022 (17th)
144,879
–
–
–
144,879
31-Aug-24
31-Aug-28
18.02
–
2022 (DSTI)
39,169
–
–
(19,584)
19,585
31-Aug-23
31-Aug-24
19.02
–
2023 (18th)
150,146
–
–
–
150,146
31-Aug-25
31-Aug-29
20.04
895,021
2023 (DSTI)
–
29,353
—
—
29,353
31-Aug-24
31-Aug-26
26.79
131,057
2024 (19th)
–
181,295
–
–
181,295
31-Aug-26
31-Aug-30
24.37
2,546,912
Total
698,630
210,648
–
(184,020)
725,258
3,572,990
Total Share
Appreciation
Rights (SARs)
1,016,776
–
–
–
1,016,776
31-Aug-26
31-Aug-26
3.79
1,464,361
Tysers
Performance
Share Rights
–
1,812,000
(51,500)
–
1,760,500
31-Aug-26
31-Aug-26
30.50
14,159,257
M Emmett – CEO and Managing Director
LTIP Financial
Year (tranche)
Balance at
30-Jun-23
Granted
Lapsed
Exercised
Balance at
30-Jun-24
Earliest
vesting date
Lapse date
Fair value
per PSR at
grant date
($)
Fair value to
be expensed
in the future
($)
2020 (sign-on
PSRs)
200,000
—
—
—
200,000
31-Aug-24
31-Aug-28
8.91
—
2021 (16th)
78,795
—
—
(78,795)
—
31-Aug-23
31-Aug-27
11.27
—
2022 (17th)
53,277
—
–
–
53,277
31-Aug-24
31-Aug-28
18.02
–
2022 (DSTI)
16,009
–
–
(8,004)
8,005
31-Aug-23
31-Aug-24
19.02
–
2023 (18th)
52,576
–
–
–
52,576
31-Aug-25
31-Aug-29
20.04
313,406
2023 (DSTI)
–
12,276
–
–
12,276
31-Aug-24
31-Aug-26
26.79
54,810
2024 (19th)
–
69,989
–
–
69,989
31-Aug-26
31-Aug-30
24.37
983,236
Total
400,657
82,265
–
(86,799)
396,123
1,351,452
Total SARs
508,388
–
–
–
508,388
31-Aug-26
31-Aug-26
3.79
732,180
47
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
Table 8: PSR/SARs movements for the period (continued)
M Shanahan – Chief Financial Officer
LTIP Financial
Year (tranche)
Balance at
30-Jun-23
Granted
Lapsed
Exercised
Balance at
30-Jun-24
Earliest
vesting date
Lapse date
Fair value
per PSR at
grant date
($)
Fair value to
be expensed
in the future
($)
2021 (16th)
14,344
–
–
(14,344)
–
31-Aug-23
31-Aug-27
11.27
–
2022 (17th)
29,302
–
–
–
29,302
31-Aug-24
31-Aug-28
18.02
–
2022 (DSTI)
8,218
–
–
(4,109)
4,109
31-Aug-23
31-Aug-24
19.02
–
2023 (18th)
28,917
–
–
–
28,917
31-Aug-25
31-Aug-29
20.04
172,374
2023 (DSTI)
–
6,047
–
–
6,047
31-Aug-24
31-Aug-26
26.79
26,999
2024 (19th)
–
24,263
–
–
24,263
31-Aug-26
31-Aug-30
24.37
340,857
Total PSRs
80,781
30,310
-
(18,453)
92,638
540,230
Total SARs
254,194
–
–
–
254,194
31-Aug-26
31-Aug-26
3.79
366,090
There are no vested or exercisable PSRs, SARS and Tysers Performance Share Rights at 30 June 2024.
PSRs and Tysers Performance Share Rights have an exercise price of $NIL.
SARs have an exercise price of $20.33. See note 21 of the financial statements for further details on the conversion of SARS to
shares upon vesting.
Shares issued on exercise of PSRs
During FY24, 164,436 PSRs were exercised and converted to shares in AUB Group Limited under the 2021 LTIP.
The hurdles, vesting conditions and outcomes for the 2021 LTIP were detailed in the FY23 financial statements.
A further 19,584 PSRs vested under the 2022 Deferred STI (DSTI) plan.
During FY24, 164,436 PSRs were exercised and converted to shares in AUB Group Limited under the 2021 LTIP.
The hurdles, vesting conditions and outcomes for the 2021 LTIP were detailed in the FY23 financial statements.
A further 19,584 PSRs vested under the 2022 Deferred STI (DSTI) plan.
All PSRs are granted over shares in the ultimate controlling entity AUB Group Limited.
All shares required to satisfy vested/exercised PSRs were acquired on market during the year.
Unissued shares
As at 30 June 2024, there were 725,258 and 1,778,000 unissued ordinary shares under PSRs as part of the AUB Group LTIP and
Tysers LTIP respectively, that have not vested.
Refer to Note 21 of the Financial Report for further details of the PSRs/SARS outstanding.
Holders of PSRs do not have any right, by virtue of the option to participate in any share issue of the Company or any related
body corporate.
SECTION 6 STATUTORY REMUNERATION TABLES AND DATA (CONTINUED)
48
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
SECTION 6 STATUTORY REMUNERATION TABLES AND DATA (CONTINUED)
Table 9: Shares held in AUB Group Limited at 30 June 2024
Balance at
30-Jun-23
Shares received
– Exercise of
PSRs
Shares acquired
during the year
Shares held
at date of
retirement
Balance at
30-Jun-24
Directors
D. C. Clarke (Chair)
30,837
—
—
30,837
M. P. C. Emmett (CEO)
82,684
86,799
—
—
169,483
R. D. Deutsch
1,000
2,250
—
3,250
P. G. Harmer
3,415
—
—
3,415
A. J. Kendrick
—
—
—
—
M. S. Laing1
—
1,714
—
1,714
P. A. Lahiff2
12,738
—
(12,738)
—
R. J. Low3
24,446
—
(24,446)
—
C. L. Rogers
8,404
—
—
8,404
Executives
M. J. Shanahan
28,620
18,453
—
—
47,073
Total
192,144
105,252
3,964
(37,184)
264,176
1.
M. S. Laing was appointed as a director on 2 November 2023.
2.
P. A. Lahiff retired as a director on 23 August 2023.
3.
R. J. Low retired as a director on 2 November 2023.
49
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
Compensation of Directors and other Key Management Personnel
Table 10: Statutory Reporting Basis – period ending 30 June 2024
The table below outlines KMP remuneration calculated in accordance with accounting standards and the Corporations Act 2001
requirements.
The amounts shown are equal to the amount expensed in the Company’s Financial Report for the particular year.
Year
Salary
& fees
Cash
short term
incentive*
Equity
settled
short term
incentive
Non
monetary
benefits
Post
employment
Super-
annuation
Share-
based
payment
Equity
PSRs/
SARS**
Total
remuneration
Total per-
formance
related
30 June 2024
$
$
$
$
$
$
$
%
Non Executive Directors
D. C. Clarke (Chair)
2024
272,500
—
—
—
27,500
—
300,000
0%
2023
217,195
—
—
—
22,805
—
240,000
0%
R.D. Deutsch
2024
174,886
—
—
—
—
—
174,886
0%
2023
79,091
—
—
—
—
—
79,091
0%
P. G. Harmer1
2024
226,140
—
—
—
24,875
—
251,015
0%
2023
167,653
—
—
—
17,604
—
185,257
0%
A.J. Kendrick2
2024
347,031
—
—
—
—
—
347,031
0%
2023
153,916
—
—
—
—
—
153,916
0%
M. S. Laing3
2024
111,953
—
—
—
7,365
—
119,318
0%
2023
—
—
—
—
—
—
—
—
P. A. Lahiff4
2024
27,027
—
—
—
2,973
—
30,000
0%
2023
122,172
—
—
—
12,828
—
135,000
0%
R. J. Low4
2024
63,068
—
—
—
—
—
63,068
0%
2023
145,000
—
—
—
—
—
145,000
0%
C. L. Rogers
2024
139,640
—
—
—
15,360
—
155,000
0%
2023
108,598
—
—
—
11,402
—
120,000
0%
Executive Directors
M. P. C. Emmett
(CEO)
2024
1,228,050
974,750
361,845
88,071
27,500
1,787,219
4,467,435
69.92%
2023
971,762
767,376
263,901
2,922
27,500
1,530,697
3,564,158
71.88%
Executives
M. J. Shanahan
(CFO)
2024
613,569
443,511
172,747
14,343
27,500
662,966
1,934,636
66.12%
2023
478,098
378,000
132,625
46,585
27,500
527,840
1,590,648
65.29%
Total Remuneration 2024
3,203,864
1,418,261
534,592
102,414
133,073
2,450,185
7,842,389
Total Remuneration 2023
2,443,485
1,145,376
396,526
49,507
119,639
2,058,537
6,213,070
** Share based payments for PSRs are calculated on the accrued cost to the Company recognising that PSRs issued to KMP will vest over 3 years (5 years for CEO
sign-on PSRs, after taking into account a 75% -100% probability that the Group will achieve the performance hurdles required for those PSRs to vest
*
STI amounts included above (including equity settled) relate to the accrued provision in respect of the current year’s performance that will be paid/settled during
the following financial years. The 2024 amounts have been approved by the Board.
SECTION 6 STATUTORY REMUNERATION TABLES AND DATA (CONTINUED)
50
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
Compensation of Directors and other Key Management Personnel (continued)
Table 10: Statutory Reporting Basis – period ending 30 June 2024 (continued)
1.
P.G. Harmer is also a director of Tysers Insurance Brokers Limited (TIBL). TIBL remuneration is based on GBP 50,000 per annum (AUD 96,015). Fees were
converted based on an AUD/GBP exchange rate of 0.52075.
2.
A.J. Kendrick also received remuneration as chair of TIBL. TIBL remuneration is based on GBP 100,000 per annum. (AUD 192,031). Fees were converted based
on an AUD/GBP exchange rate of 0.52075.
3.
M. S. Laing was appointed as a director on 2 November 2023.
4.
P. A Lahiff retired as a director on 23 August 2023.
5.
R. J. Low retired as a director on 2 November 2023.
Statutory remuneration represents the accounting expense of remuneration in the financial year.
It includes salary remuneration, annual and long service leave payments, the amortisation expense of deferred performance
share rights previously granted and an accrual for STIs. 30% of the FY24 STI will be settled by the grant of further performance
share rights of which 50% will vest on 31 August 2025 and the balance will vest on 31 August 2026. There are no performance
hurdles required for vesting of the deferred short term incentives settled as performance share rights other than continuing
employment.
Table 11: Number of PSRs granted as part of remuneration
30 June 2024
(Grant year FY24)
Granted no.
Grant date
Fair value
per PSR at
grant date
Exercise price
per PSR
Expiry date
First
exercise
date
Last
exercise
date
Directors
M. P. C. Emmett
PSRs
69,989
3-Nov-23
24.37
0.00
31-Aug-30
31-Aug-26
31-Aug-30
PSRs (DSTI)
12,276
1-Sep-23
26.79
0.00
31-Aug-25
31-Aug-24
31-Aug-25
Executives
M. J. Shanahan
PSRs
24,263
3-Nov-23
24.37
0.00
31-Aug-30
31-Aug-26
31-Aug-30
PSRs (DSTI)
6,047
1-Sep-23
26.79
0.00
31-Aug-25
31-Aug-24
31-Aug-25
Total
112,575
The fair value above is the weighted average fair value price of the EPS and TSR PSRs at the date the PSRs were granted.
All PSRs were issued with an exercise price of $NIL and the expiry date of the PSRs is four years after the vesting date.
Mr Emmett’s grant of 69,989 PSRs under the Long Term Incentive Plan was approved by shareholders at the AGM on
2 November 2023, and this approval was for all purposes, including Listing Rule 10.14.
SECTION 6 STATUTORY REMUNERATION TABLES AND DATA (CONTINUED)
51
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
Deferred Short term Incentive (DSTI)
30% of the FY23 STI was deferred in the form of an equity award based on the 60 day VWAP for 30 June 2023. Half of the PSRs
will vest on 31 August 2024 with the remaining PSRs vesting on 31 August 2025. No additional performance conditions apply to
the vesting of these PSRs other than continued employment to the date the PSRs vest.
Table 12: Value of PSRs granted as part of remuneration (including PSRs vested or lapsed during the year)
Shares issued on exercise of PSRs
Value of PSRs
granted during
the year*
Value of PSRs
exercised
during the
year**
Percentage of
remuneration
consisting
of value
share based
payments
incurred during
the year***
Number of
shares issued
on exercise of
PSRs
Paid per
share on
shares issued
on exercise of
PSRs
Number of
PSRs vested
during the
year
Number of
PSRs lapsed
during the
year
30 June 2024
$
$
%
No.
$
No.
No.
Directors
M. P. C. Emmett
PSRs
1,705,310
2,403,248
—
78,795
0.00
78,795
—
DSTI***
328,874
244,122
—
8,004
0.00
8,004
—
Total
2,034,184
2,647,370
45.53%
86,799
—
86,799
—
Executives
M. J. Shanahan
PSRs
591,178
437,492
—
14,344
0.00
14,344
—
DSTI***
161,999
125,325
—
4,109
0.00
4,109
—
Total
753,177
562,817
38.93%
18,453
0.00
18,453
—
Total
2,787,361
3,210,187
105,252
0.00
105,252
—
*
Total gross value of PSRs granted during the year which will vest over three years if all performance hurdles required for PSRs and SARs to vest, are met.
**
Total value of PSRs exercised during the year is calculated based on the fair value of the PSRs at exercise date multiplied by the number of PSRs exercised.
*** Share based payments as a percentage of remuneration is calculated on the accrued cost to the Company recognising that PSRs issued to KMP will vest over
3 years after taking into account a 75 - 100% probability that the Group will achieve the performance hurdles required for those PSRs to vest.
Loans or other transactions with KMP
No KMP or their related parties held any loans from the AUB Group during or at the end of the year ended 30 June 2024 or prior
year. Apart from the details disclosed in this Report, there were no transactions between KMP (or their related parties) and AUB
Group or any of its subsidiaries during the Reporting Period.
SECTION 6 STATUTORY REMUNERATION TABLES AND DATA (CONTINUED)
52
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
SECTION 7 GLOSSARY
AAGR
Average annual growth rate (expressed as a %).
Balanced Scorecard
a balanced scorecard set of KPIs, which includes both financial and non-financial measures
that have weighted allocations and are aligned to AUB Group’s strategic priorities.
CAGR
Compound annual growth rate (expressed as a %).
Corporations Act
Corporations Act 2001 (Cth).
EPS
Underlying earnings per share.
Executive KMP
Michael Emmett (CEO and Managing Director) and Mark Shanahan (Chief Financial Officer).
Group Executives
The CEO, CFO, Chief Broking Officer, Chief Underwriting Officer, Chief Legal & Risk Officer and
Chief Information Officer.
KMP
Persons who, directly or indirectly, have authority and responsibility for planning, directing and
controlling the activities of AUB Group during the Reporting Period.
LTI Plan
AUB Group’s Long-Term Incentive Plan.
Peer Comparator Group
Constituents of the S&P/ASX Small Ordinaries Industrials Index (AXSID), defined at the
commencement of the performance period.
PSR
Performance Share Right, with each right entitling the holder to receive one fully-paid ordinary
share in AUB Group on vesting (or, if the Board determines, an equivalent cash payment).
Vesting of PSRs may be subject to vesting conditions and performance hurdles.
Relative TSR
AUB Group’s compounded TSR measured against the ranking of constituents of the Peer
Comparator Group.
Reporting Period
12 months period ended 30 June 2024.
ROIC
Return on Invested Capital – is a profitability or performance ratio that aims to measure the
percentage return that AUB Group earns on invested capital. The ratio shows how efficiently
the Group is using the investors’ funds to generate income. Invested capital also includes
interest bearing debt (net of cash and cash equivalents) but excludes lease liabilities.
SAR
Share Appreciation Right, with each right entitling the holder to receive fully-paid ordinary
shares in AUB Group on vesting (or, if the Board determines, an equivalent cash payment). See
remuneration report included in the 2022 Annual Report for further details.
STI Plan
AUB Group’s Short-Term Incentive Plan.
TSR
Total shareholder return measures the percentage growth in the share price together with
the value of dividends paid during the relevant three year performance period, assuming all
dividends are reinvested into new securities.
Underlying EPS
Underlying earnings per share, being, in respect of any financial year, the Underlying NPAT
divided by the weighted average number of shares on issue during the financial year.
Underlying NPAT
Underlying net profit after tax, being, in respect of any financial year, the consolidated net profit
after tax of AUB Group for that year excluding fair value adjustments to the carrying values
of associates, profit on sale of entities and assets or deconsolidation of controlled entities,
contingent consideration adjustments, impairment charges and amortisation of intangibles.
Other adjustments to the Underlying NPAT calculation may be made in limited circumstances
where the Board considers it to be appropriate.
VWAP
Volume weighted average price of shares in AUB Group traded on the ASX.
53
AUB GROUP ANNUAL REPORT 2024
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
ROUNDING
The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (where rounding
is applicable) under the option available to the Company under ASIC instrument “Rounding in Financial/ Directors’ Reports”
2016/191. The Company is an entity to which this legislative instrument applies.
AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES
The Directors received an independence declaration from the auditors of AUB Group Limited. Refer to page 77 of the Annual
Report.
Non-audit services provided to the AUB Group by the entity’s auditor, Ernst & Young, in the financial year ended 30 June 2024
were predominantly in relation to tax matters. Other assurance services included those that are not required by regulation. The
directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for
auditors imposed by the Corporations Act (2001) Cth. The nature and scope of each of the non-audit services provided means
that auditor independence was not compromised. The amounts received or due to be received are detailed in Note 21 of the
Financial Report.
Signed in accordance with a resolution of the Directors.
D.C. Clarke
M. P. C. Emmett
Chair
Chief Executive Officer and Managing Director
Sydney, 21 August 2024
54
AUB GROUP ANNUAL REPORT 2024
Environmental, Social and Governance Report
DIRECTORS’ REPORT
YEAR ENDED 30 JUNE 2024
ENVIRONMENTAL,
SOCIAL AND
GOVERNANCE
REPORT
AUB GROUP ANNUAL REPORT 2024
55
CONTENTS
1. Scope and Methodology
57
1.1 Introduction
57
1.2 Climate Related Risks and Opportunities
57
1.3 Statement of Compliance
57
1.4 Governance and Principles
58
1.5 Methodology
58
1.6 Themes that Matter - Stakeholder Engagement and Materiality
58
1.7 Our SDG Contribution
60
2. ESG Balanced Scorecard
61
3. ESG Governance
63
4. Environment
64
4.1 Risks and Opportunities
64
4.2 Climate Strategy
65
4.3 Environmental Management
67
5. Social
68
5.1 Our Community Investment
68
5.2 Supporting Our Customers
69
5.3 Our People
70
6. Governance
74
AUB GROUP ANNUAL REPORT 2024
56
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
YEAR ENDED 30 JUNE 2024
1. SCOPE AND METHODOLOGY
1.1
INTRODUCTION
Doing the right thing by our people, our partners, our customers, our environment, and the communities in which we operate
is part of our ethos. At AUB Group we recognise our responsibility in society towards creating a more sustainable future. We
continue to embed ESG into our business strategy and operations. This is increasingly important as our business continues
to grow year on year. With changing customer expectations and increasing demand for ESG engagement, sustainability is
increasingly becoming a driver for success. The visible impacts of climate change increase the urgency for action and the need
to continue to develop our ESG strategy, as well as support our customers who may be facing risks.
We are a services organisation operating in more than 540 locations globally. AUB Group’s network of insurance intermediaries
conduct business with clients and other stakeholders both face-to-face and remotely. We maintain office space in the locations
in which we operate. We do not consume raw materials or manufacture any physical products so our environmental footprint
and exposure to supply chain risks is limited.
During FY24, we continued to build on our ESG strategy and are working towards achieving our ESG commitments. Our ESG
priorities are the result of extensive stakeholder engagement, including materiality assessments. ESG goals help us create long
term sustainable value for our stakeholders.
1.2 CLIMATE RELATED RISKS AND OPPORTUNITIES
We have not conducted a detailed assessment on Climate Related Risk and Opportunities (‘CRROs’), however a summary of
management’s views are as follows:
–
AUB is highly diversified in physical location, and industry sector, with no client representing more than 1% of our total
revenue. The Group’s resilience was exemplified during the COVID pandemic when industries such as Hospitality, Film,
and Entertainment produced little to no revenue for an extended period of time, but was offset by organic growth in other
industries, leading to AUB Group’s profit (excluding mergers and acquisitions) resilience during the period.
–
AUB has strong opportunities in a changing climate environment created through (1) access to new and emerging markets,
and (2) as risks become harder to place (insurers exit the market as part of their Net Zero strategy or due to climate related
disasters making the line of insurance unprofitable) our access to wholesale markets via our investment in Tysers will
generate new business.
A detailed analysis of our CRROs will be conducted in FY25 and the CRROs will be monitored from that point.
Opportunities may be presented to the Group by climate change and individual Group asset valuations may be impacted.
Our investments in subsidiaries and associates (comprising Goodwill, broking registers, and investments in associates) may
see certain portfolios of business more exposed to climate change than others. We consider the impact of climate risk on
impairment and assessment of useful life. Currently there are no indicators of impairment due to climate change.
AUB considers climate exposure and ESG metrics when considering investments in new businesses and divestments may occur
(where AUB’s strategy is not aligned to the portfolio or investment).
Refer to section 4.1 in this report for further information.
1.3 STATEMENT OF COMPLIANCE
This report is not externally verified. AUB is within Group 1 of Australian Sustainability
Reporting Standard 1 (ASRS) and this report will be audited per the requirements of ASRS
for the year ending 30 June 2026.
This report covers AUB Group’s ESG management approach and associated activities for
the year ending 30 June 2024. Unless otherwise indicated, ESG data is presented for the
period from 1 May 2023 to 30 April 2024 (the ‘reporting period’). In future periods AUB will
transition to providing data for the 12 months to 30 June, the change is not expected to have a material impact on any metrics.
This report covers AUB Group Limited and the entities it controlled as at 30 April 2024. To ensure comparability, we present
figures on continuing operations only (i.e. divestments by year end are removed for the entire period), and restate comparative
numbers to have the same constituents as the current period (irrespective of whether AUB had control of the entity in the prior
period). Our share of associates metrics are not presented.
We recognise the need to provide our stakeholders with clear and transparent ESG reporting. This report has been prepared
considering the guidance provided by the Global Reporting Initiative (GRI) Standards 2016. We have also considered the United
Nations Sustainable Development Goals and disclosed in this report the areas where we believe we can have the greatest
impact. We will comply with the Task Force on Climate Related Disclosures (‘TCFD’) by FY25 and ASRS 1 when it comes
into force.
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1. SCOPE AND METHODOLOGY (CONTINUED)
1.4 GOVERNANCE AND PRINCIPLES
Governance is a key aspect on delivering on our ESG strategy and in ensuring we have the right policies and processes in place to
support our ESG commitments.
AUB’s approach to sustainability is aligned to our Enterprise Risk Management Framework which is designed to identify and
manage material risks to the Group including (1) impacts to customer retention (as industries transition to a net zero environment)
(2) regulatory risks as AUB and its subsidiaries come within scope of a number of legislative instruments globally and (3)
reputational risks as AUB is a public company and being a laggard may result in significant brand damage.
As further detailed within this report (section 3), the Board, in consultation with the Board Audit and Risk Committee (‘BARC’),
oversees and approves AUB Group’s ESG activities, including our strategy, policies and procedures.
During the reporting period, AUB Group engaged an independent external consultant to perform a current state assessment of its
reporting approach against the requirements set out in the forthcoming ASRS and an action plan of recommendations. In addition
to this, they provided benchmarking analysis against peers.
1.5 METHODOLOGY
Social responsibility and caring for our environment are aligned with our stakeholders’ interests. Listening to our stakeholders
diverse needs helps us adapt and shape our approach to ESG and identify the key themes that matter to them. AUB’s approach is
as follows:
1. Conduct a materiality exercise every three years to understand areas of concern of our stakeholders;
2. Assess the outcome of the materiality exercise, along with legislation, and peer benchmarking annually to set minimum
requirements, aspirational targets, and revise previous targets;
3. The Board in consultation with the BARC endorses strategy and targets;
4. Targets are assigned to management personnel, monitored, and reported back to the Board at least semi-annually;
5. Progress on outcomes are presented within the Annual report annually.
The materiality exercise due to be conducted in FY24 has been deferred to align with the CRRO assessment which is being
undertaken in FY25.
The three areas of employees, customers and social and environment are the themes under which our material impacts are
organised. Our strong relationship with our partner businesses is an essential component of our framework, and our ethics and
integrity underpin everything that we do; they guide us in our approach to all of our stakeholders and business activities.
1.6 THEMES THAT MATTER - STAKEHOLDER ENGAGEMENT AND MATERIALITY
Ethics and Integrity:
–
Responsible business and governance
–
Integrity and ethical behaviour
–
Responsible investment
–
Financial resilience and profitability
–
Trust, transparency and disclosure
–
Fair insurance broker commissions
–
Compliance
–
Data security and privacy
Employee:
–
Partner relationship advocacy
–
Employee training, development, and retention
–
Health, Safety and wellbeing
Customers:
–
Technological transformation
–
Product innovation
Social and Environment:
–
Climate change, environmental sustainability, and
stewardship
–
Social responsible engagement and reconciliation
–
Responsible supply chain
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1. SCOPE AND METHODOLOGY (CONTINUED)
1.6 THEMES THAT MATTER- STAKEHOLDER ENGAGEMENT AND MATERIALITY (CONTINUED)
A materiality assessment was performed in 2021 which confirmed that the topics identified remained our most important focus
areas. Additionally, we considered stakeholder feedback obtained throughout the year for any impact on our ESG strategy, ensuring
we are agile and continuing to focus on themes that matter most. We plan to undertake a materiality assessment every 3 years.
Our next assessment was due to be completed in FY24, however this was deferred to align to us performing a CRRO assessment.
Our key stakeholders and methods of engagement are:
STAKEHOLDER
DESCRIPTION
INTEREST
CUSTOMERS
Our network partners are in regular direct contact with their
customers. They collect and analyse customer feedback
through a range of interactions such as one on one meetings,
online surveys, social media and focus groups. This helps
to ensure that we are aware of, and able to respond to, the
evolving needs of customers. A hardening commercial
insurance market over the past 5 years has impacted the
price and availability of insurance cover for our customers.
Acting fairly and in their best interest.
Providing access to insurance.
Reducing cost pressures.
Deliver a reliable and secure service.
SHAREHOLDERS
We have regular discussions, briefings and meetings
with investors, analysts and proxy advisors to keep them
informed of our performance and any emerging risks and
opportunities.
Responsible investing.
Good governance practices.
Oversight of decentralised group.
EMPLOYEES
We conduct regular employee engagement surveys,
industry benchmark research, company-wide town halls
and regular team meetings to keep our employees up-to-
date on the latest company and industry developments.
Using feedback and research we set targets to appropriately
respond to employee issues.
Development opportunities.
Market tested salaries.
Technology to eliminate repetition.
Flexible arrangements.
Diversity targets and plans.
GOVERNMENT
AND REGULATORS
We engage with Federal and state-level governments,
regulators and industry bodies through meetings and formal
policy consultation submissions to advocate for issues
important to our stakeholders. We ensure we comply with
regulation and proactively adopt key principles of upcoming
changes and best practice.
Good governance practices and risk
mitigation.
Strong asset management and protection.
SUPPLIERS
We hold formal and informal meetings with our top suppliers
including IT, product suppliers, insurance underwriters and
finance providers.
Prompt payments to small businesses.
Supply chain integrity.
COMMUNITY
We engage with the communities in which we operate
through volunteering, fundraising initiatives and events,
workshops and funded programs.
Being a good corporate citizen.
Giving back through volunteering and
charity.
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1. SCOPE AND METHODOLOGY (CONTINUED)
1.7 OUR SDG CONTRIBUTION
Our approach to ESG supports the United Nations Sustainable Development Goals (SDGs). As our business continues to grow
internationally, supporting these global goals is increasingly important for the Group. AUB Group have identified priority SDGs
where we believe we can have the greatest impact and have incorporated the goals into our broader ESG framework.
SDG
WHAT AUB GROUP IS DOING AND WHERE IS OUR FOCUS
We ensure our employees have a safe working environment and offer them health
and wellbeing programs and initiatives. With greater numbers of employees working
remotely, we are mindful of the need to monitor and address the impact on their mental
wellbeing as well as look to broader health and wellbeing challenges in our customers
and communities.
We use Officevibe, a platform which prompts employees to complete fortnightly surveys
anonymously and provides resulting insights to management. The tool enables us to
collect continuous feedback from employees on a range of topics including well-being.
We have assessed our recruitment, selection and retention processes and implemented
measures to improve gender equality at all levels across the organisation. Our longer-
term gender balance goal is to achieve 40:40:20 (40% men, 40% women and 20% open)
– at all levels of our organisation.
We stay at the forefront of market developments so that we can offer our customers the
best technology and product solutions for their needs. Developments and better use of
customer data have led to greater choice, and a more efficient & customised experience.
We negotiate terms with underwriters to enable our customers to obtain affordable
and appropriate protection for themselves, their workers and their families. We provide
our employees opportunities to develop their careers with us through internal and
external training and study assistance. We have strengthened our training program,
with the objective of organisation-wide engagement and alignment with key policies and
commitments.
We are committed to continuous assessment of potential modern slavery issues in our
supply chain and focusing on developing our approach to quantifying and managing
impacts.
We contribute to our communities through volunteering and fundraising. Our
decentralised business model means that our partner businesses are free to contribute
to causes and local communities at their own discretion. We support this activity by
developing partnerships with community stakeholders and our partner businesses to
address inequalities.
The roll-out of our ‘Do Good, Be Better’ program during the year saw increased
volunteering hours across the group. Our AUB Community Day grants employees a
day of paid volunteer leave to participate in community activities such as volunteering,
mentoring, and working with charities and other not-for-profit organisations. The AUB
Community Day includes partnerships with community groups who benefit from our
involvement and support to deliver their mission.
During 2024, the Group donated $1.1m (FY23: $1.2m) to a range of organisations.
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SDG
WHAT AUB GROUP IS DOING AND WHERE IS OUR FOCUS
We make efforts to manage our environmental footprint. This includes measures such as
carbon offsetting, switching to renewable energies and measuring our scope 1, 2 and 3
emissions. We carbon offset our business travel emissions.
We are committed to net zero emissions by 2050 for wholly owned group entities.
We are working to improve how we measure and report on our environmental impacts
and our long-term approach to mitigate climate change, including by developing our ESG
reporting to comply with a globally accepted ESG reporting standard by FY25.
2. ESG BALANCED SCORECARD
AUB Group have committed to a range of short and longer term ESG targets, as reviewed and approved by our Board of
Directors, to support our wider ESG strategy, and our contribution to the UN SDGs. AUB Group is composed of a number of
controlled entities, either fully owned or majority owned. Our ESG targets may be group wide or with initial focus on wholly
owned entities and commitment to expand the target to all controlled entities in the subsequent year.
Our balanced scorecard represents our commitments for FY24 and our progress against these. We first began to report on ESG
in FY21, our base year for measurement.
The FY24 Executive Performance Objectives include a Non-Financial KPI which includes ESG.
FOCUS AREA
MEASURE
PROGRESS
ENVIRONMENTAL GOVERNANCE
(ENVIRONMENT)
Extend renewable
energy and carbon
offset model to
others in the Group
In FY24, 22% (FY23: 30%) of the Group’s energy usage was
from renewable resources. This was largely due to the Group’s
continued expansion with new Group members not yet having
transitioned to renewable energy. We are committed to
continuing to rollout the renewable energy model to additional
entities in the Group and increasing our renewable energy usage.
AUB head office entities and Tysers offset 100% of scope 3
emissions from business flights.
EMPLOYEE DEVELOPMENT
(SOCIAL)
Minimum of 20
hours training in
addition to ethics
training for all AUB
Group head office
staff
During FY24, all head office employees completed on average
24.5 hours of training (FY23: 20.7). Additional training courses
were offered to head office employees on topics including
leadership, communication and effective time management.
1. SCOPE AND METHODOLOGY (CONTINUED)
1.7 OUR SDG CONTRIBUTION (CONTINUED)
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FOCUS AREA
MEASURE
PROGRESS
SOCIAL GOVERNANCE (SOCIAL)
Assess strategic
measures to be
implemented to
achieve long term
gender balance
objective of
40/40/20
Benchmark and
assess strategic
measures to assess
and eliminate any
gender wage gap
The Group has a target to achieve 40:40:20 (40% men, 40%
women and 20% open). During the year, a gender wage
assessment was completed across the Group.
CORPORATE GOVERNANCE
OVER M&A (GOVERNANCE)
ESG metrics
formally codified
within M&A
checklist
We have taken initial steps to formally build ESG metrics into our
M&A checklist.
ESG RATING HISTORY
We are proud of our MSCI rating. We are pleased to have
maintained our rating during FY24. For our stakeholders
on average the most material areas of focus relate to the
Governance Pillar. In this regard we proactively work to uplift
the Group’s governance through hiring skilled employees
in the right positions, and a drive to achieve best practice
outcomes. The improvement in our score is a reflection
of this journey.
2. ESG BALANCE SCORECARD (CONTINUED)
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3. ESG GOVERNANCE
AUB Group is committed to high standards of corporate governance. Embedding ESG into our existing
business is key to optimising our impact and therefore it is treated as a key part of our system of
governance.
AUB Group’s Board comprises three Board Committees that guide our governance activities in respective areas according to
their Committee Charters and Group policies.
Board structure and responsibilities
AUB GROUP LTD BOARD
BOARD AUDIT & RISK COMMITTEE PEOPLE & REMUNERATION COMMITTEE NOMINATION COMMITTEE
The Board of Directors is responsible for the corporate governance of AUB Group and ensuring high standards of governance
are maintained across all the aspects of Group’s business and operations. The Board guides and monitors the business and
affairs of AUB Group on behalf of stakeholders. Our corporate structure ensures that the Board maintains an appropriate level
of oversight over our operations.
The Board, in consultation with the Board Audit and Risk Committee (BARC), oversees and approves AUB Group’s ESG activities,
including our strategy and policies and procedures. The Board delegates responsibility for ESG to management, with our Chief
Executive Officer having ultimate responsibility of our ESG activities.
The BARC endorses all ESG targets, progress is formally reported in BARC meetings held every 2 months, and reviews all ESG
materials, and outcomes of ESG rating agencies assessments. The BARC also approve our ESG report prior to publication,
ensuring that all material topics are appropriately reported on.
Our ESG Policy sets out how we work towards being a socially and environmentally responsible corporate citizen. It outlines
policies and procedures we adopt across all our businesses to support socially and commercially ethical practices, reduce our
environmental footprint and manage our environmental risks. We have a number of more specific policies that cover other ESG
areas, such as diversity and inclusion, workplace health and safety, and modern slavery.
Our Corporate Governance Statement is founded on the ASX Corporate Governance Council’s Corporate Governance Principles
and Recommendations (4th Edition). We review and revise our Corporate Governance Statement to reflect the changing
standards and expectations of our industry annually. It is available on our website:
www.aubgroup.com.au/corporate-governance.
Escalation
Breaches of regulation, or our policies including ESG related matters are recorded within our compliance system. Where the
breach is material or systemic, the matter including an action plan to resolve and prevent in future is presented to the BARC.
Upcoming material issues are discussed in cluster groups, regional boards (with broker representation), risk management
committees, and these matters, through officers of the Group or our professional director representatives, are escalated to the
Board where appropriate to set AUB strategy.
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4. ENVIRONMENT
Environmental sustainability is integral to a strong, secure future. AUB Group is committed to being
a responsible and sustainable organisation.
4.1 RISKS AND OPPORTUNITIES
Climate change presents a number of risks and opportunities for all sectors, including the insurance industry. These include
direct damage to assets or property from climate related events, pricing and demand changes flowing from the transition to a
low-carbon economy, and business disruption from a changing regulatory environment. Increasing frequency and severity of
climate-related events pose increased risk to some customers and as these events become more regular, the cost of insurance
may become prohibitive and certain risks may become uninsurable. This has direct impact on AUB Group Limited.
AUB Group believes that we must take climate risks seriously to ensure the viability of our business as well as identify
opportunities to change and grow in a changing world. We acknowledge the science and are supportive of global efforts to
decarbonize the economy. We are committed to net zero emissions by 2050 for wholly owned Group entities.
We are working to align practices with the goals set in the Paris Agreement, including to limit global warming to well below 1.5
degrees.
We are also committed to further developing our climate risk reporting, with a view to aligning our reporting practices to the
recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD). We have made
an initial assessment of our risks and opportunities against the TCFD and will comply by FY25.
We are committed to reducing the environmental impact of our direct operations, including reduced emissions and carbon
offsetting, reducing energy and water/waste consumption. Our specific climate goals are set out in our ESG scorecard.
AUB Group’s environmental objectives and how we are achieving them are summarised below.
OUR OBJECTIVE
HOW WE ACHIEVE IT
REDUCE WATER AND
ENERGY CONSUMPTION
–
Reducing and consolidating office space.
–
4/1 work from home program for Sydney-based agency and head office staff, where
employees work from home 4 days a week.
–
Measuring Scope 1 2 and 3 emissions across the AUB Group.
–
Monitoring and reducing water consumption year-on-year.
–
Monitoring and encouraging carbon offsets purchase and renewable energy
consumption.
–
Our North Sydney head office boasts a 5.0 Star NABERS energy rating (FY23: 5.5)
and a 4.5 Star NABERS water rating (FY23: 4.0).
–
Use of energy efficient lighting in our office buildings.
–
9 buildings in the target emissions group have an average energy rating of 5.1
(FY23: 5 buildings average of 5.5).
–
6 buildings in the target emissions group have an average water rating of 4.1
(FY23: 4 buildings average 4.5).
MINIMISE WASTE, AND
ENCOURAGE THE REUSE AND
RECYCLING OF WASTE ITEMS
–
Actively encouraging recycling of paper, glass and aluminium. We also provide printer
toner cartridge recycling stations in each office.
–
Encouraging our employees to use reusable water bottles, cups, and mugs while in the
office to reduce waste.
–
2 buildings in the target emissions group have an average waste rating of 3
(FY23: 2 buildings average of 2.8).
PROMOTE SUSTAINABLE
TRANSPORT TO EMPLOYEES,
CLIENTS, AND SUPPLIERS
–
Providing office space in central locations near public transport hubs. Most employees
travel to and from work via public transport (train, bus, ferry) or active transport (walking
and cycling).
–
Encouraging video and audio communication to reduce air and road travel.
–
Carbon offset purchase for corporate travel.
SUPPORT SUSTAINABLE
PROCUREMENT AND OTHER
SUSTAINABLE WORK
PRACTICES
–
Procuring environmentally friendly office supplies.
–
Adopting digital solutions to reduce our use of paper and our need for business travel.
–
Equipping our employees with knowledge and training to minimise their own
environmental footprint.
–
Actively engaging with our network partners on good ESG practices.
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4. ENVIRONMENT (CONTINUED)
4.2 CLIMATE STRATEGY
Carbon emissions reduction
AUB Group’s emissions reporting covers ours and our partners’ tenanted offices and car fleets. Our primary measures of these
activities are scope 1, 2 and 3 emissions.
–
Scope 1 emissions relate to emissions from our car fleets.
–
Scope 2 emissions relate to energy we purchase from the electricity grid.
–
Scope 3 emissions are the result of activities from activities not directly controlled by the Group and consists of activities in
our supply chain. This includes customers exposed to industry considered heavy polluters such as mining, business travel,
and servers for software as a service.
We have reported on scope 1 and 2 for a number of years, with scope 3 related to business travel since FY23. In FY25 we will
conduct a quantitative assessment of all scope 3 exposures and work towards more comprehensive reporting in the future.
AUB’s net zero commitment by 2050 for head office relates to carbon dioxide and includes scope 3 emissions. We will
review other greenhouse gasses in future periods and encourage all business in the Group to match our commitment. AUB’s
decarbonisation target was not derived using a sectoral decarbonisation approach.
AUB’s decarbonisation strategy is as follows:
1. Reduce use across all scopes.
2. Use alternative providers offering renewable resources and vendors with good ESG scores.
3. Purchase offsets to the extent that no other alternative is possible for scope 1, scope 2 and particularly scope 3, such as
business travel to survey a site or specialist machinery.
AUB does not employ an internal carbon pricing strategy as our emission intensity is not significant, and employing such a
strategy would not have a material impact on decision making.
Scope 1 and 2 emissions
Our scope 1 and 2 emissions are presented below:
Carbon measurement
AUB’s assumptions and methodologies for deriving carbon emissions are as follows.
Fuel usage - scope 1
Activity logs detailing distance travelled, fuel cards and vehicle model data are used in combination with NGER (or equivalent)
data on emissions factors to determine total emissions.
Electricity (scope 2)
Typically electricity suppliers will provide data on emissions as well as breakdown of renewable versus non renewable data
sources. Where direct supplier data is not available, electricity consumption, National Greenhouse and Energy Reporting
Scheme (NGER) data (or an equivalent outside of Australia) on the state electricity mix and emission factor are used to calculate
total emissions. Where consumption data is not available such as common spaces we employ an equivalent floor space model.
Natural gas (scope 2)
Measured natural gas consumption and invoice data are used to calculate carbon emissions where available. As a limited
number of sites use natural gas, no additional estimations are undertaken.
Land travel - scope 3
Activity logs detailing distance travelled, average fuel consumption per kilometer travelled is used to determine fuel
consumption, in combination with NGER (or equivalent) data on emissions factors to determine total emissions. In instances
where no activity data is available, claim reimbursement data is utilised to estimate average fuel consumption.
Air travel (scope 3)
Where available, emissions data supplied by the airline provider is utilised. Where such data is unavailable, emissions on a
comparable flight and class is used to determine the emissions.
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4. ENVIRONMENT (CONTINUED)
4.2 CLIMATE STRATEGY (CONTINUED)
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
PE24
PE23
Scope 1 - Diesel & Petrol
Combustion and Natural Gas
via Pipeline
Scope 2 - Electricity from
National Grid
Total
Scope 1 and 2 Emissions
(Tonnes CO2-e)
The Graphs include impacts of newly acquired entities as if they had been in the Group for the full period. The decrease has been
due to the an increase in use of renewable energy. Pleasingly carbon emissions per employee continue to fall compared to FY23
and compared to our base year.
2024
2023
Movement,
%
Scope 1 and 2 Emissions, tCO2-e/employee
0.54
0.62
(8.3%)
AUB operates a 4/1 work from home program for our North Sydney head office, where employees of AUB Group, our agencies
and two brokerages work from home four days a week. This has allowed our staff greater flexibility and control over their
working hours and reduced our office space needs. We have sub-let or surrendered a number of offices. We continue to monitor
our emissions across the AUB Group and explore initiatives to reduce them.
Scope 3 emissions and carbon offsets
AUB head office entities and Tysers use carbon offsetting programs, offsetting 100% of scope 3 emissions from business
flights. Tysers began carbon offsetting in July 2022 and AUB head office entities from October 2022.
2024
Scope 3
emissions
2024
Total
emissions
offset
tCO2 from business flights – AUB Group
8,657
4,070
tCO2 from business flights – head office and Tysers
4,174
4,070
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4. ENVIRONMENT (CONTINUED)
4.3 ENVIRONMENTAL MANAGEMENT
AUB partners with Tasman Environmental Markets to invest in Australian based offset projects. Blue Halo climate action
technology is utilised to accurately calculate the emissions and offsetting value for AUB’s business travel to allow offsets to
be purchased. Carbon offsets were sourced from these projects:
–
Coronga Peak regeneration;
–
Tambua regeneration;
–
Darling River conservation;
–
Quimby Forest regeneration; and
–
Paroo River regeneration.
Tysers partner with Trees4Travel, a hybrid nature/technology offset program. Trees are planted to support developing
communities, biodiversity and repairing damage to our plan. Technology-based carbon credits are purchased through
investments into United Nations Certified Reduction (CER) programs.
Energy consumption
As a services organisation, our energy consumption relates to energy used to power our offices. In April 2022, AUB head office
entities switched to renewable energy. During FY24, 12% of our total electricity usage was derived from renewable sources.
This is expected to increase in FY25 as the renewable energy model is extended to others in the Group.
2024
2023
Total energy consumption (kWh) 000’s
1,941
2,005
Renewable (%)
12%
11%
Water consumption
We strive to monitor and reduce our water consumption across our businesses. Consolidating our office space, as well as
promoting flexible working arrangements have been the key factors in reduction of water consumption in the reporting period,
compared to the prior year.
KWH CONSUMED
14%
42%
5%
23%
30%
NZ
Agencies
International
Australian Broking
KWH CONSUMED
45%
55%
Support Services
Australian Broking
Energy consumption by segment
from non-renewable sources
Energy consumption by segment
from renewable sources
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5. SOCIAL
The pillars of our social approach are community,
our customers and our people.
5.1 OUR COMMUNITY INVESTMENT
AUB Group is committed to supporting the
communities in which we operate, and to
managing our wider social responsibilities.
We recognise the importance of focusing on
economic and social wellbeing by supporting our
local communities.
Do Good, Be Better
AUB Community Day
During the year we granted a day of paid volunteer leave to
all AUB Head Office employees to participate in community
activities such as volunteering, mentoring, and working with
charities and other not-for-profit organisations. This includes
partnerships with community groups who benefit from our
involvement and support to deliver their mission – whether
by assisting the homeless, supporting children in need,
working at schools or volunteering at animal shelters.
AUB Giving
The AUB Giving program allows our team members the
freedom to support causes they are passionate about via pre-
tax donations, deducted directly from their pay. During FY24
AUB Group matched each donation up to a maximum of
$1,000 per head office employee per annum. Since the launch
of the program, there has been $34.3k of donations. The
program will also become part of AUB Group’s performance
recognition process with the option to receive ‘charity gift
cards’ instead of other financial awards.
Tysers
Tysers run a program which donates £500 (GBP) every two
weeks to an employee’s choice of charity. Since launching
in 2019, over 60 charities have benefited from this scheme.
During 2024, Tysers also selected a charity via employee
vote to support via donations and an employee volunteer
program. The chosen charity is XLP which focuses on
keeping young people in education and out of gangs in
London.
Our network partnerships and initiatives
AUB Group and our partners support community
organisations, such as charities and sporting clubs, through
fundraising, sponsorship, and volunteering. Because our
partners are located in a wide range of locations, we adopt a
decentralised approach to community support, allowing our
partners to determine how they can have the greatest impact
in their local communities. During FY24, our employees
volunteered over 567 hours to charitable causes.
Our agency and Austbrokers divisions contributed monetary
donations to, and participated in, a range of fundraising
and community initiatives during the year, including as:
–
Sponsor of the annual Insurances Ashes, which is a
cricket event run by charity the Primary Club of Australia
(PCA). The event raises funds for the PCA, which gives
people with disabilities the opportunity to experience the
joy and exhilaration that comes from playing cricket. We
also actively support other PCA events that take place
throughout the year.
–
Major sponsor of the Lloyd’s Australia Golf Day. In 2023,
the event supported SpinalCure Australia in their work to
find a cure for spinal cord injury.
–
Charity partner with AllKids, which is a not-for-profit
organisation providing education to disadvantaged
children in the coastal commune of Ream in Sihanouk
Province, Cambodia. Our sponsorship enables the AllKids
staff to work with local public schools, teachers and
principals, local government, commune officials and
families to give all children in their community access to
quality education. Throughout the year we sponsored the
education of 10 children in Cambodia through the AllKids
Kids to School program.
–
Sponsorship for 4 students studying English in Cambodia
to attend the Central Coast Grammar School and develop
educational skills to assist the teachers at Sunrise
Cambodia, an organisation that provides care for at risk
children. This includes the provision of a home, food,
clothing and education including English and computer
lessons.
–
The Insurance Advisernet Foundation supports local
Australian charities that work to help change the lives of
individuals, families and communities for the better. Over
the past 10 years, IA and its Foundation has contributed
over $3m to more than 50 different charities. Each
year over $400k is donated to a variety of community
fundraising initiatives, including charities such as Men’s
Shed Association, Tour De Cure, South Australian Health
and Medical Research Institute, St Vincent de Paul Society
NSW, Pancare, and Sacred Heart.
–
Adroit Insurance and Risk, based in regional Victoria
and Albury holds strong community values at the heart
of their organisation. The team has raised over $2m for
local community organisations and foundations since it
was established in 1978. In the reporting period, Adroit
made donations to a variety of local community groups,
organised and hosted many fundraising events and
volunteer over 400 hours annually of staff time. Adroit
has proudly supported foundations and their projects
including, Geelong’s The Power In You Project who help
those affected by substance, mental health or justice
related challenges, Ballarat Health Services by supporting
the Ballarat Base hospital to raise funds to purchase two
ultrasound guided cannulation devices for use in the
Children’s Maternity wards, the Border Trust Foundation
with various projects within the Albury Wodonga region
including, financially assisting families to get their children
back to school and the Beyond Blue Big Blue Table event
at Adroit Gippsland. Recently the entire Adroit team
proudly participated in March for March, raising much
needed funds for cancer research.
–
We also provided donations to, and sponsorship of,
community and sporting clubs around Australia, including
AllKids, the St George Australia Football Club, Primary
Club of Australia and Drummoyne Water Polo Club.
AUB GROUP ANNUAL REPORT 2024
68
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
YEAR ENDED 30 JUNE 2024
5. SOCIAL (CONTINUED)
5.1 OUR COMMUNITY INVESTMENT (CONTINUED)
Commitment to fair tax contributions
AUB recognises that without taxes, communal investment
including development of future talent through formal
education opportunities would suffer. We benefit from
this communal investment and as such believe we have
an obligation to pay a fair share of taxes. AUB’s Board has
a strict policy to operate within the law and not to take
aggressive tax positions, or operate within tax havens.
Our aim is to avoid any tax controversies and to pay a fair
share of our profits as taxes in the countries in which we
operate. In FY24 the Group paid $63.62m (FY23: $32.34m)
in income tax, and $38.61m (FY23: $21.9m) in payroll tax. In
addition, our associates (companies we don’t control) pay
taxes at similar rates.
The Effective Tax Rate for the year ended 30 June 2024
was 23% (2023: 28%). The Group’s tax rate is below the
main effective tax in Australia of 30% largely as a result
of the $11m tax impact of entities that are accounted for
on an equity basis and $14m for amounts recognised in
Profit and Loss for amounts to carrying value of associates.
Entities accounted for on an equity basis are fully tax paying
in Australia, however for accounting purposes the related
tax expense is reflected in the net return on the investment
rather than the tax expense of the Group. This is offset by a
$9m increase in the tax charge resulting from expenses that
are not deductible for tax purposes which principally relate to
fees incurred when acquiring new businesses in the year.
The decrease in the effective tax rate of 5% is largely the
result of a net gain of $14m on the adjustment to carrying
value of investments in 2024 (see Note 4 (f)), that did not
have an associated tax expense; in 2023 this was a loss
of $2m. The main impact on the tax rate in future years is
expected to be the continued profitability of the business
accounted for under the equity accounting rules as
discussed above, the change in geographic profile of the
earnings of the Group and any changes in tax legislation.
5.2 SUPPORTING OUR CUSTOMERS
Our customers are at the heart of everything we
do. Our approach is based on our commitment
to high-quality service and seeks to support our
customers in safeguarding their future. Every
day we provide valuable support through market-
leading technology and products backed by strong
customer service.
Customer Engagement
Our partners and their employees actively engage with
our customers and earn their long-term trust by providing
high standards of customer service. We strive to provide all
our customers with products that are appropriate to their
financial objectives and circumstances. We do this as part
of our customer service standards and to ensure we are
compliant with the relevant financial services laws.
As part of our commitment to high quality customer service,
our partner businesses must also ensure robust dispute
resolution processes are in place to handle complaints in a
timely and fair manner. AUB Group provides all partner firms
with access to up-to-date resources on these requirements
and provides support, as and when required, to meet
regulatory notification and ongoing reporting obligations.
Customer complaints are monitored by Group Risk and
Compliance, and are reported to the Group Board Audit
and Risk Committee on a regular basis.
Technological Transformation
To deliver a stable, reliable and secure service to our
partner members, we provide centrally managed network
and infrastructure services. This centralised technology
service leverages our scale and helps partners better serve
their clients confidently. All data is backed up and secured
in our dedicated Sydney data centre with a second back
up datacenter site in Melbourne. AUB Group has made
several strategic acquisitions which uniquely position us to
transform our broker platform experience. We now have the
building blocks to create a cohesive modern suite of digital
broker solutions. In addition, our Underwriting Agencies have
transitioned to a new digital platform which will better enable
them to serve brokers and clients.
Product Access and Innovation
We keep abreast of product innovation to ensure our
partners are constantly meeting our customers’ needs. We
provide our partners with insurance services that enhance
their ability to support their customers including claims
services, specialist estimating, forensic and investigation
support. Further to enable our partners to concentrate
more on their customers we provide a range of opt-in
administrative support services in accounting, payroll, tax
and analytics. We also assist our partners to optimise their
businesses by facilitating financial advice, legal advice,
management support, succession advice and support,
funding, mergers and acquisitions support, and strategy
formulation and execution.
The acquisition of Tysers in FY23 represents a significant
acquisition during the period to increase capacity and
support hard to place insurance risks. Tysers is a leading
Lloyds and London based broker with access to specialist
underwriting expertise and global distribution capabilities.
Tysers operates primarily out of the UK but has operations
in more than a dozen countries including the United States.
The acquisition will enable the Group to enhance client
service, by increasing capacity for harder to place risks
for our clients direction of wholesale placement from our
Agencies to Tysers. The acquisition will also provide Brokers
and Agencies across the Group to access capabilities and
facilities in the Lloyd’s and International markets.
AUB GROUP ANNUAL REPORT 2024
69
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
YEAR ENDED 30 JUNE 2024
5. SOCIAL (CONTINUED)
5.2 SUPPORTING OUR CUSTOMERS (CONTINUED)
Digital Confidence
Ensuring that we have robust data privacy and security measures helps us to improve customer experience and develop trust
with our customers.
Data Privacy – AUB Group is committed to protecting the privacy of personal and sensitive information collected as part of its
business operations in line with the Australian Privacy Act (1988). Our Privacy Policy sets out our privacy principles and provides
guidance to member firms on the collecting, using, holding, disclosing, and otherwise managing personal information.
Cyber Security – AUB Group has designed and implemented a suite of core capabilities to manage cyber security and cyber
risk including the establishment of a set of strategic objectives to an industry aligned cyber security framework and a roadmap
focused on embedding solid foundations. We have developed a capability whereby our cyber posture is continually assessed
and enhanced. Taking a risk-based approach to prioritising the cyber roadmap initiatives, we are focused on meeting our
strategic information security objectives and managing risk consistent with enterprise risk appetite and tolerance levels. The
minority of partner firms within the group who manage their own IT services and security, are subject to AUB’s Security Policy
and IT Service Standards. During FY24, there were 11 cyber security breaches, none of which were deemed to be material.
5.3 OUR PEOPLE
Our employees are a critically important asset and a key pillar of our ESG framework. We aim to equip our
employees with the skills they need to deliver for our customers and to provide them with opportunities so
that they can reach their full potential. We know that a diverse and inclusive workforce is the foundation
for innovative thinking and new ideas.
For the second year in row, an independent review conducted by Great Place to Work benchmarked the
employees of AUB’s Sydney office against peers globally and certified AUB as a Great Place to Work. Our overall
response rate was 65% with 98% of those surveyed believe it is a safe place to work – 94% believed they are
treated fairly regardless of their sexual orientation – 91% believe they are treated fairly regardless of their race
91% believed you are made to feel welcome when you join the company – 90% believed they are treated fairly
irrespective of their age.
Employee Development
We are committed to ensuring that our employees get a sense of fulfilment from their work. We do this by providing
opportunities for career growth and development through on the job development, delivering specific programs via AUB/Tysers
Group Learning pathways, including soft and technical skills development, Manager Fundamentals and Leadership development
programs and Work Health & Safety (WHS)/mental health first aid training. We also provide access to study assistance.
AUB GROUP ANNUAL REPORT 2024
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
YEAR ENDED 30 JUNE 2024
5. SOCIAL (CONTINUED)
5.3 OUR PEOPLE (CONTINUED)
Our Broking Division has an Education Committee comprising senior broking management from across the country. The
Committee ensures that insurance broker employees receive the necessary training and education through the National
Insurance Brokers Association, Australia (NIBA), the Australian and New Zealand Institute of Insurance and Finance (ANZIIF),
LMI College and other specialist providers. A similar structure exists in the UK.
Our Agency Division and Head Office employees complete their ongoing training requirements online through the LITMOS
learning management system. Our agencies’ training managers are responsible for running LITMOS, ensuring that the available
learning material meets the relevant training requirements and ensures that agency staff complete their training in a timely
manner. A similar approach is applicable in the UK.
During the year, we saw increased training hours for our employees across the group due to an increased focus on compliance
training across the group and an increase in training being made available to head office employees on specific topics including
leadership and communication. In FY24, employees undertook an average of 16.3 hours of training each, including our broker
and agency employees.
2024
2023
Movement,
%
Employee training hours (includes compliance related)
49,331
45,139
6%
Employee Engagement
We use our Employee Net Promoter Score (eNPS) to monitor employee engagement. It measures our employees’ willingness
to recommend the organisation as a great place to work to others. It reflects a strong level of overall satisfaction, especially
with respect to how our employees feel about their relationships with peers and their managers. Areas of focus have included
supporting employees to better manage their health and wellbeing, through facilitating Wellbeing events, and leveraging expert
speakers to educate and create awareness of wellbeing@work. Our UK based employees have access to the Lloyd’s Wellbeing
Centre and various resources they offer focused on improving health and wellbeing. We will continue to evolve our wellbeing
strategy and are committed to ensuring our employees have the support and resources to maintain a healthy work-life balance.
We utilise Officevibe, an online employee engagement platform that helps managers build better relationships with their people
and create conditions for collaborative and high performing team environments. The platform prompts employees to complete
fortnightly surveys anonymously and provides resulting insights to management. The tool enables us to collect continuous
feedback on employee sentiment and dive deeper into emerging trends and developments amongst our workforce. Officevibe
has been rolled out to our head office teams as well as to all Sydney, Melbourne and Brisbane teams in our agencies, Tysers in
the UK and a number of brokers in the Group.
Diversity and Inclusion
We are building a Global Diversity Equity and Inclusion (DEI) strategy focused on attracting and retaining a talented workforce
that reflects the diversity of our clients and communities. This includes initiatives for gender equality, fostering inclusion and
ensuring an equitable environment where everyone feels valued and empowered to thrive. Focusing on key areas such as Talent
Acquisition, Development and Education, Remuneration, Family friendly benefits and policies, and data collection analysis will
enable us to benchmark and broaden our focus beyond gender diversity.
The continued focus on improving gender equity across the AUB Group reflects our ongoing commitment to enhancing our
Talent Acquisition and Remuneration practices. The addition of Tysers to the Group provides opportunity for shared best
practice and a global approach to progressing our diversity targets set at a group level.
Current initiatives across the Group include:
–
Regular remuneration reviews to ensure remuneration is relevant to the market and commensurate to the role regardless of
gender.
–
Charity initiatives such as sponsorships and fundraising for charities focused on DEI.
–
Activities in support of International Women’s Day as well as a calendar of culture events and activities that celebrate,
educate and raise awareness.
–
Specialist employee committees focused on charitable activities and DEI.
–
The Group reports diversity statistics annually in compliance with statutory requirements in both Australia and the UK.
These reports provide valuable insights into our workforce composition and flag areas where we can improve our employee
value proposition, retention and recruitment practices.
–
Our Group gender equity targets are to achieve a gender split of 40:40:20 (40% men, 40% women and 20% open) – across
all levels of our organisation. We recognise this is a long-term commitment and that the insurance industry as a whole will
require substantial commitment to bridge the gap, particularly in the UK.
AUB GROUP ANNUAL REPORT 2024
71
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
YEAR ENDED 30 JUNE 2024
5. SOCIAL (CONTINUED)
5.3 OUR PEOPLE (CONTINUED)
We’re pleased to report that our current gender split statistics across the group are 52% of our workforce are female. Within this
headline statistic, a key focus area for the Group is the representation of women within leadership roles, which stands at 37% in
the AUB Group, and at 12% within Tysers.
We report annually to the Workplace Gender Equality Agency (WGEA), in line with the Workplace Gender Equality Act. These
reports provide valuable insights into our workforce composition and flag areas where we can improve our employee value
proposition and retention and recruitment practices. Our 2024 filing is available on our website.
As at 30 June 2024 AUB Group and its controlled entities had a total of 2,582 (FY23: 2,433) employees with women representing
52% (FY23: 58%) across the Group. We’re pleased to report that throughout the year approximately 52% (FY23: 58%) of our
internal promotions were female. During the year, 56% (FY23: 65%) of our new hires were female, a significant step towards
building a more gender-balanced workforce.
EMPLOYEE GENDER COMPOSITION* (%)
Male
Female
0
20
40
60
80
100
80
20
31
69
52
48
85
15
Executives
Non Executive
Management
Professionals
Other
*
In 2024, we have aligned to WGEA framework for disclosing average
gender pay by rank, therefore prior year data is unavailable.
58
42
Female
Male
PROMOTIONS 2023
PROMOTIONS 2024
52
48
Female
Male
AVERAGE GENDER PAY BY RANK ($’000)
Male
Female
0
50
100
150
200
250
300
350
400
Executives
Non Executive
Management
Professionals
Other
362
258
235
164
122
91
59
69
AUB GROUP ANNUAL REPORT 2024
72
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
YEAR ENDED 30 JUNE 2024
Building on our progress in gender equality, we are expanding
our focus on broader diversity initiatives. As part of this we
will develop additional reporting measures to understand
our workforce composition and demographics, assess and
report on our cultural diversity across our workforce.
Talent Attraction and Retention
We see increasing demand for talent across several skill
sets. We monitor employee turnover to understand trends
in demand for skills and to assist us adjusting our retention
strategies to ensure our high performers are fulfilled and
engaged with their roles. We conduct exit interviews to help
management ensure that organizational issues are identified
and dealt with. Employee turnover across the Group was 14%
in 2024 compared to 17% in 2023. This has been impacted
by several factors including evolving salary expectations,
industry-wide talent shortages, exacerbated by the cost
of living crisis.
Absenteeism can be a lead indicator for poor wellbeing.
We recognise equally a very low absentee rate indicates
employees being over worked. We aim to keep absentee
rates below 5% (excluding annual leave). We encourage all
our employees to utilise their full entitlement to paid leave
each year.
Fair Remuneration
Many of our employees are highly skilled and their
remuneration reflects their value to AUB and the market. We
recognise our responsibility to ensure all our employees are
able to achieve a livable wage of 60% of the median wage.
The median wage is $67,600 in Australia, NZ 61,640 in New
Zealand and GBP 34,963 in the UK. We have benchmarked
the lowest paid employees to an FTE equivalent to ensure
their pay meets the higher of this benchmark and the related
industry award.
Based on the benchmark there were 5 employees within
Australia marginally below the threshold ($40,560), all
of whom were school leaver/interns. Such opportunities
represent an alternative pathway to higher education with an
expectation to complete industry qualifications after gaining
sufficient relevant practical experience. There were no
employees below the threshold in NZ or in the UK or within
any other country in which we have employees.
A number of non-cash benefits such as work from home
allowances, complimentary or discounted insurance
coverage available to staff, are not considered in the
analysis above. The average salary across the Group
was $139k (FY23: $132k),
To ensure remuneration is compliant and equitable, we
actively review relevant industry benchmarks and survey
data to check we are paying the right levels for our roles
across our full-time, part-time and casual workforce. We
have established internal controls enabling us to monitor
and maintain compliance.
5. SOCIAL (CONTINUED)
5.3 OUR PEOPLE (CONTINUED)
We also recognise the diversity of our workforce and that of Australia as a whole is built on migration. 30% of Australians were
born overseas, and our head office workforce reflects this at all levels.
0
20
40
60
80
100
0
20
40
60
80
100
BIRTHPLACE OF WORKFORCE (%)
Australia
Overseas
33
58
67
42
50
2024
2023
2024
2023
2024
2023
2024
2023
50
50
50
35
65
48
52
37
34
63
66
Executives
Non-Executive
Management
Professionals
Other Employees
AUB GROUP ANNUAL REPORT 2024
73
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
YEAR ENDED 30 JUNE 2024
5. SOCIAL (CONTINUED)
5.3 OUR PEOPLE (CONTINUED)
Workplace health and safety
We aim to provide a physically and psychologically safe
workplace for our people. All health and safety incidents
are reported to AUB Group Board’s People & Remuneration
Committee and Board Audit & Risk Committee.
We have a dedicated free and confidential Employment
Assistance Program (EAP) to support our employees and
their families 24/7. During the current year, we have not
witnessed any increase in reported incidents related to
mental health, however, we acknowledge that with most of
our workforce carrying out desk work remotely, workplace
health and safety incidents may not be as visible to us. We
encourage our employees to provide feedback to us about
their physical and psychological health through our regular
online employee surveys, their direct managers and HR.
Advocacy
We engage in industry research, public relations initiatives
and policy advocacy on behalf of our partners. Our activities
include engaging with governments, regulators and industry
bodies through official consultations and meetings in order
to provide information and perspectives on our industry and
our members.
The main industry associations and advocacy organisations
which are Group employees are members of include The
Insurance Association of Australia, The Australian and
New Zealand Institute of Insurance and Finance and The
Insurance Brokers Association of New Zealand.
6. GOVERNANCE
Our Policies and Processes
AUB Group have implemented policies and processes across
the Group to support our high standards of governance,
ensuring that those in the business are guided by our
core principles and appropriate support is in place for
communicating any grievances to appropriate levels of
governance.
Commitment to Responsible Investing
As outlined in the Directors report, a key element of the
Group’s strategy is to execute on strategically aligned
acquisitions. Our commitment to responsible investing
includes:
–
Acquisitions of ethical businesses with ethical leadership;
–
A long term view of ownership and sustainable operating
models; and
–
Consideration of all stakeholders.
Code of Conduct
AUB Group’s Code of Conduct (Code) sets out the ethical
standards expected of all directors, officers, and employees
of AUB Group and its controlled entities. AUB Group
encourages any businesses in which AUB Group has a direct
or indirect equity investment to adopt the code.
The Code is designed to ensure AUB Group delivers on its
commitment to corporate responsibility and sustainable
business practice. It establishes a foundation to our
business decisions and provides clear, consistent guidelines
on ethical behaviour.
The Code requires our people to:
–
Act with honesty and integrity in dealing with all
stakeholders, including shareholders and the community
–
Manage conflicts of interest
–
Comply with the law
–
Adhere to company policies and procedures
–
Respect confidentiality and privacy.
All employees are required to complete ethics training
annually. Breaches of our code of conduct will impact an
employee’s annual performance rating and in turn the
at-risk portion of their remuneration. Except for fixed term
contractors and other labour hire staff, all employees have a
portion of their remuneration at risk based on performance
measures.
In additional to standard HR policies, and our code of
conduct, our businesses have policies governing (1)
complaints, (2) Financial Hardship, and (3) Domestic
Violence and (4) flexible working.
AUB GROUP ANNUAL REPORT 2024
74
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
YEAR ENDED 30 JUNE 2024
6. GOVERNANCE (CONTINUED)
Employee and Customer Grievance
There are risks which may arise from our decentralised
operation such as pockets of poor culture or leadership. In
addition to grievance and escalation policies that exist within
each of our businesses we provide an anonymous access
point for any employee of any company in the Group or any
customer to contact the head office. Submissions are-jointly
reviewed by the Group legal counsel & Head of People and
Culture on any grievance they may have.
This process is designed to pro-actively manage a range of
issues including mismanagement across the decentralised
Group. Although these issues may not constitute
whistleblower events, we believe it is best practice to enable
them to surface and be dealt with.
Whistleblower events are dealt with through our
Whistleblower portal – Whisplii.
Supply Chain Management
AUB Group acknowledges that modern slavery can occur in
every industry, sector, and country, including those where we
operate. AUB Group has a zero tolerance policy for modern
slavery in our supply chain and is committed to continual
improvement in combating all forms of modern slavery
such as forced labour, debt bondage, deceptive recruiting,
human trafficking and child labour. AUB Group’s ESG policy
promotes ethical and sustainable practices, in particular
respecting human rights through developing high quality and
ethical partnerships with suppliers and service providers.
AUB Group encourages all employees and business
partners to escalate any concerns internally or through our
anonymous reporting service. We comply with all relevant
laws and expect the same from all our stakeholders.
We recognise that as an organisation our suppliers are
key to positively contributing to the social, economic, and
environmental wellbeing of the communities that we are part
of. Therefore, an assessment of modern slavery risks forms
part of our review of all potential supplier engagements.
We include standard ethical sourcing contractual clauses
in all contracts where new vendors are directly engaged
to provide services to AUB Group. We expect our first-tier
suppliers to comply with these standards and encourage
that they expect the same level of compliance from their
suppliers. We believe mutual commitments between AUB
Group and our suppliers, to operate in accordance with
community expectations of businesses, creates sustainable
value for all our stakeholders. We work collaboratively with
our suppliers to foster relationships that align with the
standards in our governance framework and the interests
of our stakeholders.
AUB Group takes a systematic approach to assessing
modern slavery risks to ensure we remain compliant with
modern slavery requirements and educate, encourage and
provide resources (including self-certification) to support
compliance by controlled entities with modern slavery
requirements. AUB Group conducted a preliminary review
of its controlled entities’ supply chain partners and assessed
it against government and international organisations’
data and resources as part of our enterprise-wide Risk
& Compliance Management Framework.
As our approach to addressing modern slavery risk matures,
we will continue to develop systems, controls and processes
to assess and further develop the effectiveness of our risk
management framework, including in respect of controlled
entities. AUB Group has implemented compliance measures
to assess and review potential risks.
To further complement our framework and demonstrate
compliance with modern slavery requirements and
obligations, the Group has developed a range of controls
to reduce modern slavery risks. These include policies,
training and awareness, reporting tools, due diligence and
monitoring. These policies and procedures promote and
instill good practices and behaviours and protect the human
rights of our employees and suppliers.
Over subsequent reporting periods, we will continue to
review and develop our processes to ensure effectiveness of
our actions. The AUB Group Board Audit and Risk Committee
has responsibility for overseeing the Group’s response to
modern slavery risks. Modern slavery risk management is
discussed by the Group Board and the Group Board Audit
and Risk Committee. Our Modern Slavery Statement is
available on our website.
AUB GROUP ANNUAL REPORT 2024
75
FINANCIAL
REPORT
AUB GROUP ANNUAL REPORT 2024
76
AUDITORS INDEPENDENCE DECLARATION
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Auditor’s Independence Declaration to the Directors of AUB Group Limited
As lead auditor for the audit of the financial report of AUB Group Limited for the financial year ended 30 June 2024, I declare to
the best of my knowledge and belief, there have been:
a.
No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
b.
No contraventions of any applicable code of professional conduct in relation to the audit; and
c.
No non-audit services provided that contravene any applicable code of professional conduct in relation to the audit.
This declaration is in respect of AUB Group Limited and the entities it controlled during the financial year.
Ernst & Young
Michael Wright
Partner
21 August 2024
AUB GROUP ANNUAL REPORT 2024
77
Notes
2024
$’000
2023
$’000
Revenue from contracts with customers
4 (a)
964,787
763,659
Other income
4 (b)
49,347
28,084
Share of profit of associates
4 (c)
36,154
35,690
Cost to provide services and administrative expenses
4 (d)
(790,198)
(660,625)
Finance costs
4 (e)
(101,919)
(72,102)
158,171
94,706
Adjustments to carrying value
4 (f)
51,301
(6,649)
Profit from sale or dilution of interests in associates, controlled entities, and broking
portfolios
4 (g)
6,597
39,046
Profit before income tax
216,069
127,103
Income tax expense
5 (a)
(48,392)
(35,480)
Profit for the year
167,677
91,623
Other comprehensive income
Other comprehensive income to be reclassified to profit or loss in subsequent periods:
Exchange differences on translation of foreign operations
(5,119)
62,688
Gains/(Losses) on cash flow hedges
(7,704)
17,601
Tax on other comprehensive income to be reclassified to profit or loss in subsequent
periods
1,804
(3,911)
Other comprehensive income not to be reclassified to profit or loss in subsequent periods:
Remeasurements of post-employment benefit obligations
(1,992)
(7,124)
Tax on other comprehensive income not to be reclassified to profit or loss in
subsequent periods
492
17
Other comprehensive income after income tax for the period
(12,519)
69,271
Total comprehensive income after tax for the year
155,158
160,894
Profit for the year attributable to:
Equity holders of the parent
137,072
65,253
Non-controlling interests
30,605
26,370
167,677
91,623
Total comprehensive income after tax for the year attributable to:
Equity holders of the parent
123,852
134,462
Non-controlling interests
31,306
26,432
155,158
160,894
Basic earnings per share (cents per share)
6 (a)
125.65
65.35
Diluted earnings per share (cents per share)
6 (a)
124.79
65.08
The above Consolidated Statement of Comprehensive Income (SOCI) should be read in conjunction with the notes to the
Financial Statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
78
Notes
2024
$’000
2023
$’000
ASSETS
Current Assets
Cash and cash equivalents
10
377,366
260,352
Cash and cash equivalents - Trust
10
908,950
936,369
Trade and other receivables
11
286,940
313,079
Lease net investment
1,147
1,804
Financial and other assets
12
18,798
11,718
Deferred acquisition costs
14,184
13,822
Total Current Assets
1,607,385
1,537,144
Non-current Assets
Trade and other receivables
11
14,560
17,286
Right-of-use asset and lease net investment
72,751
70,360
Financial and other assets
12
24,395
29,891
Property, plant and equipment
11,598
12,885
Investment in associates
8
250,911
238,526
Intangible assets and goodwill
13
2,042,894
1,956,841
Deferred tax asset
5 (b)
24,756
21,385
Total Non-current Assets
2,441,865
2,347,174
Total Assets
4,049,250
3,884,318
LIABILITIES
Current Liabilities
Trade and other payables
15
1,044,118
1,050,117
Deferred revenue from contracts with customers
31,017
30,827
Income tax payable
25,378
26,482
Provisions
16
86,086
204,547
Lease liabilities
14,155
14,743
Interest-bearing loans and borrowings
17
6,119
19,769
Financial liabilities
18
162,043
36,138
Total Current Liabilities
1,368,916
1,382,623
Non-current Liabilities
Provisions
16
19,919
5,475
Lease liabilities
64,536
62,134
Interest-bearing loans and borrowings
17
639,882
564,461
Financial liabilities
18
87,505
237,940
Deferred tax liabilities
5 (b)
119,281
118,317
Total Non-current Liabilities
931,123
988,327
Total Liabilities
2,300,039
2,370,950
Net Assets
1,749,211
1,513,368
EQUITY
Issued capital
20
1,141,428
945,687
Retained earnings
312,847
258,399
Foreign currency translation reserve
51,521
57,340
Hedge reserve
6,662
12,562
Defined benefits plan and other reserves
(8,117)
(6,617)
Put option reserve
18
(10,318)
(11,781)
Share based payments reserve
18,297
24,263
Equity attributable to equity holders of the parent
1,512,320
1,279,853
Non-controlling interests
236,891
233,515
Total Equity
1,749,211
1,513,368
The above Consolidated Statement of Financial Position (SOFP) should be read in conjunction with the notes to the Financial
Statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
79
Attributable to equity holders of the parent
Non-
controlling
interests
$’000
Total
equity
$’000
Issued
capital
$’000
Retained
earnings
$’000
Foreign
currency
translation
reserve
$’000
Put option
reserve
$’000
Hedge
reserves
$’000
Defined
benefit
plan and
other
reserves
$’000
Share-
based
payments
reserve
$’000
Total
$’000
At 1 July 2023
945,687 258,399
57,340
(11,781)
12,562
(6,617)
24,263 1,279,853
233,515 1,513,368
Profit after tax for
the year
– 137,072
–
–
–
–
–
137,072
30,605
167,677
Other comprehensive
income for the year
–
–
(5,819)
–
(7,704)
(1,992)
–
(15,515)
701
(14,814)
Tax on other
comprehensive income
–
–
–
–
1,804
492
–
2,296
–
2,296
Comprehensive
income after tax for
the year
– 137,072
(5,819)
–
(5,900)
(1,500)
–
123,853
31,306
155,159
Transactions with
owners in their
capacity as owners:
Ownership changes
without gaining/losing
control (Note 9)
–
(8,508)
–
–
–
–
–
(8,508)
(28,386)
(36,894)
Non-controlling
interests relating to
new acquisitions
(Note 7(a))
–
–
–
–
–
–
–
–
33,125
33,125
Non-controlling
interests relating to
disposals (Note 7(b))
–
–
–
–
–
–
–
–
(4,582)
(4,582)
Transfer to/(from) put
option reserve
–
(1,463)
–
1,463
–
–
–
–
–
–
Net cost of share-
based payment
–
–
–
–
–
–
(5,966)
(5,966)
–
(5,966)
Issue of shares, net
of issue costs
195,741
–
–
–
–
–
–
195,741
–
195,741
Equity dividends
(Note 6(d))
–
(72,653)
–
–
–
–
–
(72,653)
(28,087) (100,740)
At 30 June 2024
1,141,428 312,847
51,521
(10,318)
6,662
(8,117)
18,297 1,512,320
236,891 1,749,211
The above Consolidated Statement of Changes in Equity (SOCIE) should be read in conjunction with the notes to the Financial
Statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
80
Attributable to equity holders of the parent
Non-
controlling
interests
$’000
Total
equity
$’000
Issued
capital
$’000
Retained
earnings
$’000
Foreign
currency
translation
reserve
$’000
Put option
reserve
$’000
Hedge
reserves
$’000
Defined
benefit
plan and
other
reserves
$’000
Share-
based
payments
reserve
$’000
Total
$’000
At 1 July 2022
608,520 247,278
(5,057)
(8,161)
(1,128)
261
12,781 854,494 143,183
997,677
Profit after tax for
the year
–
65,253
–
–
–
–
–
65,253
26,370
91,623
Other comprehensive
income for the year
–
–
62,397
–
17,601
(6,895)
–
73,103
62
73,165
Tax on other
comprehensive income
–
–
–
–
(3,911)
17
–
(3,894)
–
(3,894)
Comprehensive
income after tax for
the year
– 65,253
62,397
–
13,690
(6,878)
– 134,462
26,432
160,894
Transactions with
owners in their
capacity as owners:
Ownership changes
without gaining/losing
control (Note 9)
–
(5,337)
–
–
–
–
–
(5,337)
4,012
(1,325)
Non-controlling
interests relating to new
acquisitions (Note 7(a))
–
–
–
–
–
–
–
–
84,046
84,046
Non-controlling
interests relating to
disposals (Note 7(b))
–
–
–
–
–
–
–
–
(2,020)
(2,020)
Transfer to put option
reserve
–
3,620
–
(3,620)
–
–
–
–
–
–
Net cost of share-based
payment
–
–
–
–
–
–
11,482
11,482
–
11,482
Issue of shares, net of
issue costs
337,167
–
–
–
–
–
– 337,167
–
337,167
Equity dividends
(Note 6(d))
–
(52,415)
–
–
–
–
–
(52,415)
(22,138)
(74,553)
At 30 June 2023
945,687 258,399
57,340
(11,781)
12,562
(6,617)
24,263 1,279,853 233,515 1,513,368
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 30 JUNE 2023
AUB GROUP ANNUAL REPORT 2024
81
Notes
2024
$’000
2023
$’000
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
1,165,144
816,668
Dividends/trust distributions received from associates
37,973
38,203
Management fees received from associates/related entities, and interest received
56,001
34,665
Payments to suppliers and employees
(974,692)
(677,007)
Income tax paid
(63,616)
(32,339)
Interest paid
(47,547)
(62,813)
Net Settlement with Department of Justice*
(38,497)
–
Interest paid - lease liabilities
4
(5,556)
(4,001)
Net cash from operating activities before customer trust account movements
129,210
113,376
Net increase/(decrease) in cash held in customer trust accounts
(47,210)
88,862
NET CASH FLOWS FROM OPERATING ACTIVITIES
82,000
202,238
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for acquisition of consolidated entities, net of cash acquired
7 (a)
(43,931)
(160,199)
Cash inflow from sale of controlled entities (leading to loss of control)
15,037
9,710
Payment for new associates and increases in holdings in associates
8
(15,520)
(7,207)
Proceeds from reduction in interests in associates
1,750
42,135
Payment for contingent and deferred consideration on prior year acquisitions
18
(26,512)
(16,078)
Net payment for new broking portfolios purchased/broking portfolios sold
(8,582)
(4,307)
Net payments from purchases/sales of plant and equipment, capitalised projects,
and other assets
(6,399)
(749)
Net repayments/(advances) of loans to associates/related entities
1,344
(159)
NET CASH FLOWS (USED IN)/FROM INVESTING ACTIVITIES
(82,813)
(136,854)
CASH FLOWS FROM FINANCING ACTIVITIES
Capital raising
20
195,741
161,297
Dividends paid to shareholders of the Group
(72,653)
(52,415)
Distributions paid to shareholders of non-controlling interests
(28,087)
(22,138)
Distributions paid to unitholders of controlled trusts
(15,430)
(11,803)
Increase in borrowings
10 (b)
97,313
709,315
Repayment of borrowings
10 (b)
(36,452)
(178,825)
Payments of principal for lease liabilities
10 (b)
(14,325)
(10,255)
Payment of financial liabilities resulting from acquisition of controlled entity
–
(92,978)
Payment for increase in interests in controlled entities
(49,401)
(21,934)
Proceeds from reduction in interests in controlled entities
12,507
18,394
NET CASH FLOWS FROM FINANCING ACTIVITIES
89,213
498,658
NET INCREASE IN CASH AND CASH EQUIVALENTS
88,400
564,042
Cash and cash equivalents at beginning of the period
1,196,721
592,460
Impact as a result of foreign exchange
1,195
40,219
Cash and cash equivalents at the end of the period
10
1,286,316
1,196,721
The above Consolidated Statement of Cash Flows (SOCF) should be read in conjunction with the notes to the Financial
Statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED 30 JUNE 2024
*
Please refer to Note 16 for further detail in relation to the settlement with the Department of Justice. Further contractual protections will be settled at the same
time as the earn out of the Tysers acquisition.
AUB GROUP ANNUAL REPORT 2024
82
1
CORPORATE INFORMATION
The consolidated financial statements are those of AUB
Group Limited (the parent ‘Company’) and all entities that
AUB Group Limited controlled (together the ‘Group’) during
the year and at the reporting date.
The financial report of AUB Group Limited for the year ended
30 June 2024 was authorised for issue in accordance with a
resolution of the directors on 21 August 2024. The Directors
have the power to amend and reissue the financial report.
AUB Group Limited is a for profit company limited by shares
incorporated in Australia whose shares are publicly traded
on the Australian Securities Exchange.
The principal activities of entities within the consolidated
Group for the year were the provision of services globally
across insurance broking, agencies, and distribution of
ancillary products within the support services businesses.
The registered office and principal place of business of the
Company is Level 14, 141 Walker Street, North Sydney NSW
2060, Australia.
2.1 MATERIAL ACCOUNTING POLICY
INFORMATION
a.
Basis of preparation of the financial report
The financial report is a general purpose financial report
which has been prepared in accordance with the requirements
of the Corporations Act 2001, Australian Accounting Standards
and other authoritative pronouncements of the Australian
Accounting Standards Board.
The financial report has been prepared under the historical
cost convention, as modified by applying fair value accounting
to certain financial assets and financial liabilities (including
derivative instruments) measured at Fair Value through Profit
or Loss (‘FVTPL’) or in other comprehensive income (‘OCI’).
The financial report is presented in Australian dollars ($) and
all values are rounded to the nearest $1,000 (where rounding
is applicable), unless otherwise stated, under the option
available to the Company under ASIC instrument “Rounding
in Financial/Directors’ Reports” 2016/191. The Company is an
entity to which this legislative instrument applies.
The functional currency of the Group and all segments other
than New Zealand Broking and International is Australian
Dollars. The New Zealand Broking segment’s functional
currency is New Zealand dollars. The International segment’s
functional currency is British Pounds. The presentational
currency of the Group is Australian Dollars.
The financial statements have been prepared on a going
concern basis.
Certain comparative information has been revised in this
financial report to conform with the current period’s presentation.
b.
Statement of compliance
The financial statements comply with Australian Accounting
Standards as issued by the Australian Accounting Standards
Board and International Financial Reporting Standards
(‘IFRS’) as issued by the International Accounting Standards
Board (‘IASB’).
c.
Basis of consolidation
Information from the financial statements of controlled
entities is included from the date the parent entity obtains
control until such time as control ceases. Generally, there
is a presumption that a majority of voting rights results
in control. To support this presumption, the Group also
considers all relevant facts and circumstances in assessing
whether it has control over an entity, including rights arising
from contractual arrangements with the entity and/or other
vote holders of the entity.
Where there is a loss of control of a controlled entity, the
consolidated financial statements include the results for the
part of the reporting period during which the parent entity
had control.
The financial information in respect of controlled entities
is prepared for the same reporting period as the parent
Company using consistent accounting policies. Adjustments
are made to ensure conformity with the Group’s accounting
policies.
All intercompany balances and transactions, including
unrealised profits arising from intra-group transactions, have
been eliminated in the consolidated accounts.
Non-controlling interests represent the portion of profit
or loss and net assets in subsidiaries which are not 100%
owned by the Group. These are presented separately in the
Consolidated Statement of Comprehensive Income and
within equity in the Consolidated Statement of Financial
Position.
Transactions with owners in their capacity as owners
A change in ownership interest without loss of control is
accounted for as an equity transaction. The difference
between the consideration transferred and the book value of
the share of the non-controlling interest acquired or disposed
is recognised directly in equity attributable to the parent entity.
Where the parent entity loses control over a controlled entity,
it derecognises the assets including goodwill, liabilities and
non-controlling interests in the controlled entity together
with any accumulated translation differences previously
recognised in equity. The Group recognises the fair value of
the consideration received and the fair value of the investment
retained together with any gain or loss in the Consolidated
Statement of Comprehensive Income.
d.
Critical accounting assumptions
and estimates
The preparation of the financial statements requires
management to make judgements, estimates and
assumptions that affect the reported amounts in the
financial statements. Management continually evaluates its
judgements and estimates in relation to assets, liabilities,
contingent liabilities, revenue and expenses.
Management bases its judgements and estimates on
historical experience and on other various factors it believes
to be reasonable under the circumstances, the result of
which form the basis of the carrying values of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under
different assumptions and conditions.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
83
2.1 MATERIAL ACCOUNTING POLICY
INFORMATION (CONTINUED)
d.
Critical accounting assumptions and
estimates (continued)
Management has identified the following critical accounting
policies for which significant judgements, estimates and
assumptions are made. Actual results may differ from these
estimates under different assumptions and conditions
and may materially affect financial results or the financial
position reported in future periods.
Further details of the nature of these assumptions and conditions
are found in the relevant notes to the financial statements.
The carrying amounts of certain assets and liabilities are
often determined based on estimates and assumptions of
future events. The key estimates and assumptions that have
a significant risk of causing a material adjustment to the
carrying amounts of certain assets and liabilities within the
next annual reporting period are:
Impairment of goodwill/intangibles and investments in
associates
The Group determines whether goodwill is impaired at
least on an annual basis and for any identifiable intangibles
and investments in associates that have an indicator of
impairment. This requires an estimation of the recoverable
amount of the cash-generating units to which the goodwill
is allocated. The resulting recoverable amounts derived
from the appropriate measures described in Note 14 are
compared to the carrying value for each CGU and in the event
that the carrying value exceeds the recoverable amount, an
impairment loss is recognised. The assumptions used in this
estimation of recoverable amount and the carrying amount of
goodwill are discussed in Note 14.
Measurement of contingent consideration
The Group recognises contingent consideration at fair value
through profit or loss. Contingent consideration terms vary
between transactions but generally involves either (1) an EBIT
or Revenue (fixed) performance hurdle (generally 2-3 years)
post the acquisition date (i.e. high water mark) or (2) future
dated (generally 2-3 years) EBIT or Revenue times a fixed
multiple less historic payments made.
See Note 7(a) and Note 8 for further details on current year
transactions and Note 18 for movements in contingent and
deferred consideration.
Re-estimation of financial liability at amortised cost
A financial liability at amortised cost has been recognised
representing an estimate of the value the Group could be
required to pay on the future exercise by holders of put
options over non-controlling interests and the value of
units held by others for consolidated trusts. The Group
re-estimates the financial liability at the reporting date, taking
into account the estimated future outcomes for income
or profit. For put options, generally this involves projecting
the EBIT of the entity to the first exercise date multiplied by
the expected EBIT multiple and projected net debt (based
on known information and the Company’s gearing targets).
Historical trends and any relevant external factors are taken
into account in determining the likely outcome. See Note 18
for further details.
Deferred tax assets
Deferred tax assets (‘DTA’) are recognised for deductible
temporary differences when management considers that
it is probable that future taxable profits will be available to
utilise those temporary differences. Judgement is required
in relation to DTA’s recognised in connection to carry
forward losses. The future profitability of each entity or tax
consolidation group (if a part of a tax consolidation group)
needs to be assessed including where a capital loss is made,
the probability of a future capital gain to offset the carry
forward capital loss. See Note 5 for further details.
Pensions
Tysers operates two defined benefit pension schemes, which
require contributions to be made to separately administered
funds. The cost of the defined benefit pension schemes and
the present value of the pension obligation are determined
using actuarial valuations. An actuarial valuation involves
making various assumptions that may differ from actual
developments in the future. These include the determination
of the discount rate, future salary increases, mortality rates
and future pension increases. Due to the complexities
involved in a valuation and its long-term nature, a defined
benefit obligation is highly sensitive to changes in these
assumptions. All assumptions are reviewed at each reporting
date. Remeasurements, comprising actuarial gains and
losses, the effect of any asset ceiling, excluding amounts
included in net interest on the net defined benefit liability and
the return on plan assets, are recognised immediately in the
Statement of Financial Position with a corresponding debit
or credit to retained earnings through other comprehensive
income in the period in which they occur. Remeasurements
are not reclassified to profit or loss in subsequent periods.
Capital risk management
AUB Group’s risk management policy is to identify, assess,
and manage risks, which are likely to adversely impact on
its financial performance, continued growth and its survival.
In terms of financial risk management, the Group takes a
risk-averse approach, and seeks to minimise risk whilst
bearing in mind cost effectiveness.
AUB does not engage in speculative activity, nor will
it explicitly seek opportunities to profit from expected
movements in the financial markets. The Group hedges cash
flows where there is a mis-match in receipts compared to
the functional currency of an entity.
As at 30 June 2024, AUB Group’s hedge program includes
foreign currency hedges, to mitigate the risk of variability of
operating cash flows caused by foreign currency fluctuations.
The current hedges are designed to ensure that USD revenue
exposures are hedged to GBP, the Tysers functional currency.
Where possible, the Group takes advantage of natural
hedges offsetting foreign currency assets and liabilities.
Hedge accounting
The Group uses derivative financial instruments, such as
forward currency contracts to hedge its exposure to foreign
currency risk in forecast transactions.
At the inception of a hedge relationship, AUB Group formally
designates and documents the hedge relationship to which it
wishes to apply hedge accounting and the risk management
objective and strategy for undertaking the hedge.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
84
2.1 MATERIAL ACCOUNTING POLICY
INFORMATION (CONTINUED)
d.
Critical accounting assumptions and
estimates (continued)
Such derivative financial instruments are initially recognised
at fair value on the date on which a derivative contract is
entered into and are subsequently remeasured at fair value.
Derivatives are carried as financial assets when the fair value is
positive and as financial liabilities when the fair value is negative.
The effective portion of the gain or loss on the hedging
instrument is recognised in other comprehensive income in the
cash flow hedge reserve. If there is an ineffective portion of the
hedge, that portion is recognised immediately in profit or loss.
Climate change
Climate change is a material risk to the global economy
including the insurance sector. As a result of an increased
frequency and severity of climate related events, the availability
and cost of insurance coverage for some of our customers
may be materially impacted. Our decentralised operating
approach and diversified investment strategy helps to manage
concentration risk to locations, industries, and products. As a
result, we are not materially exposed to industries expected to
be significantly impacted by climate change.
There are opportunities for the Group to facilitate alternative
insurance cover for customers impacted by climate change.
There are also opportunities for the Group within new and
emerging markets such as renewable energy.
3
OPERATING SEGMENTS
An operating segment is a component of an entity that
engages in business activities from which it may earn
revenues and incur expenses, whose operating results are
regularly reviewed by members of the senior executive
management team who are the entity’s Chief Operating
Decision Makers (‘CODM’) to make decisions about resources
to be allocated to the segment and assess its performance
and for which discrete financial information is available.
Operating segments that meet the quantitative criteria as
prescribed by AASB 8 are reported separately. However,
an operating segment that does not meet the aggregation
criteria is still reported separately where information about
the segment would be useful for the users of the financial
statements. Information about other business activities and
operating segments that are below the quantitative criteria
are combined and disclosed in a separate category.
The Group’s corporate structure is organised into five
business units which have been identified as separate
reportable segments as follows:
1. Australian Broking: assesses the insurable risks
and risk appetite of customers and sources relevant
insurance products from insurers and underwriters to
meet the needs of the customer. Post policy-binding
services primarily include claims handling on behalf
of the customer (claims preparation). Customers
generally comprise Small and Medium Enterprise (‘SME’)
businesses, however services are also provided to larger
institutions and individuals.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
2. Agencies: assesses, on behalf of the insurer, the risk
profile of the end customer and pricing of policies
requested by brokers. Post policy-binding services
primarily include claims handling on behalf of the insurer
(claims processing). Business is largely generated by
brokers operating within the SME insurance sector in
Australia and New Zealand. Agencies do not assume any
underwriting risk and accordingly do not incur or hold
policy liabilities.
3. New Zealand Broking: provides broking services within
the New Zealand market. Operations are centrally
monitored and managed by AUB Group NZ head office.
As a distinct overseas operation and investment,
performance of the segment is separately monitored.
4. International (previously Tysers): includes Wholesale
and Retail broking and Managing General Agents (‘MGA’)
and is headquartered in London. This is a separately
reportable segment given Tysers is largely UK based and
operating mainly in markets outside Australia. Tysers
operates across:
–
Wholesale broking: wholesale broker to the Lloyd’s
marketplace with global distribution largely through
retail brokers;
–
Retail broking: provides retail broking services within
the UK market; and
–
Managing General Agents: operates insurer delegated
authorities, both in-house and through third parties.
5. Support Services: provides a diversified range of
services to support the Australian Broking, Agencies,
New Zealand Broking and International segments,
and external clients. Services include post claim
rehabilitation, investigation, loss adjusting, legal, white
labelling, Group captive insurance and AUB Group head
office support. These sub segments are not individually
reportable.
Discrete financial information about each of these segments
is reported to management on a regular basis and the
operating results are monitored separately for the purposes
of resource allocation and performance assessment.
Each segment, except Support Services, contains entities
with similar characteristics in relation to customer profile
and operational risks.
Underlying Net Profit Before Tax
Performance of segments is reviewed by CODM on an
Underlying Net Profit Before Tax (‘UNPBT’) basis. UNPBT
excludes the effects of non-recurring events or other items
not representative of the underlying operations of the Group.
Items of income and expenditure which do not represent the
underlying performance of the Group and segments include
restructuring costs, acquisition related costs, fair value
gains/losses, profits/losses on sale, amortisation of broking
registers and impairments.
Such items are considered to be a result of non-recurring
events or non-representative of the underlying operations of
the Group and segments of the Group. UNPBT also excludes
non-controlling interests (‘NCI’) to reflect the performance
attributable to the shareholders of the Company.
AUB GROUP ANNUAL REPORT 2024
85
3
OPERATING SEGMENTS (CONTINUED)
UNPAT reconciles to the Profit after income tax attributable to equity holders of the parent (‘Reported NPAT’) within the
Statement of Comprehensive Income (‘SOCI’) as follows:
Notes
2024
$’000
2023
$’000
Net Profit after tax attributable to equity holders of the parent
SOCI
137,072
65,253
Add back/(less) (net of NCI and income tax):
– Amortisation of broking registers
39,604
30,352
– Adjustments to value of entities (to fair value) on the day they became controlled
entities
(17,794)
(29,796)
– Remeasurement of put option liability (net of interest unwind)
(1,463)
3,620
– Impairment charge
–
5,473
– Movements in contingent consideration (net of interest unwind)
(18,734)
39,912
– (Profit)/loss on deconsolidation of controlled entity, sale/dilution of associates
and portfolios
(2,503)
(25,315)
– Impairment of the right-of-use asset and onerous lease expense
153
251
– Costs in relation to Syndicated Debt Facility restructuring
9,748
–
– Expenses incurred for acquisitions in the current and prior period
24,932
39,355
Underlying Net Profit After Tax
171,015
129,105
Represented by:
Underlying profit pre-tax
240,026
180,643
Tax expense
(69,011)
(51,538)
Underlying Net Profit After Tax
171,015
129,105
30 June 2024
Segment Financial Performance
Australian
Broking
$’000
Agencies
$’000
New Zealand
Broking
$’000
International
$’000
Support
Services
$’000
Total
$’000
Inter-segment revenue
6,729
–
–
–
–
6,729
Revenue from external customers
322,934
179,358
80,755
422,050
9,049
1,014,146
Total revenue and other income
329,663
179,358
80,755
422,050
9,049
1,020,875
Share of Net Underlying Profits of
Associates accounted for using the
equity method before amortisation
on broking registers and income tax
expense
39,771
1,718
1,051
(84)
15,088
57,544
Total income
369,434
181,076
81,806
421,966
24,137
1,078,419
Less: Expenses
Total underlying cost to provide
services and administrative
expenses*
(202,752)
(101,874)
(51,354)
(318,514)
(17,411)
(691,905)
Inter-segment expenses
–
(6,729)
–
–
–
(6,729)
Interest paid and other borrowing
costs
(5,233)
(590)
(2,810)
(3,291)
(61,689)
(73,613)
Non-controlling interest
(41,288)
(16,533)
(4,926)
(3,399)
–
(66,146)
Underlying Net Profit Before Tax
120,161
55,350
22,716
96,762
(54,963)
240,026
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
*
Excludes non-operating expenses, refer to preceding table for reconciliation between statutory profit and underlying profit before tax.
AUB GROUP ANNUAL REPORT 2024
86
3
OPERATING SEGMENTS (CONTINUED)
30 June 2023
Segment Financial Performance
Australian
Broking
$’000
Agencies
$’000
New Zealand
Broking
$’000
International
$’000
Support
Services
$’000
Total
$’000
Inter-segment revenue
5,618
–
–
–
–
5,618
Revenue from external customers
273,899
143,202
60,690
311,069
2,883
791,743
Total revenue and other income
279,517
143,202
60,690
311,069
2,883
797,361
Share of Net Underlying Profits of
Associates accounted for using the
equity method before amortisation
on broking registers and income tax
expense
41,069
2,855
1,287
(325)
12,480
57,366
Total income
320,586
146,057
61,977
310,744
15,363
854,727
Less: Expenses
Total underlying cost to provide
services and administrative
expenses*
(190,929)
(88,696)
(43,874)
(231,245)
(24,032)
(578,775)
Inter-segment expenses
–
(5,618)
–
–
–
(5,618)
Interest paid and other borrowing
costs
(741)
(58)
(1,196)
(992)
(41,685)
(44,673)
Non-controlling interest
(24,165)
(16,635)
(2,640)
(1,578)
–
(45,018)
Underlying Net Profit Before Tax
104,751
35,050
14,267
76,929
(50,354)
180,643
*
Excludes non-operating expenses, refer to preceding table for reconciliation between statutory profit and underlying profit before tax.
Segment Non-Current Assets
The total of non-current assets other than financial instruments and deferred tax assets are provided in the following graphs.
The measurement of segment non-current assets follows the accounting policies of the Group.
Intangible assets such as goodwill, and investment in associates have been presented within the segment the respective
underlying operations is contained.
Disaggregated information by segment of the carrying value of associates is disclosed in Note 8.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
6%
29%
47%
2024
8%
10%
2023
Australian Broking
New Zealand
Agencies
International
Support Services
6%
27%
50%
7%
10%
AUB GROUP ANNUAL REPORT 2024
87
3
OPERATING SEGMENTS (CONTINUED)
Other Segment Information
Revenue from external customers is attributed to geographic location based on the country where services were provided.
Revenue based on geographic location
2024
$’000
2023
$’000
Australia
548,972
415,218
New Zealand
81,753
80,759
UK
118,972
113,656
USA
105,741
69,515
Rest of Europe
48,419
24,987
Other
110,289
87,609
Total revenue
1,014,146
791,744
4
REVENUE AND EXPENSES
Revenue Recognition
Revenue from contracts with customers
The Group will recognise as revenue the amount of the transaction price that is allocated to the performance obligation,
excluding any amounts that are highly probable of significant reversal, when the performance obligation has been satisfied.
Australian Broking, Australian Agencies, and New Zealand Broking Segments
Commission, brokerage and fees
In most instances the Group receives short-term advances from its customers, being the receipt of the premium and fees on bound
policies prior to the due date to the insurer. Using the practical expedient in AASB 15, the Group does not adjust the consideration
for the effects of a significant financing component if it expects, at contract inception, that the period between the transfer of the
promised service to the customer and when the customer pays for that service will be one year or less.
Non-Variable Component
Policy issuance
Commission, brokerage and fee income is generated by brokers primarily through assessment of insurable risks and risk
appetite of customers and sourcing relevant insurance products from insurers and underwriters which meets the needs of
the customer. For agencies, services are provided to brokers (the customer), through assessment of risk profile and pricing of
policies requested by brokers.
The Group recognised commissions, brokerage and fee revenue at invoice date on the basis that: (a) the Group acts primarily
as an agent of the customer when acting in the capacity as a broker, and as an agent of the insurer while acting in the capacity
as an agent; (b) the Group’s performance obligations are distinct from those of the insurer; and (c) the Group’s performance
obligations are predominantly completed prior to the inception of the insurance policy, the invoice date is the relevant date to
recognise the fixed components of revenue.
Claims handling
Claims handling refers to claims processing on behalf of insurers. In certain arrangements (separate contract or distinct clause
within binding agreements with insurers) the cost per claim processed is separately identifiable. For such claims the revenue
is recognised over time based on the number of claims processed and the percentage of completion of claims assessment in
progress at the balance sheet date.
Variable components
The Group recognises the variable amount of revenue only to the extent that it is highly probable that a significant reversal of
revenue will not occur when the uncertainty associated with the variability is resolved.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
88
4
REVENUE AND EXPENSES (CONTINUED)
Claims handling and premium settlement activities
In most arrangements for agencies, claims handling services forms part of the binding arrangement with insurers. Claims
handling for brokers refers to claims preparation services on behalf of the insured. Premium settlement refers to post policy
issuance activities such as payment processing and bordereaux/settlement reporting.
Revenue associated with claims handling services and premium settlement activities is recognised over time as the services are
provided to the customer and variable consideration is constrained to reflect potential cancellations.
Premium Funding Commissions
Premium funding companies provide services to a similar customer base as the brokers within the Group. The services provided
by these companies involve short-term lending of the upfront Gross Written Premium (‘GWP’) in return for the principal loan
repaid over the term of the insurance cover plus interest and fees.
The Premium Funding Commission is recognised monthly by the Group on receipt of cash or notification by the Premium
Funding Company on the commission due to the Group. No component of the commission is deferred as no ongoing obligation
exists for the Group.
Profit Commissions
Profit Commissions refer to the share of profits provided to the broker or agencies by the insurer in relation to the book of
policies (the ‘book’) bound by the broker or agency in any given underwriting year. Insurers calculate the profit based on the
GWP less any cost incurred to maintain the book, and satisfy its obligations under the policies within the book such as claim
acquisition, and maintenance costs. The variable consideration is contingent on the performance of the book and in particular
the quantum of claims.
The Group recognises profit commission at the earlier of:
–
receipt of payment;
–
receipt of the insurers’ advice of the amount earned; or
–
where the recipient is an agency who administers the related claims handling services, the point at which the profit
commission no longer contains a highly probable risk of significant reversal of revenue.
Support Services Segment
Fees
Fee revenue earned is recognised upon issue of an invoice for services rendered, plus an accrual for a percentage of completion
of any work in progress (including a profit margin), which has yet to be invoiced, but for which the Group has an enforceable right
of payment. No ongoing performance obligation exists after the issuance of the invoice.
Other Revenue
Other income is recognised when the service has been performed and the right to receive the payment is established.
Management fees from related entities
Management fees and other revenue are recognised over time as the performance obligation is satisfied.
Interest income
Interest income is recognised as interest accrues using the effective interest method.
Dividends and distributions from trusts
Dividends and distributions from trusts are recognised when the shareholder’s right to receive the payment is established.
Share of profits of associates
The Group recognises its share of profits of associates using the equity accounted method, being the recognition of a
post-tax share of profits at the Group’s economic interest of each associate. The share of profits excludes any fair value
changes or impairments incurred within the associate as a result of a downstream transaction such as bolt on acquisitions or
changes in control. Additionally, differences between the Group and entity accounting policies are adjusted at the Group level,
primarily in relation to intangibles recognised by the acquirer (i.e. the Group) which were not recognised at the associate level.
The amortisation of such intangibles over its useful life (generally 10 years) is separately disclosed.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
89
4
REVENUE AND EXPENSES (CONTINUED)
2024
$’000
2023
$’000
a. Revenue from contracts with customers
Commission, brokerage and fee income
931,554
734,033
Management fees from related entities
5,882
5,982
Other revenue
27,351
23,644
Total revenue from contracts with customers
964,787
763,659
Recognised at a point in time
881,429
684,281
Recognised over time
83,358
79,378
b. Other income
Interest income from related parties
1,509
248
Interest from other persons/corporations
47,838
27,836
Total other income
49,347
28,084
c. Share of profit of associates
Share of profit of associates after tax but before amortisation
42,970
41,920
Amortisation of intangibles – associates
(6,816)
(6,230)
Total share of profit of associates
36,154
35,690
Expenses
Expenses, including salaries and wages, business technology and software costs, insurance, advertising and marketing, and
interest, are recognised as incurred or as services are provided to the Group.
Salary related statutory obligations such as long service leave are accrued on a probability weighted basis to the vesting
date. Assumptions are applied in relation to annual and long service leave with respect to expected wage growth and risk free
discount rates over the next 10 years.
Amortisation of broker registers are conducted on a straight line basis over the useful life of the asset, generally 10-12 years.
The right-of-use asset incorporates fixed rental increases, with changes based on indexes and rental market reviews
incorporated when such changes are known. The Group applies practical expedients in relation to short-term (less than
12 months) and low value (less than $7,000 AUD) leases. Such leases are recognised on a straight line basis of the expected
gross expense over the term of the lease.
Depreciation/amortisation of all other assets is recognised on a straight line basis over the useful life of the asset, refer to
Note 27 for more details.
Commission expenses are sub agent and referral fees paid to another party in return for introductory services on insurances
brokered by the Group. The expense is recognised in full when the related insurance policy is invoiced. For broking entities,
typically they are the principal in the arrangement and as such the commission income and expense are not offset. For
agencies, and in some arrangements for broking entities, the commission is recognised on a net basis as the entity was
determined to be an agent in the arrangement.
Legal fees/acquisition costs are recognised as they are incurred except in relation to acquisition of a non-financial asset,
borrowing facility, or associates. The costs that are directly attributable to bringing an asset to its intended use are capitalised
and depreciated over the useful life of the asset. The costs directly attributable to obtaining funding are capitalised and
amortised over the term of the facility to a maximum of 5 years. The cost directly attributable to acquisition of an associate is
capitalised as part of the carrying value of the associate.
Further disclosures in relation to non-operating gains and losses such as fair value adjustments to carrying value or gains/
losses from sale are made in Notes 7-9.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
90
4
REVENUE AND EXPENSES (CONTINUED)
Expenses (continued)
2024
$’000
2023
$’000
d. Costs to provide services and administrative expenses
Salaries and wages
488,637
403,164
Business technology and software costs
54,099
43,571
Commission expense
33,447
26,045
Amortisation/impairment of right-of-use asset and rent expense
22,543
17,097
Amortisation of broking registers and other assets
51,104
37,024
Amortisation/depreciation of software and fixed assets
7,469
6,241
Insurance
19,015
22,776
Advertising, marketing, and travel costs
37,843
29,826
Consulting, accounting, and audit fees
31,901
21,150
Legal fees/acquisition costs
12,502
19,349
Share-based payments
8,678
10,591
Other expenses
22,960
23,791
Total cost to provide services and administrative expenses
790,198
660,625
e. Finance costs
Interest paid and other borrowing costs*
68,074
44,673
Interest unwind on lease liability
5,538
4,001
Interest unwind on contingent consideration and put option liability
15,552
12,429
Finance charge on profits of trust minority interests
12,755
10,999
Total finance costs
101,919
72,102
f.
Adjustments to carrying value
Fair value adjustment relating to the carrying value of associates and goodwill
15,551
29,930
Adjustment to contingent consideration on acquisitions
34,139
(26,920)
Remeasurement of put option liability
1,611
(3,317)
Impairment charge relating to the carrying value of goodwill and intangible assets (see Note 13)
–
(6,342)
Total adjustments to carrying value
51,301
(6,649)
g. Profit from sale or dilution of interests in associates, controlled entities, and broking
portfolios
Profit on sale of controlled entities leading to deconsolidation (Note 7(b))
4,154
4,447
Profit from sale or dilution of interests in associates and broking register
2,443
34,599
Total profit from sale or dilution of interests in associates, controlled entities, and broking
portfolios
6,597
39,046
*
Includes $13.2m of costs in relation to the Syndicated Debt Facility restructuring.
5
INCOME TAX
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from
or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or
substantively enacted by the year end date as presented in the Consolidated Statement of Financial Position.
Deferred income tax is provided on all temporary differences at the date of the Consolidated Statement of Financial Position
between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
–
when the deferred income tax liability arises from the initial recognition of goodwill, or of an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit
nor taxable profit or loss; or
–
when the taxable temporary differences associated with investments in subsidiaries, associates or interests in joint
ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary
differences will not reverse in the foreseeable future. No deferred tax liability has been recognised in respect of any potential
profit on the disposal of an associate or controlled entity by the Group as there is no intention of disposing of these assets in
the foreseeable future. Any tax liability will be recognised before the date of asset’s disposal, when it is considered probable
that the temporary difference will reverse in the foreseeable future.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
91
5
INCOME TAX (CONTINUED)
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and
unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary
differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except:
–
when the deductible temporary differences arise from the initial recognition of an asset or liability in a transaction that is not
a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
–
when the deductible temporary differences associated with investments in subsidiaries, associates or interests in joint
ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference
will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be
utilised.
The carrying amount of deferred income tax assets is reviewed at each year end date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each year end date and are recognised to the extent that it has
become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset
is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the
year-end date as presented in the Consolidated Statement of Financial Position.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss. Deferred tax assets
and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax
liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.
Tax consolidation
For the purposes of income taxation, AUB Group Limited (‘AUB’) entered into a Consolidated Tax Group with its 100% owned
Australian subsidiaries. Tax consolidation results in the controlled entity members being treated as part of the Head Company
for tax purposes rather than as a separate taxpayers. The Income Tax Assessment Act (1997) provides that the Consolidated
Tax Group is to be treated as a single entity for Australian tax purposes with the Head Company responsible for the tax payable.
AUB formally notified the Australian Taxation Office of its adoption of the tax consolidation regime.
The Consolidated Tax Group was formalised by entering into tax sharing and tax funding agreements in order to allocate income
tax payable to group members. Each member of the group calculates tax expense on an entity basis. The agreement also
provides that AUB carries forward tax funding assets or tax funding liabilities for which an intercompany loan is recognised
between the parties.
Tax effect accounting by members of the tax consolidated group
Members of the tax consolidated group have entered into a tax funding agreement. The tax funding agreement provides for the
allocation of current taxes to members of the tax consolidated group in accordance with their accounting profit for the period,
while deferred taxes are allocated to members of the tax consolidated group in accordance with the principles of AASB 112
Income Taxes. Allocations under the tax funding agreement are made at the end of each quarter.
Effective Tax Rate
The Effective Tax Rate for the year ended 30 June 2024 was 23% (2023: 28%). The Group’s tax rate is below the main effective
tax in Australia of 30% largely as a result of the $11m tax impact of entities that are accounted for on an equity basis and $14m
for amounts recognised in Profit and Loss for adjustments to carrying value of associates. Entities accounted for on an equity
basis are fully tax paying in Australia, however for accounting purposes the related tax expense is reflected in the net return
on the investment rather than the tax expense of the Group. This is offset by a $9m increase in the tax charge resulting from
expenses that are not deductible for tax purposes which principally relate to fees incurred when acquiring new businesses in
the year.
The decrease in the effective tax rate of 5% is largely the result of a net gain of $14m on the adjustment to carrying value of
investments in 2024 (see Note 4 (f)), that did not have an associated tax expense; in 2023 this was a loss of $2m. The main
impact on the tax rate in future years is expected to be the continued profitability of the business accounted for under the equity
accounting rules as discussed above, the change in geographic profile of the earnings of the Group and any changes in tax
legislation. The Group is expected to become a Significant Global Entity during the Year Ending 30 June 2025 as a result of the
global growth of the business. However, this is not expected to impact the effective tax rate of the Group.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
92
5
INCOME TAX (CONTINUED)
Effective Tax Rate (continued)
The AUB Group consists of AUB Group Limited, the parent entity and ASX listed entity, and over 300 entities in which the parent
has a direct or indirect economic interest. The information reported by the Australian Taxation Office (‘ATO’) (as prescribed by
statute) in respect of corporate tax entities will not necessarily provide the complete picture, particularly for organisations such
as the AUB Group that receive a significant amount of its income through franked dividends.
The AUB Tax Consolidation Group (‘AUB TCG’), comprises only AUB Group Limited (the parent entity) and its 100% wholly owned
entities. The primary income of the AUB TCG is the receipt of franked dividend income received from the partly owned entities.
Given tax has already been paid in respect of the franked dividends, the AUB TCG is entitled to a credit equal to that tax. That is,
the franking credits attaching to the dividends reflect tax that has already been paid by the individual entity paying the dividends.
While the franking credits represent tax paid, they are reflected in the income tax return of the AUB TCG as an offset against
AUB’s gross tax, thereby reducing the amount disclosed as ‘tax payable’. The amount disclosed by the ATO in their report is after
the franking credits have been taken into account, which does not reflect the tax paid by the Group.
a.
Income tax expense
i.
Major components of income tax expense are as follows:
2024
$’000
2023
$’000
Current income tax
Current income tax charge
56,075
49,638
Adjustment for prior years
(3,087)
(1,077)
Deferred tax credit
Origination and reversal of temporary differences
(4,596)
(13,081)
Total income tax expense in Consolidated Statement of Comprehensive Income
48,392
35,480
ii.
A reconciliation between tax expense and the product of accounting profit before income tax multiplied by the
company’s applicable income tax rate is as follows:
2024
$’000
2023
$’000
Profit before income tax
216,069
127,103
At the company's statutory income tax rate of 30% (2023: 30%)
64,821
38,131
Impact of:
Equity accounted income/distributions from entities operating as trusts
(10,955)
(8,975)
Gain/(Loss) on sale
2,098
775
Adjustments to carrying value (see Note 4(f))
(13,683)
1,995
Tax losses not recognised
536
1,095
Benefit of tax losses not previously recognised
–
(1,099)
Income taxed at different tax rates on overseas operations
(621)
981
(Over)/under provision prior year
(3,084)
(1,077)
Acquisition costs and other non-deductible expenses
9,280
3,654
Income tax expense reported in the Consolidated Statement of Comprehensive Income
48,392
35,480
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
93
5
INCOME TAX (CONTINUED)
b.
Deferred income tax
Deferred Tax Assets and Deferred Tax Liabilities are offset when they relate to the same tax authority, there is a legally
enforceable right of offset and tax amounts in that jurisdiction are intended to be settled on a net basis.
i.
Movement in deferred income tax during the year relates to the following:
Assets
Liabilities
2024
$’000
2023
$’000
2024
$’000
2023
$’000
Unamortised broking registers (and other intangibles)
–
–
(123,077)
(132,791)
Accrued income not yet assessable
–
–
(6,874)
(5,912)
Foreign currency hedge
–
–
(2,548)
(4,332)
Defined benefit pensions
–
–
(1,449)
(1,611)
Accrued expenses and provisions
31,391
30,092
–
–
PPE & ROU tax timing differences
3,057
5,578
–
–
Borrowing costs
1,920
4,068
–
–
Carry forward capital losses
–
–
–
–
Carry forward operating losses
7,723
9,737
–
–
Other
2,674
–
(7,342)
(1,761)
Netting of deferred taxes (arising within same tax consolidated
group or entity)
(22,009)
(28,090)
22,009
28,090
Deferred tax assets/(liabilities)
24,756
21,385
(119,281)
(118,317)
The Other Deferred Tax Asset and Liability balances principally relate to timing differences resulting from differing accounting
standards used in preparation of financial statements for some subsidiary companies.
ii.
Unrecognised deferred tax assets
Deferred tax assets for tax losses incurred are recognised to the extent that the Group expects the carry forward losses to be
utilised in the future. Deferred tax assets arising from unused tax losses not recognised at 30 June 2024 was $3.0m (2023:
$2.0m). Deferred tax assets arising from unused capital losses not recognised at 30 June 2024 was nil (2023: $1.1m).
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
94
6
EARNINGS PER SHARE (‘EPS’)/DIVIDENDS PAID AND PROPOSED
Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing
equity (other than dividends), divided by the weighted average number of ordinary shares.
Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for:
–
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as
expenses;
–
other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential
ordinary shares; and
–
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus
element.
a.
Earnings Per Share (‘EPS’)
The following reflects the income and share data used in the basic and diluted earnings per share computations:
2024
$’000
2023
$’000
Net profit attributable to ordinary equity holders of the parent
137,072
65,253
2024
Thousands
Shares
2023
Thousands
Shares
Weighted average number of ordinary shares for basic earnings per share
109,081
99,837
Effect of dilution:
Share options
758
430
Weighted average number of ordinary shares adjusted for the effect of dilution
109,839
100,267
Basic earnings per share (cents per share)
125.65
65.35
Diluted earnings per share (cents per share)
124.79
65.08
b.
Changes in weighted average number of shares
On the 5 July 2024, a further 909,086 shares were issued as part of a Share Placement Plan and therefore have no impact on
the diluted EPS as at 30 June 2024. The weighted average number of shares for the period between the date of issue and the
date of completion of these financial statements is 119,551.
There have been no significant transactions involving ordinary shares or potential ordinary shares that would significantly
change the number of ordinary shares or potential ordinary shares outstanding between the reporting date and the date of
completion of these financial statements.
c.
Information on the classification of securities
Options granted to employees as described in Note 21 are considered to be potential ordinary shares and have been included
in the determination of the diluted earnings per share to the extent they are dilutive. These options have not been included in
the determination of the basic earnings per share. The amount of the dilution of these options is the average market price of
ordinary shares during the year minus the exercise price.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
95
6
EARNINGS PER SHARE (‘EPS’)/DIVIDENDS PAID AND PROPOSED (CONTINUED)
d.
Equity dividends on ordinary shares
2024
$’000
2023
$’000
Dividends paid or recognised as a liability during the year
Final franked dividend for financial year ended 30 June 2022: 38.0 cents
–
35,155
Interim franked dividend for financial year ended 30 June 2023: 17.0 cents
–
17,260
Final franked dividend for financial year ended 30 June 2023: 47.0 cents
50,951
–
Interim franked dividend for financial year ended 30 June 2024: 20.0 cents
21,702
–
Total dividends paid/provided in current year
72,653
52,415
In addition to the above, dividends paid to non-controlling interests totalled $28.09m (FY23: $22.14m).
Dividends proposed and not recognised as a liability
Final franked dividend for financial year ended 30 June 2023: 47.0 cents
–
50,951
Final franked dividend for financial year ended 30 June 2024: 59.0 cents
68,787
–
68,787
50,951
Dividends paid and accrued per share (cents per share)
67.00
55.00
Dividends proposed per share (cents per share) not recognised at balance date
59.00
47.00
e.
Franking credit balance
The amount of franking credits available for the subsequent financial year are:
2024
$’000
2023
$’000
– franking account balance as at the end of the financial year at 30% (2023: 30%)
78,274
61,938
– franking credits that will arise from the payment of income tax payable as at the end of the
financial year
115
15,359
The amount of franking credits available for future reporting periods
78,389
77,297
– impact on the franking account of dividends proposed or determined before the financial report
was authorised for issue but not recognised as a distribution to equity holders during the year
(29,480)
(21,836)
The amount of franking credits available for future reporting periods after payment of dividend
48,909
55,461
The tax rate at which paid dividends have been franked is 30% (2023: 30%).
Dividends proposed will be franked at the rate of 30% (2023: 30%).
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
96
7
BUSINESS COMBINATIONS AND TRANSACTIONS INVOLVING GAIN OR LOSS OF CONTROL
a.
Business combinations
A major strategy of the Group is to acquire part ownership in insurance broking, agency and other complementary services
businesses or portfolios. The terms of these acquisitions vary in line with negotiations with individual vendors but are structured
to achieve the Group’s benchmarks for return on investment.
The business combinations in the current period relate to insurance broking, agency and wholesale insurance businesses in
Australia, New Zealand, Belgium and the United Stated of America.
The acquisition method of accounting is used to account for all business combinations. Consideration transferred is measured
as the fair value of the assets given, shares issued or liabilities assumed at the date of exchange. All acquisition costs including
legal fees are charged against profits to acquisition and legal fees (see Note 4(d)) as incurred.
An estimate is made of the fair value of the future contingent consideration. Any variation to this amount in future periods
(either up or down) is recognised through the Consolidated Statement of Comprehensive Income. Over accruals are recognised
as income in the year the amount is reversed and any under accruals are charged as an expense against profits. Contingent
considerations are recognised in the Consolidated Statement of Financial Position at fair value. Refer to Refer to Note 2.1 (d) and
Note 18 for further information on measurement and critical assumptions.
When a business combination occurs, the acquiree’s identifiable assets and liabilities are measured at their fair value at the
date of acquisition to determine the amount of any goodwill associated with the transaction. Any previously held interests of the
acquiree are remeasured to fair value, with the movement reflected in the Consolidated Statement of Comprehensive Income
as either a profit or loss. If new information becomes available within one year of acquisition about the facts and circumstances
that existed at the date of acquisition, then any revisions to the fair value previously recognised, will be retrospectively adjusted.
Non-Controlling Interest is initially measured at fair value.
When the Group increases their interest in a company leading to the Group obtaining control in the company the Group
derecognises the investment in associate and recognises the acquiree’s identifiable assets and liabilities measured at their
fair value in line with other business combinations. The shares held immediately preceding the Group obtaining control is
remeasured based on the fair value of the shares acquired, resulting in a fair value gain or loss. The cumulative amount
recognised through Other Comprehensive Income is reclassified to profit or loss when control is obtained or lost.
Where there is a change in ownership and the Group loses control, the gain or loss will be recognised in the Consolidated
Statement of Comprehensive Income and the net assets of the entity including the carrying value of non-controlling interests is
derecognised.
Change in the ownership interest in a controlled entity (without loss of control) is accounted for as a transaction with owners
in their capacity as owners and these transactions will not give rise to a gain or loss in the Consolidated Statement of
Comprehensive Income.
Refer to Note 9 for transactions between owners.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
97
7
BUSINESS COMBINATIONS AND TRANSACTIONS INVOLVING GAIN OR LOSS OF CONTROL
(CONTINUED)
a.
Business combinations (continued)
a.
i. During the current period, the following transactions occurred:
During the period the business combination transactions of the Group included JC & JD Holdings LLC, JUA Holdings Pty
Ltd, Austbrokers CE McDonald Pty Ltd and SURA Professional Risks Pty Ltd, none of which were individually significant.
The total Revenue and Net Profit After Tax recognised during the year in relation to the current period acquisitions was
$25.9m, and $7.3m respectively. Group Revenue and Net Profit After Tax in relation to the current period acquisitions
would have been $38.6m and $10.6m respectively, had all of the above transactions closed on 1 July 2023.
Business Acquired
Transaction date(s)
2024
$ ‘000
2023
$ ‘000
All other transactions
Various
Various
Various
Total consideration paid for all additional interest acquired
110,343
1,101,779
Less contingent/deferred consideration
(22,382)
(154,912)
Less shares issued by Parent (AUB Group Limited)
–
(175,870)
Less shares issued by a subsidiary
(13,273)
(39,146)
Less cash acquired
(6,721)
(95,131)
Less trust cash acquired
(24,036)
(476,521)
Payments for acquisition of consolidated entities, net of cash acquired
43,931
160,199
Goodwill arising on acquisition related to the Group
82,758
801,739
Goodwill arising on acquisition related to non-controlling interests
34,532
48,968
Total goodwill arising on acquisition
117,290
850,707
Other intangibles net of deferred taxes
25,902
340,484
Net increase in non-controlling interest
33,125
84,046
ii) During the prior period, the following transactions occurred:
–
Effective 1 July 2022, Austbrokers Corporate Pty Ltd (‘AUC’), a controlled entity of the Group, acquired 100% of SRS
Broking Pty Ltd. AUC partially funded the acquisition by issuing shares, resulting in AUB diluting its ownership in AUC
by 20% to 80%.
–
Effective 30 September 2022, AUB Group acquired 100% of Integro Insurance Brokers Holdings Limited and its
controlled entities, Galileo Insurance Services LLC, and Integro Insurance Brokerage Services LLC (collectively
“Tysers”) for GBP 520m comprising GBP 320m in cash, GBP 100m in AUB shares, and GBP 100m in contingent
consideration. The contingent consideration is subject to Tysers meeting revenue growth hurdles within 24 months
of completion. The fair value of the contingent consideration at acquisition date is based on the probability weighted
outcome discounted over 24 months at 9.88%. Contingent consideration is recognised at fair value through profit or
loss, refer to Note 4 (f).
–
Effective 1 January 2023, AUB Group acquired a further 25% of AEI Insurance Group Pty Ltd (“AEI”). On this date AEI
became a controlled entity of the Group, and the transaction resulted in a fair value gain on step up of $27.4m.
b.
Loss of Control
When a 100% disposal occurs the Group derecognises all assets and liabilities previously recognised in relation to the disposed
entity including associated goodwill. A gain or loss is recognised in relation to the disposal based on the difference between the
carrying value of net assets (including goodwill) associated with the entity and the sale price.
When a partial disposal occurs leading to the Group losing control of the entity, the Group derecognises all assets, liabilities and NCI
previously recognised in relation to the disposed entity including associated goodwill with an investment in associate recognised in
relation to the remaining interest continued to be held by the Group. A gain or loss is recognised in relation to the disposal based on
the difference between the share (portion of interest being disposed) of net assets (including goodwill) associated with the entity
and the sale price.
i. During the current period, the following transactions occurred:
–
During the period the Group lost control of HQ Insurance Pty Ltd.
ii. During the prior period, the following transactions occurred:
–
Effective 31 January 2023, the Group disposed all of its interest in Austbrokers Coast to Coast Pty Ltd (‘Coast to
Coast’). On that date Coast to Coast ceased to be a controlled entity.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
98
8
INVESTMENT IN ASSOCIATES
The Group’s investments in its associates are accounted for under the equity method of accounting in the Consolidated
Financial Statements. These are entities in which the Group has significant influence and which are not controlled entities.
The Group deems they have significant influence if they have more than 20% of the voting rights.
The financial statements of the associates are used by the Group to apply the equity method. The reporting dates of the associates
and the AUB Group are identical and adjustments are made to bring into line dissimilar accounting policies used by associates.
The investment in associates is carried in the Consolidated Statement of Financial Position at cost plus post-acquisition
changes in the Group’s share of associates profit/(loss) for the period, less dividends and any impairment in value. The
Consolidated Statement of Comprehensive Income reflects the Group’s share of the results of operations of the associates.
Refer to Note 14 Impairment Assessment for accounting policies in relation to the impairment testing of investments in associates.
On partial acquisition whilst maintaining significant influence the purchase price is added to the investment in associate
carrying value, and on partial disposal whilst maintaining significant influence the portion of interest in the entity being sold is
proportionately derecognised from the investment in associate carrying value. As part of impairment testing we consider the
recent purchase/disposal prices when determining if there are indicators of impairment.
i.
During the current period, the following transactions occurred:
There were no significant transactions in respect of associates during the period.
Entity
Transaction
date(s)
30 Jun 2024
%/$‘000
30 Jun 2023
%/$‘000
Increase in voting shares
Various
Various
Various
Various
Total cash consideration paid for all interest acquired
15,520
7,207
Decrease in voting shares
Various
Various
Various
Various
Total consideration received for all interest disposed
1,750
43,435
Less carrying value of shares being sold
(178)
(6,104)
Less Capital Gains Tax on shares being sold
(525)
(10,948)
Net gain on disposal of interest
1,047
26,383
ii.
During the previous period, the following transactions occurred:
–
Effective 1 August 2022, the Group disposed its interest in SRG Group Pty Limited.
–
Effective 1 May 2023, the Group’s disposed its interest in Western United Financial Services Pty Limited.
iii. The Group’s investment in associates ownership at balance date is as follows:
2024
%
2023
%
Australian Broking
Adroit Specialty Risks Pty Limited
34.0
34.0
Austbrokers ABS Aviation Pty Ltd
50.0
50.0
Austbrokers Dalby Insurance Brokers Pty Ltd
50.0
50.0
Austbrokers Kelly Partners Pty Ltd
50.0
50.0
Austbrokers SPT Pty Ltd
50.0
50.0
Bluestone Insurance Pty Ltd
50.0
50.0
Brett Grant and Associates Pty Ltd
50.0
50.0
Broker Claims Pty Ltd
47.5
47.5
Claim Central Consolidated Pty Ltd
38.3
–
Countrywide Insurance Holdings Pty Ltd**
52.5
52.5
Cruden & Read Pty Ltd
50.0
50.0
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
99
2024
%
2023
%
Australian Broking (continued)
Finzane Group Pty Ltd*
70.0
50.0
F360 IB Pty Ltd
29.1
–
Global Assured Finance Pty Ltd
50.0
50.0
JMD Ross Insurance Brokers Pty Ltd
50.0
50.0
KJ Risk Group Pty Ltd
49.0
49.0
Lea Insurance Brokers Pty Ltd/ Lea Group Trust**
67.7
57.0
Markey Group Pty Ltd
50.0
50.0
MGA Management Services Pty Ltd
49.9
49.9
National Rural Insurance Group Pty Ltd
25.0
25.0
Nexus Advisernet (Aust) Pty Ltd
26.5
26.5
Oxley Insurance Brokers Pty Ltd/Port Macquarie Insurance Brokers Unit Trust
42.7
42.7
Pace Insurance Pty Ltd/Pace Insurance Group Unit Trust
10.4
10.4
Peter L Brown & Associates Pty Ltd
50.0
50.0
Rework Pty Ltd
50.0
50.0
Rivers Insurance Brokers Pty Ltd
50.0
50.0
Supabrook Pty Ltd
50.0
50.0
The Procare Group Pty Ltd
48.8
48.8
YDR Pty Ltd
50.0
50.0
Agencies
Anchorage Marine Underwriting Agency Pty Ltd
26.2
26.2
Hiller Marine Pty Ltd
–
50.0
Sura Professional Risks Pty Ltd*
80.0
50.0
Sura Technology Risks Pty Ltd
50.0
50.0
Tasman Underwriting Pty Ltd
50.0
50.0
New Zealand Broking
ICIB Brokerweb North Shore Limited*
43.3
36.1
Commercial and Rural Insurance Limited
36.1
36.1
McDonald Everest Insurance Brokers Limited
50.0
50.0
Support Services
BizCover Pty Ltd
40.7
40.7
International
Factory and Industrial Risk Managers (Pty) Ltd
40.0
40.0
*
The Group obtained control of the entity during the period as a result of further shares obtained.
** Whilst the Group holds more than 50% interest in the entity, the Group’s voting rights are capped at 50%, hence it was determined that the Group maintains
significant influence and does not have control of the entity.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
8
INVESTMENT IN ASSOCIATES (CONTINUED)
AUB GROUP ANNUAL REPORT 2024
100
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
8
INVESTMENT IN ASSOCIATES (CONTINUED)
Other information in respect of associated entities which carry on business directly or through its
controlled entities:
a. The principal activity of each associate is insurance broking, agency, or insurance related ancillary services such as loss
adjusting, platforms, etc. except Whittles Group Pty Ltd (a subsidiary of MGA Management Services Pty Ltd) which provides
strata management services.
b. There have been nil impairments relating to the investment in associates during the current or previous year.
c. All associates, including unit trusts, were incorporated, or established in Australia, except for associates owned by AUB
Group NZ Limited, which are enties incorporated in New Zealand, and associates owned by Ludgate Limited which are
entities incorporated in the UK.
d. The following associates are considered material to the Group as at 30 June 2024:
–
BizCover is a commercial online insurance platform that allows SME clients to compare quotes from insurance providers
and purchase a variety of insurance products, including public liability, professional indemnity and business insurance.
The carrying value at 30 June 2024 is $127.56m (2023: $129.49m); and
–
MGA Management Services Pty Limited provides insurance agent and broker services for a range of insurance types
including commercial insurance, personal insurance and specialised insurance. The carrying value at 30 June 2024 is
$29.67m (2023: $26.80m).
iv. The Group’s reconciliation of share of associates’ net profits is presented below:
2024
$’000
2023
$’000
Revenue
186,536
176,639
Operating profits before income tax
60,115
56,588
Amortisation of intangibles
(6,816)
(6,230)
Net profit before income tax
53,299
50,358
Income tax expense
(17,145)
(14,668)
Share of associates' net profits
36,154
35,690
v.
The Group’s reconciliation of its carrying value in its investment in associates is presented below:
2024
$’000
2023
$’000
Balance at the beginning of the period
238,526
250,100
Acquisition of or increase in investment in associates
15,540
10,522
Disposal or dilution of interest in associates
(178)
(6,104)
Reclassification of investment in associates becoming controlled entity
(1,374)
(13,057)
Reclassification of controlled entity to investment in associate on losing control
–
569
Reclassification of investment in associate to other investments where significant influence
was lost
–
(1,786)
Share of associates’ profit after income tax
36,154
35,690
Dividends/trust distributions received
(37,973)
(37,889)
Net foreign exchange and other movements
216
481
Balance at the end of the period
250,911
238,526
vi.
The Group’s share of the assets and liabilities of associates:
2024
$’000
2023
$’000
Current assets
206,093
205,892
Non-current assets
80,653
66,485
Current liabilities
(181,605)
(176,769)
Non-current liabilities
(33,530)
(24,927)
Net assets
71,611
70,681
AUB GROUP ANNUAL REPORT 2024
101
9
SHARES IN CONTROLLED ENTITIES
New acquisitions of controlled entities or transactions which lead to the Group obtaining or losing control in an entity during the
current and previous periods are disclosed in Note 7. The following transactions involve transactions between owners where
there is no change in the control assessment.
i.
During the current period, the following transactions occurred:
–
Effective 1 July 2023, the Group acquired a further 16.9% of AUB Three Sixty Pty Ltd for $46.8m.
Entity
Transaction
date(s)
June 2024
%
June 2023
%
Increase in voting shares
AUB Three Sixty Pty Limited
01-Jul-23
66.55
49.65
All other transactions
Various
Various
Various
Decrease in voting shares
All other transactions
Various
Various
Various
ii.
During the previous period, the following transactions occurred:
–
Effective 1 July 2022, the Group acquired a further 10.7% of AUB Group NZ Limited for NZD 16.2m cash. On this date,
the entity became wholly owned by the Group.
–
Effective 1 January 2023, the Group’s interest in AUB Three Sixty Pty limited was decreased to 49.65%.
Other information
a) All controlled entities are incorporated in Australia except for the following:
–
AUB Group NZ Limited (‘AUB NZ’), AUB Three Sixty NZ Limited and Insurance Advisernet New Zealand Unit Trust and
their controlled entities which are incorporated in New Zealand;
–
Ludgate Limited which is incorporated in the UK;
–
Ludgate US Corp which is incorporated in the US; and
–
Colonnade Pte Ltd (‘Colonnade’) which is incorporated in Singapore.
b) Colonnade is the Group’s insurance captive. Given the size and scale of the Group including associates, certain insurable
risks are internally manageable. Furthermore, the entity provides the Group opportunities to insure certain non-insurable or
hard to place risks at more equitable terms for all participants in the scheme. During the current period, insurance placed
through Colonnade covers AUB Group, some of its controlled entities and some of its associates. No external parties to the
Group are part of schemes provided by Colonnade.
c) Material non-controlling interests (‘NCI’) of the Group’s controlled entities include the following:
No other NCI are material to the Group.
As at 30 June 2024
Name of controlled entity
Principal place of business
Non-
controlling
Interest
%
Profit or loss
attributed to
minority
$’000
Total NCI
balance at
year end
$’000
AUB Three Sixty Pty Limited and its controlled entities Australia and New Zealand
33.4
9,423
67,043
AUB Group NZ Limited and its controlled entities
New Zealand
–
2,714
48,031
AEI Insurance Group Pty Limited and its
controlled entities
Australia
38.7
2,100
40,817
As at 30 June 2023
Name of controlled entity
Principal place of business
Non-
controlling
Interest
%
Profit or loss
attributed to
minority
$’000
Total NCI
balance at
year end
$’000
AUB Three Sixty Pty Limited and its controlled entities Australia and New Zealand
50.3
9,086
92,494
AUB Group NZ Limited and its controlled entities
New Zealand
–
1,487
36,246
AEI Insurance Group Pty Limited and its controlled
entities
Australia
35.0
1,380
37,221
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
102
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
9
SHARES IN CONTROLLED ENTITIES (CONTINUED)
iii. The Group’s shares in controlled entities ownership at balance date is as follows:
2024
%
2023
%
Name and Interests in controlled entities:
Australian Broking
AB Phillips Group Pty Ltd and its controlled entities
57.8
58.2
Austbrokers Life Pty Ltd and its controlled entities
95.1
95.1
Adroit Holdings Pty Ltd and its controlled entities
100.0
100.0
AEI Insurance Group Pty Ltd and its controlled entities
61.3
65.0
Astute Insurance Services Pty Ltd
53.2
53.2
AUBCC Pty Ltd
90.0
–
AUB Hospitality Pty Ltd
100.0
100.0
Austbrokers Canberra Pty Ltd
100.0
100.0
Austbrokers City State Pty Ltd
55.0
60.0
Austbrokers Corporate Pty Ltd and its controlled entities
80.0
80.0
Austbrokers InterRisk Pty Ltd
51.0
51.0
Austbrokers Member Services Pty Ltd
100.0
100.0
Austbrokers RIS Pty Ltd and its controlled entities
95.0
95.0
Austbrokers RWA Pty Ltd
51.0
51.0
Austbrokers Southern Pty Ltd
51.0
51.0
Austbrokers Sydney Pty Ltd and its controlled entities
100.0
100.0
Austbrokers Trade Credit Pty Ltd
75.0
75.0
CityCover (Aust) Pty Ltd and its controlled entities (Austbrokers Comsure)
76.1
83.5
Experien Insurance Services Pty Ltd and its controlled entities
73.2
73.2
Finsura Holdings Pty Ltd and its controlled entities
70.0
70.0
Insurance Advisernet Unit Trust and its controlled entities
53.0
52.0
Insurance Advisernet New Zealand Unit Trust and its controlled entities
53.0
52.0
JUA Holdings Pty Ltd and its controlled entity
78.9
–
McNaughton Gardiner Insurance Brokers Pty Ltd
75.0
75.0
Northlake Holdings Pty Ltd (Country Wide Insurance Brokers WA) and its controlled entities
89.1
89.1
Terrace Insurance Brokers Pty Ltd and controlled entity
50.5
50.5
The Insurance Alliance Pty Ltd and its controlled entity
100.0
100.0
Agencies
Austagencies Pty Ltd and its controlled entities
100.0
100.0
AUB Three Sixty Pty Ltd and its controlled entities
66.6
49.7
New Zealand Broking
AUB Group NZ Limited and its controlled entities
100.0
100.0
Brokerweb Risk Services Limited and its controlled entities
72.1
72.1
Runacres Limited and its controlled entities
67.0
67.0
Support Services
AUB Group Services Pty Ltd
100.0
100.0
Austbrokers Investments Pty Ltd
100.0
100.0
Colonnade Pte Ltd
100.0
100.0
International
Ludgate Limited and its controlled entities
100.0
100.0
Ludgate US Corp and its controlled entity
100.0
100.0
AUB GROUP ANNUAL REPORT 2024
103
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
10
CASH AND CASH EQUIVALENTS
Cash and cash equivalents, and cash and cash equivalents - trusts (‘Trust Cash’), in the Consolidated Statement of Financial
Position comprise cash at bank, in hand and short-term deposits with an original maturity of three months or less.
Although there is a concentration of cash and cash equivalents held with major banks, the lifetime expected credit losses on
cash and cash equivalents are insignificant.
Trust cash relates to cash held for insurance premiums received from policyholders which will ultimately be paid to insurers,
claims floats and amounts held in escrow for specified purposes. Trust cash cannot be used to meet business obligations/
operating expenses other than payments to underwriters and /or refunds to policyholders.
For the purposes of the Consolidated Statement of Cash Flows, cash and cash equivalents as defined above are shown net of
outstanding bank overdrafts.
Foreign currency
Transactions in foreign currencies are translated to the respective functional currencies of the entities at exchange rates
at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are
retranslated to the functional currencies at the exchange rate at that date. The foreign currency gain or loss on monetary items
is the difference between amortised cost in the functional currency at the beginning of the year, adjusted for payments during
the year, and the amortised cost in foreign currency translated at the exchange rate at the end of the year.
The assets and liabilities of foreign operations are translated to Australian dollars at exchange rates at the reporting date.
The income and expenses of foreign operations are translated to Australian dollars at exchange rates on the dates of the
transactions. Foreign currency differences are recognised in other comprehensive income and presented in the foreign currency
translation reserve, in equity. If the foreign operation is not a wholly owned controlled entity, then the relevant proportion of the
translation difference is allocated to non-controlling interests.
2024
$’000
2023
$’000
Cash and cash equivalents
377,366
260,352
Cash and cash equivalents - Trust
908,950
936,369
Total cash and cash equivalents
1,286,316
1,196,721
AUB GROUP ANNUAL REPORT 2024
104
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
10
CASH AND CASH EQUIVALENTS (CONTINUED)
a.
Cashflow from operating activities
2024
$’000
2023
$’000
Profit after tax for the period
167,677
91,623
Equity accounted (profits) after income tax
(36,154)
(35,690)
Dividends/trust distributions received from associates
37,973
38,203
Amortisation of intangibles
49,999
35,920
Amortisation of capitalised project costs
3,901
3,469
Amortisation and impairment of right-of-use asset
14,302
12,024
Depreciation of fixed assets
4,672
3,876
Share options expensed
8,678
10,590
Adjustment to contingent consideration on acquisitions
(34,139)
26,920
Remeasurement of put option and interest unwind
(1,463)
3,620
Finance charge on movement in trust minority interests
12,755
10,999
(Profit) from sale of associates, controlled entities and broking portfolios
(2,443)
(34,599)
(Profit) on deconsolidation
(4,154)
(4,447)
Interest unwind on contingent consideration
15,404
12,126
Adjustments to fair value of associates and goodwill
(15,551)
(29,930)
Impairment of intangibles
–
6,342
Changes in assets and liabilities
(Increase) in trade and other receivables
46,966
(46,724)
(Decrease)/increase in trade and other payables
(49,065)
(19,239)
Increase in deferred revenue from customers
101
10,149
Increase/(decrease) in trust payables
(10,717)
109,919
(Decrease)/increase in provisions
(108,964)
(6,054)
Change in deferred tax
(7,910)
(13,081)
Increase/(decrease) in provision for tax
(9,868)
16,222
Net cash flows from operating activities
82,000
202,238
AUB GROUP ANNUAL REPORT 2024
105
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
10
CASH AND CASH EQUIVALENTS (CONTINUED)
b.
Changes in liabilities arising from financing activities
Listed below are the disclosure requirements in respect of the changes in the liabilities arising from financing activities, including
both changes arising from cash flows and non-cash changes (such as foreign exchange gains or losses).
Year ended 30 June 2024
1 July
2023
$’000
Cash flows
$’000
Foreign
exchange
movement
$’000
New
Acquisitions/
interest
unwind
$’000
Transfers
$’000
New
consolidated
entity/
deconsolidation
$’000
30 June
2024
$’000
Current interest-bearing loans and
borrowings (excluding items listed below)
19,202
(15,103)
(51)
–
–
657
4,705
Current lease liability
14,743
(14,325)
18
1,100
12,190
429
14,155
Current unsecured loan - other
567
37
–
702
–
108
1,414
Non-current interest-bearing loans and
borrowings
564,312
75,999
(506)
–
–
– 639,805
Non-current lease liability
62,134
–
(74)
14,503
(12,190)
163
64,536
Non-current unsecured loan - other
149
(72)
–
–
–
–
77
Total liabilities from financing activities
661,107
46,536
(613)
16,305
–
1,357 724,692
Year ended 30 June 2023
1 July
2022
$’000
Cash flows
$’000
Foreign
exchange
movement
$’000
New
Acquisitions/
interest
unwind
$’000
Transfers
$’000
New
consolidated
entity/
deconsolidation
$’000
30 June
2023
$’000
Current interest-bearing loans and
borrowings (excluding items listed below)
8,388
10,624
–
195
–
(5)
19,202
Current lease liability
8,187
(10,255)
72
1,473
13,243
2,023
14,743
Current unsecured loan - other
553
14
–
–
–
–
567
Non-current interest-bearing loans and
borrowings
38,630
519,934
416
5,355
–
(23) 564,312
Non-current lease liability
18,752
–
510
20,915
(13,243)
35,200
62,134
Non-current unsecured loan - other
231
(82)
–
–
–
–
149
Total liabilities from financing activities
74,741
520,235
998
27,938
–
37,195
661,107
AUB GROUP ANNUAL REPORT 2024
106
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
11
TRADE AND OTHER RECEIVABLES
Trade and other receivables which generally have 30-day credit terms, are initially recognised at fair value and subsequently
measured at amortised cost.
The Group acts as an agent in the collection of amounts due from customers for premiums and amounts payable to insurers on
broking/agency operations, as the Group is not liable for the underlying insurance contract. As such these balances do not meet
the definition of a financial liability or financial asset respectively. The Group recognises amounts due from customers in relation
to uncollected fees and commissions due to the Group for services rendered, adjusted for the expected credit loss. The Group
only recognises amounts due to insurers for premiums when collected but yet to be transferred to the insurer.
Amounts due from premium funding operations include amounts due from policyholders in respect of insurances arranged
by a controlled entity. These arrangements with policyholders have repayment terms up to 12 months from policy inception.
The individual funding arrangements are used to pay insurers. Should policyholders default under the premium funding
arrangement, the insurance policy is cancelled by the insurer and a refund issued which is credited against the amount due.
The Group’s credit risk exposure in relation to these receivables is limited to commissions and fees charged plus any additional
interest charged under the premium funding arrangement.
Other receivables are loan receivables and short-term intercompany funding to related entities.
The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate
cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the
financial assets, or both. Financial assets classified and measured at amortised cost are held within a business model with the
objective to hold financial assets in order to collect contractual cash flows.
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised
when:
a. the rights to receive cash flows from the asset have expired;
b. the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without
material delay to a third party under a ‘pass-through’ arrangement; or
c. the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the
risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset,
but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset and has neither transferred or retained
substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of
the Group’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred
asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration received
that the Group could be required to repay.
As at 30 June 2024
Due not later
than 6 months
$’000
6 months to
no later than
1 year
$’000
Later than
1 year and
not later than
5 years
$’000
Later than
5 years/
No maturity
$’000
Total
$’000
Trade receivables
32,970
–
462
–
33,432
Amount due from customers on broking / agency
operations
199,584
374
–
–
199,958
Amount due from clients in respect of premium
funding
3,097
–
–
–
3,097
Related party receivables (Note 25)
5,462
15
3,238
6,470
15,185
Prepayment and other receivables
39,570
5,868
4,390
–
49,828
Total trade and other receivables
280,683
6,257
8,090
6,470
301,500
AUB GROUP ANNUAL REPORT 2024
107
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
11
TRADE AND OTHER RECEIVABLES (CONTINUED)
As at 30 June 2023
Due not later
than 6 months
$’000
6 months to
no later than
1 year
$’000
Later than
1 year and
not later than
5 years
$’000
Later than
5 years/
No maturity
$’000
Total
$’000
Trade receivables
59,422
–
476
–
59,898
Amount due from customers on broking/ agency
operations
186,265
–
–
–
186,265
Amount due from clients in respect of premium
funding
2,038
–
–
–
2,038
Related party receivables (Note 25)
7,069
–
3,195
6,662
16,926
Prepayment and other receivables
53,506
4,779
6,953
–
65,238
Total trade and other receivables
308,300
4,779
10,624
6,662
330,365
Expected Credit Losses (‘ECL’)
For trade receivables and other receivables, an allowance is made for anticipated losses based upon historical information,
adjusted for forward-looking information, and specific credit information of counterparties where available.
Amounts overdue by more than (a) Brokers - 30 days, (b) Support services entities and Underwriters - 90 days and (c) Wholesale
brokers - 180 days are considered to have a significance increase in credit risk.
Expected credit losses are recorded on receivables, including trade and other receivables, interest-bearing loan assets,
investments and other financial assets. The Group applies the simplified approach to its trade receivables, and measures the
loss allowance at an amount equal to lifetime expected credit losses.
For amounts due from customers of broking/agency operations and amounts due from clients in respect of premium funding
operations, an allowance is made for anticipated lapses and cancellations based upon historical information, adjusted for
forward-looking information.
ECL allowance included in trade and other receivables (current) above using the 12-month simplified approach as follows:
–
Australian and New Zealand Brokers: the provision for lapses 5.0% (2023: 5.0%) provides an amount for expected
cancellations and loss of commissions and fees (amounts due from broking operations, debtors) based on Group wide
historic data. For debtors over 90 days, due to the risk of cancelation by the insurer, provisioning is made at 100%.
–
Agencies: provision at 50% for debtors over 90 days, and 100% for debtors over 120 days in line with their binding
arrangements to generally cancel policies past due by 90 days.
–
International: the provision for lapses 3.6% (2023: 5.6%) provides an amount for expected cancellations and loss of
commissions and fees (amounts due from broking operations, debtors) based on Group wide historic data. For debtors over
180 days, due to the risk of cancelation by the syndicate, provisioning is made at 100%.
Commercial loans to minority shareholders and associates are secured over the shares of the non AUB Group shareholders of
the borrower. Other related party loans are generally provided to a related party for purchase of shares in a controlled entity or
associate, where the shares acquired form collateral in the loan deed. All other loans and receivables, including intercompany
and short-term loans to controlled entities and associates are unsecured. The valuation of shares held as security exceed the
total loans receivable for the years ended 30 June 2024 and 30 June 2023.
The Group recognises under AASB 15 a component of revenue representing the significant risk of reversal on issued policies.
This is within the Group’s deferred revenue balance within the Consolidated Statement of Financial Position. In addition to
requirements under AASB 15, forward looking elements under ECL provisioning is required. This is presented in the table
below, along with ECL provisioning on assets not impacted by AASB 15. As such changes in forward looking elements of ECL
provisioning have an impact on the table below.
2024
$’000
2023
$’000
Opening balance 1 July
5,196
316
ECL from acquisition of a controlled entity
–
3,780
Movements during the year
(2,068)
1,100
Total expected credit loss
3,128
5,196
AUB GROUP ANNUAL REPORT 2024
108
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
12
FINANCIAL AND OTHER ASSETS
Foreign Exchange Forward Contract Asset
The Group uses forward currency contracts as hedges of its exposure to foreign currency risk in forecast transactions. Such
derivative financial instruments are initially recognised at fair value of the date of which a derivative contract is entered into
and are subsequently remeasured at fair value. If there is any ineffective portion, it is recognised immediately in profit or loss.
Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
For the purposes of hedge accounting, hedges are classified as:
–
Fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability.
–
Cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a particular risk
associated with a recognised asset of liability or a highly probable forecast transaction.
At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which it wishes
to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation
includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the Group will
assess whether the hedging relationship meets the hedge effectiveness requirements.
A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements:
–
There is ‘an economic relationship’ between the hedged item and the hedging instrument;
–
The effect of credit risk does not ‘dominate the value changes’ that result from that economic relationship; and
–
The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group
actually hedges and the quality of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
The Group designates only the spot element of forward contracts as a hedging instrument. The forward element is recognised
in OCI and accumulated in a separate component of equity under cost of hedging reserve.
The amounts accumulated in OCI are accounted for depending on the nature of the underlying hedged transaction. If the hedged
transaction subsequently results in the recognition of a non-financial item, the amount accumulated in equity is removed from
the separate component of equity and included in the initial cost or other carrying amount of the hedged asset or liability. This is
not a reclassification adjustment and will not be recognised in OCI for the period.
Other Assets
Other assets are contract assets, secured loans, minor investments in listed equities and defined benefit scheme asset. For
AUB’s policy on defined benefit schemes refer to Note 16.
Contract assets represent assets recognised at fair value acquired on acquisition of a subsidiary in relation to expected
revenues generated by existing contracts over the next 10 years. The asset has finite life and is amortised over the term of the
contract (10 years).
As at 30 June 2024
Due not
later than
6 months
$’000
6 months
to no later
than 1 year
$’000
Later than
1 year and
not later
than 5 years
$’000
Later than
5 years /
No maturity
$’000
Total
$’000
Foreign Exchange Forward Contract asset
5,322
12,346
1,979
–
19,647
Other assets
568
562
19,922
2,494
23,546
Total financial and other assets
5,890
12,908
21,901
2,494
43,193
As at 30 June 2023
Due not
later than
6 months
$’000
6 months
to no later
than 1 year
$’000
Later than
1 year and
not later
than 5 years
$’000
Later than
5 years /
No maturity
$’000
Total
$’000
Foreign Exchange Forward Contract asset
5,628
4,603
13,303
–
23,534
Other assets
744
743
16,588
–
18,075
Total financial and other assets
6,372
5,346
29,891
–
41,609
AUB GROUP ANNUAL REPORT 2024
109
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
13
INTANGIBLE ASSETS AND GOODWILL
Capitalised project costs
Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled
by the Group are recognised as intangible assets where the following criteria are met:
i.
it is technically feasible to complete the software so that it will be available for use;
ii. management intends to complete the software and use or sell it;
iii. there is an ability to use or sell the software;
iv. it can be demonstrated how the software will generate probable future economic benefits; and
v. adequate technical, financial and other resources to complete the development and to use or sell the software are available,
and the expenditure attributable to the software during its development can be reliably measured.
Directly attributable costs that are capitalised as part of the software including eligible employee costs and an appropriate
portion of relevant overheads.
Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is ready
for use.
Research expenditure and development expenditure that do not meet the criteria above are recognised as an expense as
incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.
Assessments are made on a project by project basis on the expected life of the intangible with a maximum useful life of 5 years
adopted by the Group. Costs associated with maintaining software programs and Software-as-a-Service (‘SaaS’) are recognised
as an expense as incurred.
Software-as-a-Service (‘SaaS’) arrangements
SaaS arrangements are service contracts providing the Group with the right to access the cloud provider’s application software
over the contract period. As such the Group does not receive a software intangible asset at the contract commencement date.
A right to receive future access to the supplier’s software does not, at the contract commencement date, give the customer the
power to obtain the future economic benefits flowing from the software itself and to restrict others’ access to those benefits.
The following outlines the accounting treatment of costs incurred in relation to SaaS arrangements:
–
Recognise as an operating expense over the term of the service contract:
–
Fee for use of application software;
–
Support and maintenance services;
–
Program/Project management;
–
Integration; and
–
Customisation costs.
–
Recognise as an operating expense as the service is received (as considered distinct services):
–
Configuration costs;
–
Data conversion and migration costs;
–
Testing costs; and
–
Training costs.
Costs incurred for the development of software code that enhances or modifies, or creates additional capability to, existing
on-premise systems and meets the definition of and recognition criteria for an intangible asset are recognised as intangible
software assets.
Goodwill
Goodwill on acquisition is initially measured at cost, being the excess of the cost of the business combination over the acquirer’s
interest in the fair value of the identifiable net assets acquired at the date of acquisition. Following initial recognition, goodwill is
measured at cost less any accumulated impairment losses and is not amortised.
As at the acquisition date, any goodwill acquired is allocated to each of the cash-generating units expected to benefit from the
combination’s synergies. Goodwill is reviewed for impairment annually, or more frequently if events or changes in circumstances
indicate that the carrying value may be impaired. Impairment is determined by assessing the recoverable amount of the
cash-generating unit to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than the
carrying amount, an impairment loss is recognised.
Where goodwill forms part of a cash-generating unit and part of the operation of that unit is disposed, the goodwill associated
with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal
of the operation. Impairment losses recognised for goodwill are not subsequently reversed.
AUB GROUP ANNUAL REPORT 2024
110
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
13
INTANGIBLE ASSETS AND GOODWILL (CONTINUED)
Intangible assets - Insurance Broking Register and Brand Name
Identifiable intangible assets acquired separately or in a business combination are initially measured at cost. The cost of an
intangible asset acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition,
intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment. Internally generated
intangible assets are not capitalised and expenditure is charged against profits in the year in which the expenditure is incurred.
The useful lives of these intangible assets are assessed to be finite for insurance broking registers and indefinite for brand name.
Intangible assets with finite lives are amortised over the useful life, currently estimated to be 10 and 12 years (2023: 10 and
12 years) for broking portfolios/client relationships and financial services businesses (life risk), and assessed for impairment
whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation
method for an identifiable intangible asset with a finite useful life is reviewed at least at each financial year end. Changes in the
expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted
for by changing the amortisation period or method, as appropriate, which is a change in accounting estimate. The amortisation
expense on identifiable intangible assets with finite lives is recognised in the expense category of the Consolidated Statement of
Comprehensive Income consistent with the function of the intangible asset.
Gains or losses arising from derecognition of an identifiable intangible asset are measured as the difference between the net
disposal proceeds and the carrying amount of the asset and are recognised in the Consolidated Statement of Comprehensive
Income when the asset is derecognised.
Year ended 30 June 2024
Capitalised
project costs
$’000
Goodwill
$’000
Insurance
broking
registers
$’000
Brand name
$’000
Total
$’000
Cost
Balance at the beginning of the year
11,719
1,443,434
547,028
58,863
2,061,044
Net additions/(disposals) not related to
consolidation/(deconsolidation)
4,405
–
2,606
–
7,011
Acquisition of controlled entities
–
117,290
40,442
–
157,732
Deconsolidation of controlled entities
(13)
(16,731)
(6,354)
–
(23,098)
Impairments/write-off during the year
–
–
–
–
–
Translation of foreign exchange rate movements
231
(2,227)
(2,607)
(330)
(4,933)
Total intangibles at cost
16,342
1,541,766
581,115
58,533
2,197,756
Amortisation
Balance at the beginning of the year
4,963
–
99,240
–
104,203
Deconsolidation of controlled entities
(13)
–
(1,650)
–
(1,663)
Amortisation during the year
4,063
–
49,999
–
54,062
Translation of foreign exchange rate movements
212
–
(1,952)
–
(1,740)
Total accumulated amortisation
9,225
–
145,637
–
154,862
Summary
Net carrying amount at beginning of year
6,756
1,443,434
447,788
58,863
1,956,841
Net carrying amount at end of year
7,117
1,541,766
435,478
58,533
2,042,894
AUB GROUP ANNUAL REPORT 2024
111
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
13
INTANGIBLE ASSETS AND GOODWILL (CONTINUED)
Year ended 30 June 2023
Capitalised
project costs
$’000
Goodwill
$’000
Insurance
broking
registers
$’000
Brand name
$’000
Total
$’000
Cost
Balance at the beginning of the year
5,538
559,847
123,081
–
688,466
Net additions/(disposals) not related to
consolidation/(deconsolidation)
4,714
–
4,307
–
9,021
Acquisition of controlled entities
1,026
850,707
402,010
54,886
1,308,629
Deconsolidation of controlled entities
(11)
(9,014)
(1,604)
–
(10,629)
Impairments/write-off during the year
(201)
(1,219)
(4,922)
–
(6,342)
Translation of foreign exchange rate movements
653
43,113
24,156
3,977
71,899
Total intangibles at cost
11,719
1,443,434
547,028
58,863
2,061,044
Amortisation
Balance at the beginning of the year
2,299
–
63,657
–
65,956
Deconsolidation of controlled entities
–
–
(1,604)
–
(1,604)
Amortisation during the year
2,365
–
35,920
–
38,285
Translation of foreign exchange rate movements
299
–
1,267
–
1,566
Total accumulated amortisation
4,963
–
99,240
–
104,203
Summary
–
–
–
–
–
Net carrying amount at beginning of year
3,239
559,847
59,424
–
622,510
Net carrying amount at end of year
6,756
1,443,434
447,788
58,863
1,956,841
Intangible assets are attributable to the following controlled entities:
2024
$’000
2023
$’000
i) Goodwill
Ludgate Limited, Ludgate US Corp and their controlled entities
715,817
689,708
AUB Group NZ Limited and its controlled entities
132,933
109,325
Insurance Advisernet Unit Trust and Insurance Advisernet
New Zealand Unit Trust
116,565
117,109
AUB Three Sixty Pty Ltd and its controlled entities
122,230
115,319
Austagencies Pty Ltd and its controlled entities
100,569
79,232
AEI Insurance Group Pty Ltd and its controlled entities
83,025
75,143
Austbrokers Corporate Pty Ltd and its controlled entities
68,371
58,867
Adroit Holdings Pty Ltd and its controlled entities
39,120
41,954
Experien Insurance Brokers Pty Ltd
18,596
18,538
Other controlled entities
144,540
138,239
Total goodwill
1,541,766
1,443,434
2024
$’000
2023
$’000
ii) Insurance Broking Registers
Remaining amortisation period
(years)
2024
2023
Ludgate Limited and its controlled entities
10.3
11.3
303,545
329,021
AUB Group NZ Limited and its controlled entities
6.2
5.5
44,600
36,270
AEI Insurance Group Pty Ltd and its controlled entities
8.5
9.5
26,799
29,952
Austbrokers Corporate Pty Ltd and its controlled entities
8.3
5.5
18,559
14,382
Other controlled entities
41,975
38,163
Total insurance broking register
435,478
447,788
AUB GROUP ANNUAL REPORT 2024
112
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
14
IMPAIRMENT ASSESSMENT
Impairment of non-financial assets other than Investment in Associates, Intangibles and Goodwill
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication
exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable
amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for
an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets
or groups of assets and the asset’s value in use cannot be estimated to be close to its fair value. In such cases the asset
is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset or
cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written
down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating
to continuing operations are recognised in those expense categories consistent with the function of the impaired asset.
If indication of impairment exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed
only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment
loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increased
amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been
recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at its revalued
amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted
in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining
useful life.
No such indicators were noted in the current or prior year and subsequently no impairments recorded.
Investments in Associates, Intangibles and Goodwill
The Group assesses the impairment of investments in associates, intangibles and goodwill as a significant judgement and
material to the financial statements.
The recoverable amount of the intangible assets and goodwill is determined based on the higher of the estimate of fair value
of the cash generating unit (‘CGU’) to which they relate less costs to sell or its value in use. In determining fair value, each
controlled entity or associate is considered a separate CGU or grouped into a single CGU for impairment testing where cash
inflows are interdependent and have similar characteristics.
The CGU represents the lowest level within the Group at which the goodwill is monitored for internal management purposes.
Australian Broking entities, New Zealand entities and Support Services entities are viewed as separate CGU’s at the entity level
for impairment purposes, whilst Agency businesses have been disaggregated into two CGU’s and International businesses have
been aggregated into one CGU.
To conduct impairment testing, the Group compares the carrying value with the recoverable amount of each CGU.
The recoverable amount is based on the higher of:
–
Fair value - based on maintainable earnings; or
–
Value in use - based on a discounted cash flow model.
The Group conducts testing over multiple phases, throughout the year and with several layers of review:
1. Half year impairment review: Review of all CGUs at 31 December for indicators of impairment including qualitative
questionnaires to each Group representative which has oversight of the respective CGU.
2. Annual Impairment testing:
–
Phase I - Targeting: Fair value measurement of all CGUs and comparison to carrying value as at 31 March to determine
if any entities show a potential impairment or low headroom. Testing is conducted irrespective of any indicators of
impairment (or lack thereof). Earnings before interest and tax (‘EBIT’) is averaged over 3 years to consider the impact
of timing differences, however stress testing is conducted using (1) a 5% decline in EBIT, (2) stressed multiples, and
(3) a single year EBIT.
–
Phase II – Screening: Update of prior year Discounted Cash Flow (‘DCF’) models where an entity continues to rely on a
value in use model to support its carrying value and current year results meet or exceed prior year projections.
–
Phase III – Detailed Review: Review of entities identified in Phase I and II as having potential impairment issues
including creation of new DCFs, supporting normalisations or plans to rectify profitability concerns.
–
Phase IV – Year End Refresh: Review of following year budgets, and current year actuals to ensure no significant
changes to the reporting date at 30 June compared to the interim testing date 31 March. Low head room entities are
revisited to mitigate the risk of an undetected impairments.
AUB GROUP ANNUAL REPORT 2024
113
14
IMPAIRMENT ASSESSMENT (CONTINUED)
Investments in Associates, Intangibles and Goodwill (continued)
2. Watchlist Monitoring: Entities with low headroom are monitored at Board Audit and Risk Committee (‘BARC’) level and
specifically considered during half year and year end testing given sensitivity to impairment.
3. Governance: Impairment testing is conducted by the Group Financial Control team and reviewed at 3 levels, as follows:
(1) Group Head of Financial Control/Deputy CFO (2) Chief Financial Officer, and (3) BARC.
The Group maintains a policy to seek independent advice on multiples every 3 years from an appropriate valuations firm.
The Group sought independent advice in 2022 to determine the appropriate EBIT multiple used to determine fair value.
The extensive impairment testing and monitoring exceed requirements under accounting standards and reflect the
materiality of the balances to the Group and the low risk appetite of management and the BARC.
Key assumptions for the fair value methodology are as follows:
2024
2023
Fair value is based on estimates of maintainable earnings. The appropriate pre-tax maintainable
earnings for each CGU is multiplied by a multiple from within the range, depending on the type of
business carried out by the CGU.
8-15 times
8-15 times
The risk free rate (before risk margin).
4.28%
3.65%
Multiples have been determined after factoring in the following assumed sustainable long-term
profit growth.
up to 3%
up to 3%
Value in use
Where the Value In Use methodology produces a higher valuation than Fair Value Less Costs of Disposal (‘FVLCD’), this
valuation is used for the Recoverable Amount. This measurement takes into account the expected Discounted Cash Flows
(‘DCF’) for the next 5 years based on the forecast profitability. The valuation takes into account the weighted average cost
of capital (‘WACC’) for those CGUs and also looks at the expected long-term growth rate with a terminal value calculation at
the end of the intermediary cash flows. This methodology will result in a better estimated valuation for entities where historic
performance may not factor in the medium and long-term expected growth from this business.
During the current year, one CGU (2023: no CGUs) were valued using the value in use methodology. The fair value measurements
were categorised as level 3 fair value based on the lack of observable inputs in the valuation technique used (see Note 19).
Key assumptions for the value in use methodology are as follows:
2024
2023
Post-tax discount rates (WACC).
9.21%-13.58%
N/A
Short-term revenue growth rate – used in discount cash flow assumptions (1-5 years).
5.0%-8.0%
N/A
Long-term revenue growth rate.
2.0%-3.0%
N/A
Low headroom
Entities are considered to have low headroom if headroom is less than $500k and 5% of total carrying value (whichever is lower)
or show impairment using any of the following: (1) stressed multiple (2) 5% reduction in EBIT or (3) single current year profit
(to ensure 3-year average does not hide a decline in profitability).
No reasonably possible change in key assumptions would result in the recoverable amount of a CGU that is material to the
Group’s total intangible assets, goodwill and investment in associates, being significantly less than the carrying value included in
the accounts.
When making an acquisition, the Group may pay a deposit and defer a component of the purchase price to be determined
based on future financial results. Estimates of the final acquisition cost are made and recognised in the financial statements.
An estimate of the contingent consideration is made at the time of acquisition and is reviewed and varied at balance date if
estimates change or actual payments are made. This adjustment can be a loss (if increased) or a profit (if reduced). Where an
estimate is reduced an offsetting adjustment (impairment) is generally made to the carrying value.
During the current year, due to current market conditions, further adjustments to contingent considerations in respect of current
and prior year acquisitions resulted in a net reduction (previous year reduction) to the estimates previously recognised by the
Consolidated Group of $40.2m (2023: $26.9m increase). Where the revised contingent consideration estimates are below the
original estimated contingent consideration payments, a corresponding and offsetting impairment charge may be recognised.
The reduction in contingent consideration lead to an impairment of $nil (2023: $nil).
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
114
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
14
IMPAIRMENT ASSESSMENT (CONTINUED)
Impairment - current year
Phase I - Targeting
Phase 3 -
Detailed review
Phase 4 - Low
Head Room
No impairment
Impairment
All other entities
1 Entity
3 Entities
Phase 2 -
Screening
No cash generating unit were assessed to be impaired during the current year. Two CGU remain on the watchlist due to low
headroom. One CGU was added to the watchlist.
Impairment - previous year
Phase I - Targeting
Phase 3 -
Detailed review
Phase 4 - Low
Head Room
No impairment
Impairment
All other entities
2 Entities
2 Entities
Phase 2 -
Screening
Two cash generating unit were assessed to be impaired during the current year by $6.34m. One CGU remains on the watchlist
due to low headroom. One CGU was removed from the watchlist. No CGUs were added to the watchlist.
15
TRADE AND OTHER PAYABLES
Liabilities for trade creditors and other amounts are carried at amortised cost which is the fair value of the consideration to be
paid in the future for goods and services received, whether or not billed to the entity. Payables to related parties are carried at
the principal amount. Interest, when charged, is recognised as an expense on an accrual basis. Payables are normally settled on
90 day terms.
The Group recognises amounts due to insurers for premiums collected but yet to be transferred to the insurer.
As at 30 June 2024
Due not later
than 6 months
$’000
6 months to
no later than
1 year
$’000
Later than
1 year and
not later than
5 years
$’000
Later than
5 years/No
maturity
$’000
Total
$’000
Trade payables and accruals
82,194
–
–
–
82,194
Amount payable on broking/agency operations
944,582
–
–
–
944,582
Related party payables
2,079
–
–
–
2,079
Other payables
15,263
–
–
–
15,263
Total trade and other payables
1,044,118
–
–
–
1,044,118
AUB GROUP ANNUAL REPORT 2024
115
15
TRADE AND OTHER PAYABLES (CONTINUED)
As at 30 June 2023
Due not later
than 6 months
$’000
6 months to
no later than
1 year
$’000
Later than
1 year and
not later than
5 years
$’000
Later than
5 years/No
maturity
$’000
Total
$’000
Trade payables and accruals
53,782
–
–
–
53,782
Amount payable on broking/agency operations
932,983
–
–
–
932,983
Related party payables
3,387
–
–
–
3,387
Other payables
59,965
–
–
–
59,965
Total trade and other payables
1,050,117
–
–
–
1,050,117
16
PROVISIONS
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event and it
is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are
determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time
value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision
due to the passage of time is recognised as a finance cost.
Make good provision on leased premises
In accordance with the various lease agreements, the Group must restore the leased premises to a similar condition that
existed prior to leasing the premises by removing all fixed and removable partitions. A provision has been included for expected
amounts payable. Because of the long-term nature of the liability, the greatest uncertainty in estimating the provision is the cost
that will ultimately be incurred. During the year further amounts were provided for premises leased during the year. Current lease
durations range from less than 1 year to 10 years. Make good payments will only be made at the end of the lease.
Employee entitlements
Liabilities for employee entitlements to annual leave and other current entitlements are accrued at amounts calculated on the
basis of current wage and salary rates, including package costs and on-costs. Liabilities for non-accumulating sick leave are
recognised when the leave is taken and are measured at the rate paid or payable. Liabilities for employee entitlements to long
service leave, which are not expected to be settled within twelve months after balance date, are accrued at the present value
of the future amounts to be made in respect of services provided by employees up to the reporting date using the projected
unit credit method. Consideration is given to expected future wage and salary level, experience of employee departures and
periods of service. The discount factor applied to all such future payments is determined using high quality corporate bond rates
attaching as at the reporting date, with terms to maturity that match, as closely as possible, estimated future cash outflows. Any
contributions made to the accumulated superannuation funds by entities within the Group are charged against profits when due.
Defined benefit plan liability
The Group operates two defined benefit pension plans in the UK. All of the plans are final salary pension plans, which provide
benefits to members in the form of a guaranteed level of pension payable for life. The level of benefits provided depends on
members’ length of service and their salary in the final years leading up to retirement. Defined benefit schemes are funded,
with assets of the scheme held separately from those of the Group, in separate trustee administered funds. Defined benefit
scheme assets are measured at fair value and liabilities are measured by independent actuaries using the projected unit credit
method. The actuarial valuations are obtained at least triennially and are updated at each balance sheet date. If the present
value of defined benefit obligations at the reporting date is less/more than the fair value of plan assets at that date, the plan has
a surplus/deficit respectively which is presented in the Consolidated Statement of Financial position. The Group recognises
a plan surplus as a defined benefit plan asset only to the extent that it is able to recover the surplus either through reduced
contributions in the future or through refunds from the plan. The net interest cost is calculated by applying the discount rate
to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit
expense in the statement of profit or loss. Remeasurement gains and losses arising from experience adjustments and changes
in actuarial assumptions are recognised immediately in the statement of financial position with a corresponding debit or
credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or
loss in subsequent periods. Changes in the present value of the defined benefit obligation resulting from plan amendments or
curtailments are recognised immediately in profit or loss as past service costs.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
116
16
PROVISIONS (CONTINUED)
Defined benefit plan liability (continued)
As previously announced, on 2 November 2023, the Group entered into a resolution with the U.S. Department of Justice (DOJ) in
terms of which Tysers Insurance Brokers Limited (Tysers) agreed to pay the DOJ a total of USD 46.59m in connection with the
DOJ’s investigation into Tysers and/or its employees, agents and associated persons in relation to the conduct of business in
Ecuador between 2013-2017. This agreement was subsequently entered into record by the U.S. District Court for the Southern
District of Florida, and the agreed payment settled by the Group with the DOJ.
The conduct occurred prior to AUB’s ownership of Tysers and, as a result of the previously reported contractual protections and
amounts provided for upon acquisition of Tysers in AUB’s Financial Report for the year ended 30 June 2023, the settlement
payment had no material impact to the current period Net Profit After Tax.
Year ended 30 June 2024
Employee
entitlements
$’000
Make good
provision
$’000
Other general
provisions
$’000
Total
$’000
Balance at the beginning of the year
126,955
3,951
79,116
210,022
Payments made during the year
(62,512)
(617)
(68,502)
(131,631)
Movements during the year
21,542
207
2,004
23,753
Foreign exchange rate movements
7,147
199
(3,485)
3,861
Balance at the end of the year
93,132
3,740
9,133
106,005
Current provisions
85,298
185
603
86,086
Non-current provisions
7,834
3,555
8,530
19,919
Balance at the end of the year
93,132
3,740
9,133
106,005
Year ended 30 June 2023
Employee
entitlements
$’000
Make good
provision
$’000
Other general
provisions
$’000
Total
$’000
Balance at the beginning of the year
31,414
2,195
–
33,609
Payments made during the year
(18,690)
–
(729)
(19,419)
Movements during the year
108,766
1,664
77,152
187,582
Foreign exchange rate movements
5,465
92
2,693
8,250
Balance at the end of the year
126,955
3,951
79,116
210,022
Current provisions
123,476
1,955
79,116
204,547
Non-current provisions
3,479
1,996
–
5,475
Balance at the end of the year
126,955
3,951
79,116
210,022
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
117
17
INTEREST-BEARING LOANS AND BORROWINGS
Interest-bearing liabilities are initially recognised at fair value of the consideration received, net of any directly attributable
transaction costs. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost.
Gains and losses are recognised in profit or loss when the liabilities are derecognised. Borrowing costs are amortised over the
term of the loans.
Group Borrowing facilities as at 30 June 2024
On 24 January 2024, the Group refinanced its existing $675.0m syndicated debt facility. The new facility consists of:
–
Tranche A: AUD term facility of $550.0m; and
–
Tranche B: multi-currency revolving credit facility of $300.0m.
At 30 June 2024 the total outstanding facility balance is $550.0m (30 June 2023: $520.5m).
AUB Group Limited’s borrowing facilities are subject to financial undertakings and warranties typical of facilities of this nature
and have sub-limits for various purposes, including acquisitions.
A small number of controlled entities within the Group in Australia and New Zealand have negotiated facilities with other banks.
During the current and prior period, there were no defaults or breaches of terms and conditions of any of these facilities.
2024
$’000
2023
$’000
Current
Secured bank loan
4,705
19,202
Other
1,414
567
Total interest-bearing loans and borrowings (current)
6,119
19,769
Non-current
Secured bank loan
639,805
564,312
Other
77
149
Total interest-bearing loans and borrowings (non-current)
639,882
564,461
AUB Group Limited syndicated finance facility (see below)
550,000
520,500
Commonwealth Bank
21,243
19,251
St George Bank
–
7,278
Australia and New Zealand Banking Group
19,246
8,316
Westpac Banking Corporation
39,375
–
Macquarie Bank
11,866
5,471
Other
4,271
23,414
Total secured bank loans
646,001
584,230
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
118
17
INTEREST-BEARING LOANS AND BORROWINGS (CONTINUED)
Group Borrowing facilities as at 30 June 2024
Facility
provider
Type of
Borrowing
Total
Facility
$’000
Undrawn
Amount
$’000
Amount
Utilised
$’000
Borrowing
Amount
$’000
Current
$’000
Non-
Current
$’000
Expiry Date(s)
Interest
Rate
%
Variable/
Fixed
(Var/Fix)
AUB Group Limited
Syndicated
Finance
Facility
Loan Facility
850,000
300,000
550,000
550,000
–
550,000
30/06/29
6.2 - 6.5
Var
Australia
and New
Zealand
Banking
Group
Bank
Guarantees
6,045
707
5,338
–
–
–
N/A
N/A
N/A
Facilities arranged by other controlled entities
Common-
wealth Bank
Loan facility
24,408
3,165
21,243
21,243
–
21,243
Between
28/07/2025 -
31/08/2026
7 - 8.94
Var
Hunter
Premium
Funding
Loan facility
1,190
–
1,190
1,190
997
193
Between
01/02/2025 -
14/07/2033
9.6
Var
Australia
and New
Zealand
Banking
Group
Loan Facility
19,246
–
19,246
19,246
2,560
16,686
10/12/2026
7.0
Var
Westpac
Banking
Corporation
Loan Facility
41,567
2,192
39,375
39,375
–
39,375
12/12/2025
7.0
Var
Macquarie
Bank
Loan facility
11,866
–
11,866
11,866
433
11,433
Between
01/04/2025 -
01/01/2029
7.3 - 7.9
Var
Other
Loan facility
1,863
273
1,590
1,590
715
875
Between
30/11/2024 -
31/08/2026
7 - 9.0
Var
Total
Borrowing
Facilities
956,185
306,337
649,848
644,510
4,705
639,805
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
119
17
INTEREST-BEARING LOANS AND BORROWINGS (CONTINUED)
Group Borrowing facilities as at 30 June 2023
Facility
provider
Type of
Borrowing
Total
Facility
$’000
Undrawn
Amount
$’000
Amount
Utilised
$’000
Borrowing
Amount
$’000
Current
$’000
Non-
Current
$’000
Expiry Date(s)
Interest
Rate
%
Variable/
Fixed
(Var/Fix)
AUB Group Limited
Syndicated
Finance
Facility
Loan Facility
670,500
150,000
520,500
520,500
6,000
514,500
30/09/2027
8
Var
Australia
and New
Zealand
Banking
Group
Bank
Guarantees
13,458
–
13,458
–
–
–
N/A
N/A
N/A
Facilities arranged by other controlled entities
Common-
wealth Bank
Loan facility
20,257
1,006
19,251
19,251
1,994
17,257
31/07/2023 &
01/07/2026
6 - 10
Var
Hunter
Premium
Funding
Loan facility
20,268
3,077
17,191
17,191
2,833
14,358
Between
30/11/2024 &
31/05/2028
1 - 2.75
Fixed
Australia
and New
Zealand
Banking
Group
Loan Facility
8,316
–
8,316
8,316
1,552
6,764
30/06/2032
7
Var
St George
Bank
Loan Facility
8,000
722
7,278
7,278
1,100
6,178
05/12/2024
7
Var
Macquarie
Bank
Loan facility
8,471
3,000
5,471
5,471
377
5,094
Between
01/05/2024 &
30/04/2027
3.75 -
5.2
Var and
Fixed
Other
Loan facility
7,201
1,694
5,507
5,507
5,346
161
Between
30/11/2023 &
30/06/2032 &
31/10/2025
8 - 9.1
Var
Total
Borrowing
Facilities
756,471
159,499
596,972
583,514
19,202
564,312
18
FINANCIAL LIABILITIES
Contingent and deferred consideration payable
The Group initially recognises estimated contingent and deferred consideration at fair value as part of purchase consideration
and is remeasured at fair value through profit or loss at each reporting date.
Contingent considerations terms vary between transactions but generally involves either (1) an EBIT or Revenue (fixed)
performance hurdle (generally 2-3 years) post the acquisition date (i.e. high water mark) or (2) future dated (generally 2-3 years)
EBIT or Revenue times a fixed multiples less historic payments made.
Financial liability at amortised cost
AUB recognises a financial liability in relation to units held by non-AUB parties for unit trusts controlled by the Group as the
Group does not control the distribution of profits these entities make to its beneficiaries. These liabilities are initially measured at
fair value and subsequently measured at each reporting date at amortised cost as an expense through finance costs.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
120
18
FINANCIAL LIABILITIES (CONTINUED)
Put options
AUB Group Limited entered into agreements with various shareholders of controlled entities and associates, granting options to
put shares held by those shareholders to AUB Group Limited at fair value at the date of exercise of that option. The earliest the
put option can be exercised is 5 years from the date of AUB acquiring its initial shareholding in those entities.
The Group recognises put options financial liability initially at estimated fair value of the value the Group could be required
to pay on the future exercise by holders of the put options. Refer to Note 2.1(d) for further information on measurement and
critical assumptions and for put option liability movement during the current period, refer to the Consolidated Statement of
Comprehensive Income.
After initial recognition, put options financial liability is subsequently measured at amortised cost using the effective interest
method. The Group re-estimates put options financial liability at the reporting date using the same model applied during
the initial measurement, however the discount rate is not reset as the liability is held at amortised cost. The adjustment is
recognised through the Consolidated Statement of Comprehensive Income as income or expense. Movements in the put option
liability are ultimately transferred from retained earnings to the put option reserve.
Whilst this obligation will only be payable in the event that other shareholders of controlled and associated entities put
their remaining shares to the Group, a liability has been recognised in relation to the put option. The financial liability will be
derecognised when the put option expires unexercised or an entity is disposed with the corresponding movement being
reflected in the put option reserve. At balance date there has been no indication from the non-controlling shareholders that they
wish to exit their respective businesses and put their shares to the Group.
Included in financial liabilities are the following:
As at 30 June 2024
Contingent
and Deferred
Considerations
$’000
Financial
Liability at
Amortised
Cost
$’000
Other
Liability
$’000
Put
Options
$’000
Total
$’000
Balance at the beginning of the period
193,060
58,697
10,540
11,781
274,078
Additions during the year
25,731
4,616
1,000
–
31,347
Interest unwind/Finance charge on profits of trust
minority
15,552
12,755
–
–
28,307
Remeasurement of obligations (including foreign
currency movements)
(40,344)
–
(130)
(1,463)
(41,937)
Payments made in respect of previously recognised
balances
(26,512)
(15,430)
(305)
–
(42,247)
Balance at the end of the period
167,487
60,638
11,105
10,318
249,548
As at 30 June 2023
Contingent
and Deferred
Considerations
$’000
Financial
Liability at
Amortised
Cost
$’000
Other
Liability
$’000
Put
Options
$’000
Total
$’000
Balance at the beginning of the period
17,576
51,861
5,252
8,161
82,850
Additions during the year
152,516
–
6,235
–
158,751
Interest unwind/Finance charge on profits of trust
minority
12,126
10,999
–
397
23,522
Remeasurement of obligations (including foreign
currency movements)
26,920
7,642
(757)
3,223
37,028
Payments made in respect of previously recognised
balances
(16,078)
(11,805)
(190)
–
(28,073)
Balance at the end of the period
193,060
58,697
10,540
11,781
274,078
Contingent consideration sensitivity: A 10% increase or decrease in profit or revenue of acquired entities which are subject to an
earn out would have a $4.03m charge (30 June 2023: $2.69m charge) or $16.75m release (30 June 2023: $19.36m release) to
the profit or loss respectively.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
121
18
FINANCIAL LIABILITIES (CONTINUED)
Ageing is presented below:
As at 30 June 2024
Due not later
than 6 months
$’000
6 months to
no later than
1 year
$’000
Later than 1
year and not
later than 5
years
Later than 5
years
$’000
Total
$’000
Contingent and deferred consideration payables
8,687
142,503
16,297
–
167,487
Financial liability at amortised cost
5,853
–
–
54,785
60,638
Other liability
888
889
9,328
11,105
Put options
3,223
–
7,095
–
10,318
Total financial liabilities
18,651
143,392
32,720
54,785
249,548
As at 30 June 2023
Due not later
than 6 months
$’000
6 months to
no later than
1 year
$’000
Later than
1 year and not
later than 5
years
Later than
5 years
$’000
Total
$’000
Contingent and deferred consideration payables
26,790
–
166,270
–
193,060
Financial liability at amortised cost
–
4,639
–
54,058
58,697
Other liability
743
743
9,054
–
10,540
Put options
3,223
–
8,558
–
11,781
Total financial liabilities
30,756
5,382
183,882
54,058
274,078
19
FINANCIAL INSTRUMENTS
Financial risk management objectives and policies
The Group’s principal financial instruments comprise receivables, loans, cash and short-term deposits, payables, lease liabilities,
overdrafts, interest bearing loans and borrowings, bank overdrafts and derivatives.
The Group manages its exposure to key financial risks, including interest rate and foreign currency risk in accordance with the
Group’s financial risk management policy. The objective of the policy is to support the delivery of the Group’s financial targets
whilst protecting future financial security.
AUB has entered into forward contracts to manage the foreign currency risk associated with multi-currency cash flows
generated by Tysers. AUB has designated these instruments in hedge relationships.
The Board reviews and agrees policies for managing each of these risks as summarised below. Primary responsibility for
identification and control of financial risks rests with the Board Audit and Risk Management Committee, supported by a
Management Committee, under the authority of the Board. The Board reviews and agrees policies for managing each of the
risks identified below.
Risk exposures and Responses
a. Credit Risk
Refer to Note 10 Cash and Cash Equivalents and Note 11 Trade and Other Receivables.
b. Liquidity Risk
The Company’s objective is to maintain adequate cash to ensure continuity of funding and flexibility in its day-to-day operations.
The Company reviews its cash flows weekly and models expected cash flows for the following 12 to 24 months (updated
monthly) to ensure that any stress on liquidity is detected, monitored and managed, before risks arise.
To monitor existing financial assets and liabilities as well as enable an effective control of future risks, the Group has established
comprehensive risk reporting that reflects expectations of management of expected settlement of financial assets and
liabilities. The Group’s main borrowing facilities are provided by a syndicated facility as outlined in Note 17, although some
controlled entities have arranged borrowing facilities with other banks.
The Company considers the maturity of its financial assets and projected cash flows from operations to monitor liquidity risk.
Liquidity risk arises in the event that the financial assets/liabilities are not able to be realised/settled for the amounts disclosed
in the accounts on a timely basis.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
122
19
FINANCIAL INSTRUMENTS (CONTINUED)
Risk exposures and Responses (continued)
b. Liquidity Risk (continued)
The table below reflects all contractually fixed payouts and receivables for settlement, repayments and interest resulting from
recognised financial assets and liabilities. Cash flows for financial assets and liabilities without a fixed amount or timing are
based on the conditions existing at 30 June 2024 with comparatives based on conditions existing at 30 June 2023.
2024
$’000
2023
$’000
Financial Assets
Due not later than 6 months
1,580,555
1,433,664
6 months to not later than one year
26,831
93,480
Later than one year and not later than five years
29,991
40,516
Later than five years
20,450
6,661
Total financial assets
1,657,827
1,584,321
Financial Liabilities
Due not later than 6 months
(1,101,104)
(1,126,784)
6 months to not later than one year
(181,727)
(51,293)
Later than one year and not later than five years
(737,138)
(810,477)
Later than five years
(54,785)
(54,057)
Total financial liabilities
(2,074,754)
(2,042,611)
Whilst the Group’s financial liabilities exceed its financial assets for periods past 12 months, AUB generates significant cash
flows from its long-term equity interest in its subsidiaries and associates which are excluded from the table above. This cash
flow is expected to enable AUB to meet its debts when they become due and payable. Furthermore, AUB has the ability to raise
substantial debt and capital from the market should it need.
The risk implied from the values shown in the table below, reflects a balanced view of cash inflows and outflows. Lease
liabilities, trade payables and other financial liabilities mainly originate from the financing of assets used in the Group’s ongoing
operations such as plant and equipment and investments in working capital, e.g. trade receivables and deferred payments on
broker acquisitions.
The table summarises the maturity profile of the Group’s financial assets and financial liabilities based on contractual
undiscounted payments.
c. Fair Values of recognised assets and liabilities
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to
sell the asset or transfer the liability takes places either:
–
in the principal market for the asset or liability; or
–
in the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Group.
The fair value of an asset or lability is measured using the assumptions that market participants would use when pricing the
asset or liability, assuming that the market participants act in their economic best interests.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to
measure the fair value, maximising the use of relevant observable inputs and minimising the unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair
value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
–
Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities, including cash;
–
Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or
indirectly observable;
–
Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable.
The Company’s deferred acquisition costs, contingent considerations, put option liabilities, financial liability at fair value and
contingent considerations made in relation to acquisitions of controlled entities and associated are categorised as level 3. These
are valued based on the inputs in the valuation used on new acquisitions during the reporting period, refer to Note 2.1(d), Note 7(a)
and Note 18 for measurement techniques & critical assumptions, new transactions, and movements during the year respectively.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
123
19
FINANCIAL INSTRUMENTS (CONTINUED)
Risk exposures and Responses (continued)
c. Fair Values of recognised assets and liabilities (continued)
All other assets and liabilities measured at fair value are categorised as level 2 under the three-level hierarchy reflecting the
availability of observable market inputs when estimating the fair value.
Management has assessed that the fair value of cash and short-term deposits, trade receivables, trade payables, bank
overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these
instruments.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a
current transaction between willing parties, other than in a forced or liquidation sale.
The following methods and assumptions were used to estimate the fair values:
–
The fair value of loans and other financial assets has been calculated using market interest rates;
–
Long-term fixed-rate and variable-rate receivables/borrowings are evaluated by the Group based on parameters such as
interest rates and individual creditworthiness of the customer. Based on this evaluation, allowances are taken into account
for the expected losses of these receivables. Market values have been used to determine the fair value of securities;
–
The fair value of the non-current deferred and contingent consideration payments may change as a result of changes in the
projected future financial performance of the acquired assets and liabilities. Refer to Note 18 for further information; and
–
The fair value of forward contracts is determined based on standard market valuation methodologies which use reliable
observable inputs including yield curves and market rates.
The carrying value of most of the Group’s financial assets and financial liabilities approximate their fair value due to their short-
term nature. Presented below are the book and fair value of the Group’s financial assets and liabilities:
2024
Level 1
$’000
Level 2
$’000
Level 3
$’000
Carrying Value
$’000
Fair Value
$’000
Financial assets measured at fair value
Financial assets:
Foreign Exchange Forward Contract asset
–
19,647
–
19,647
19,647
Total financial assets measured at fair value
–
19,647
–
19,647
19,647
Financial assets not measured at fair value
Cash and cash equivalents
377,366
–
–
377,366
377,366
Cash and cash equivalents - Trust
908,950
–
–
908,950
908,950
Deferred acquisition costs
–
–
14,184
14,184
14,184
Financial assets:
Other financial assets
–
23,546
–
23,546
23,886
Total financial assets not measured at fair value
1,286,316
23,546
14,184
1,324,046
1,324,386
Financial liabilities not measured at fair value
Contingent and deferred consideration payables
–
–
167,487
167,487
168,533
Other liability
–
–
11,105
11,105
11,105
Put options
–
–
10,318
10,318
9,117
Financial liability at amortised cost
–
–
60,638
60,638
105,205
Interest-bearing loans and borrowings
–
646,001
–
646,001
646,001
Total financial liabilities not measured at fair value
–
646,001
249,548
895,549
939,961
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
124
19
FINANCIAL INSTRUMENTS (CONTINUED)
Risk exposures and Responses (continued)
c. Fair Values of recognised assets and liabilities (continued)
2023
Level 1
$’000
Level 2
$’000
Level 3
$’000
Carrying Value
$’000
Fair Value
$’000
Financial assets measured at fair value
Financial assets:
Foreign Exchange Forward Contract asset
–
23,534
–
23,534
23,534
Total financial assets measured at fair value
–
23,534
–
23,534
23,534
Financial assets not measured at fair value
Cash and cash equivalents
260,352
–
–
260,352
260,352
Cash and cash equivalents - Trust
936,369
–
–
936,369
936,369
Deferred acquisition costs
–
–
13,822
13,822
13,822
Financial assets:
–
–
–
–
–
Other financial assets
–
18,075
–
18,075
18,075
Total financial assets not measured at fair value
1,196,721
18,075
13,822
1,228,618
1,228,618
Financial liabilities not measured at fair value
Contingent and deferred consideration payables
–
–
193,060
193,060
193,617
Other liability
–
–
10,540
10,540
10,540
Put options
–
–
11,781
11,781
10,228
Financial liability at amortised cost
–
–
58,697
58,697
71,139
Interest-bearing loans and borrowings
–
584,230
–
584,230
584,230
Total financial liabilities not measured at fair value
–
584,230
274,078
858,308
869,754
There were no transfers between Level 1 and Level 2 of the fair value hierarchy for the current or prior period.
No level 3 financial instrument is measured at fair value on a recurring basis.
Put Options
AUB Group Limited has entered into agreements with various financiers and shareholders of related entities and associates,
granting options to put shares held in related companies or associates to AUB Group Limited, refer to Note 18.
Other than shown on Note 18, at balance date no liability has arisen in relation to these arrangements.
d)
Market Risk
Interest rate risk
The Group’s exposure to interest rate movements relates to cash and cash equivalents held by the Group and the Group’s long-
term debt obligations. To manage interest rate risk, interest rates on borrowings are fixed for a period depending on market
conditions. This risk is minimal as the Group holds cash (including trust cash) in excess of the amount of borrowings and
therefore the Group has a hedge against interest rate rises. Loans generally have interest rate resets every three months. In the
event of interest rate rises, a net increase in interest revenue will occur due to cash and cash equivalents exceeding borrowings.
The main risk to the Group is in relation to interest rate reductions which will decrease the net income earned on cash
and cash equivalents held. The cash held to pay insurers must be held in prescribed investments (investment grade bank
accounts or deposits) and as such will be subject to market interest rate fluctuations. The Group has at balance date, the
following mix of financial assets and liabilities exposed to variable interest rate risk.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
125
19
FINANCIAL INSTRUMENTS (CONTINUED)
Risk exposures and Responses (continued)
d) Market Risk (continued)
2024
$’000
2023
$’000
Financial Assets
Cash and cash equivalents (including trust account balance)
1,286,316
1,196,721
Loans and advances - related entities
11,947
16,925
Other financial assets
–
–
Total financial assets
1,298,263
1,213,646
Financial Liabilities
Loans and other borrowings
(661,730)
(564,461)
Net exposure to interest rate movements
636,533
649,185
Due to AUB’s current positive net exposure to interest rates, fixing interest rates on borrowings has been assessed by the
Group to be unnecessary. Materially all borrowings are based on variable interest rates. See Note 17 for full details of terms and
conditions.
The Group constantly analyses its interest rate exposure. Within this analysis consideration is given to potential renewals of
existing positions, alternative financing and the term for fixing interest rates.
The following sensitivity analysis is based on the interest rate exposures in existence at year end. The sensitivity for the prior
year has been prepared on an equivalent basis. At year end, had interest rates moved as illustrated in the table below, with all
other variables held constant, post-tax profits and equity would have been affected as follows:
Post-tax profits
Higher/ (lower)
Impacts directly to equity
Higher/ (lower)
Judgements of reasonably possible movements
2024
$’000
2023
$’000
2024
$’000
2023
$’000
+1.00% (100 basis points) (2023: 1.00% (100 basis points))
6,365
6,492
–
–
-1.00% (100 basis points) (2023: -1.00% (100 basis points))
(6,365)
(6,492)
–
–
Equity securities price risk
Equity securities price risk arises from investments in equity securities. The Group does not invest in listed equity securities or
derivatives.
At year end, the Group had no material exposure to equities other than to shares in associates and controlled entities and
therefore has no exposure to price risk that has not already been reflected in the financial statements. The Group tests for
impairment annually and reviews all investments at least half yearly. The methodology for testing for impairment and results is
shown in Note 14.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in
foreign currency rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s
operating activities (when revenue or expenses is denominated in a foreign currency) and the Group’s investment in overseas
controlled entities.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
126
19
FINANCIAL INSTRUMENTS (CONTINUED)
Risk exposures and Responses (continued)
d. Market Risk (continued)
The Group maintains a hedge program to manage its foreign currency risks in relation to cash flows. Refer to Note 12 for further
information on the Group’s hedge instruments.
The majority of the foreign exchange rate exposure relates to the investment in New Zealand and Tysers operations, although
some controlled entities raise client invoices in foreign currency denominations.
The Group does not hedge its net investment in foreign operations through derivatives.
At year end, had foreign exchange rates moved as illustrated in the table below, with all other variables held constant, post-tax
profits and equity would have been affected as follows:
Post-tax profits
Higher/ (lower)
Impacts directly to equity
Higher/ (lower)
Judgements of reasonably possible movements
2024
$’000
2023
$’000
2024
$’000
2023
$’000
-10% NZD:AUD
(2,034)
(250)
(13,674)
(15,533)
+10% NZD:AUD
2,034
250
13,674
15,533
-10% GBP:AUD
10,047
9,165
(32,471)
(40,599)
+10% GBP:AUD
(10,047)
(9,165)
32,471
40,599
-10% USD:AUD
(4,396)
(2,680)
(20,822)
(18,266)
+10% USD:AUD
4,396
2,680
20,822
18,266
e. Capital Management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to
provide returns to shareholders and benefits for other stakeholders and to maintain an optimum capital structure.
In order to maintain or adjust the capital structure or in response to changes in economic conditions and the requirements of
the financial covenants, the Group may adjust the amount of dividends paid to shareholders, issue new shares or sell assets to
reduce debt if required.
The Group monitors capital using the leverage ratio. Leverage is calculated as Net Debt divided by Earnings Before Interest, Tax,
Depreciation and Amortisation (‘EBITDA’), as defined below:
–
Net Debt contains the Group’s interest-bearing loans and borrowings, plus other debt (including guarantees), the Group’s
contingent consideration*, the Group’s share of borrowings and contingent consideration in relation to associates less
uncommitted cash and cash equivalents**;
–
EBITDA includes the Group’s share of associate EBITDA plus an annualised EBITDA of controlled entities acquired during the
period, less contribution of EBITDA for any controlled entities disposed during the period.
The leverage ratios at 30 June were as follows:
2024
$’000
2023
$’000
Leverage ratio
Interest-bearing loans and borrowings
646,001
584,230
Debt like items
10,516
16,552
Contingent consideration
167,487
193,060
Interest-bearing loans, borrowings and contingent consideration payable - associates
(AUB Group share)
41,681
25,522
Contingent consideration payable for obligors*
(158,436)
(192,859)
Uncommitted cash and cash equivalents**
(228,975)
(152,870)
Total net debt
478,274
473,635
EBITDA - controlled entities
276,971
164,500
Normalisation due to M&A
33,413
50,469
EBITDA - associates (AUB Group share)
62,326
61,571
Total normalised EBITDA
372,710
276,540
Leverage ratio - Net Debt/EBITDA
1.28
1.71
*
Contingent consideration excludes contingent consideration recognised by wholly owned Group entities.
** Uncommitted cash and cash equivalents excludes trust cash accounts, and restricted cash such as to meet regulatory obligations.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
127
20 ISSUED CAPITAL
2024
$’000
2023
$’000
Issued capital opening balance
945,687
608,520
Issue of shares, net of issue costs
195,741
337,167
Issued capital closing balance
1,141,428
945,687
Shares No.
Shares No.
Number of shares on Issue (ordinary shares fully paid)
115,678,348
108,405,620
Movements in number of shares on issue
Beginning of the financial year
108,405,620
92,409,126
Issue of shares
7,272,728
6,875,102
Issue of shares - acquisition
–
9,018,974
Number of shares issued during period - options exercised
–
102,418
Total shares on issue
115,678,348 108,405,620
Weighted average number of shares on issue at end of the year
109,081,229
99,836,672
On 23 May 2024, AUB completed the placement of 7.3m shares at $27.50 to raise $200m.
On 5 July 2024, as part of Share Placement Plan AUB issued 909,086 shares at $27.50. Total amount raised was $25m.
Ordinary shares have the right to receive dividends and, in the event of winding up the company, to participate in the proceeds
from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held.
Ordinary share capital is recognised at the fair value of the consideration received by the company, net of issue costs.
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the company.
21
SHARE-BASED PAYMENT PLANS
The Group provides benefits to employees (including executive directors) of the Group in the form of share-based payments,
whereby employees render services in exchange for shares or rights over shares (‘equity-settled transactions’).
An Employee Performance Share Rights Plan is in place which provides benefits to executive directors and senior executives
through the issue of both Performance Share Rights (‘PSRs’) and Share Appreciation Rights (‘SARs’). The performance hurdles
relating to PSRs issued in previous periods remain unchanged.
The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments
at the date at which they are granted. Details of the methodology to value of PSRs is included below.
In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price
of the shares of AUB Group Limited (market conditions) if applicable.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which
the performance and /or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled
to the award (the vesting period).
Deferred STI entitlements (30% of total STI entitlement) which have been granted as PSRs, are expensed in the year they
are granted as all performance hurdles to achieve the STI have been satisfied. The granting of PSRs is used as a retention
strategy and there are no further performance hurdles required for the PSRs to be exercised with the exception of the continued
employment by the relevant Group Executive of the AUB Group up to the time the PSRs can be converted to shares. 50% of the
PSRs can be exercised 12 months after the grant date and the balance can be exercised 24 months after the grant date.
For all other PSRs, the cumulative expense recognised for equity-settled transactions at each reporting date until vesting date
reflects:
–
the extent to which the vesting period has expired; and
–
the Group’s best estimate of the number of equity instruments that will ultimately vest.
No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is
included in the determination of fair value at grant date. The Consolidated Statement of Comprehensive Income charge or
credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period and is
included in Note 4(d) Expenses.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
128
21
SHARE-BASED PAYMENT PLANS (CONTINUED)
The share-based payment reserve is used to record the value of equity benefits provided to employees and directors as part of
their remuneration.
For PSRs vesting based on earnings per share hurdles, no expense is recognised for awards that do not ultimately vest, except
for awards that are cancelled or where vesting is only conditional upon a market condition.
For PSRs issued based on Total Shareholder Return (‘TSR’) hurdles, an expense is recognised irrespective of the Group meeting
market expectations.
In the event PSRs are cancelled, or cancelled and reissued, the remaining cost for these is brought forward and recognised
immediately in addition to the expense for any reissued/new PSRs.
If the terms of an equity-settled award are modified, as a minimum, an expense is recognised as if the terms had not been
modified. In addition, an expense is recognised for any modification that increases the total fair value of the share-based
payment arrangement, or is otherwise beneficial to the employee as measured, at the date of modification.
The dilutive effect, if any, of outstanding PSRs is reflected as additional share dilution in the computation of earnings per share
(see Note 6).
Shares allocated on vesting and conversion are subject to the terms of AUB Group’s Share Trading Policy and carry full dividend
and voting rights upon allocation.
Financial
year
Grants
issued
As at
30 June
2022
Granted
during
FY23
lapsed
during
FY23
exercised
during
FY23
As at
30 June
2023
Granted
during
FY24
lapsed
during
FY24
exercised
during
FY24
As at
30 June
2024
Grant date
Earliest
exercise
date
Valuation
$
2019
4,873
–
(3,674)
(1,199)
–
–
–
–
–
31-Oct-18
31-Oct-21
10.72
2020
101,219
–
–
(101,219)
–
–
–
–
– 19-Dec-19 31-Aug-22
9.37
2020
200,000
–
–
– 200,000
–
–
– 200,000 19-Dec-19
31-Aug-24
8.91
2021
164,436
–
–
– 164,436
–
– (164,436)
– 18-Dec-20 31-Aug-23
11.27
2022
144,879
–
–
– 144,879
–
–
– 144,879 13-Nov-21
31-Aug-24
18.02
2023*
– 39,169
–
–
39,169
–
–
(19,584)
19,585 02-Sep-22 31-Aug-23
19.02
2023
– 150,146
–
–
150,146
–
–
–
150,146 29-Mar-23 31-Aug-25
20.92
2024*
–
–
–
–
– 29,353
–
–
29,353 01-Sep-23
31-Aug-24
26.79
2024
–
–
–
–
– 181,295
–
–
181,295 03-Nov-23 31-Aug-26
24.08
615,407 189,315 (3,674) (102,418) 698,630 210,648
– (184,020) 725,258
Share Appreciation Rights (SARS’s)
2022
1,016,776
–
–
– 1,016,776
–
–
– 1,016,776 11-Nov-21 31-Aug-26
3.79
*
29,353 (2023: 39,169) Equity award resulting from 30% of Deferred Short term incentive (‘DSTI’) granted as PSRs. No additional performance conditions apply to
the vesting of the PSRs with the exception of the continued employment by the relevant Group Executive. 50% of the PSRs granted in respect of the DSTI will be
exercisable one year after grant date and the balance will be exercisable 2 years after grant date.
The weighted average exercise price for all PSRs exercised in FY24 and FY23 was $NIL.
The fair value per SAR at grant date is calculated at $3.79 using the Black-Scholes formula.
All PSRs lapsed during FY23 were due to vesting conditions not being met.
The weighted average remaining contractual life for the PSRs/SARs outstanding at 30 June 2024 was 2.96 years (30 June 2023:
3.80 years).
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
129
21
SHARE-BASED PAYMENT PLANS (CONTINUED)
Vesting conditions for PSRs
The following option exercise conditions apply to all PSRs issued.
For PSRs issued in FY20, FY21 and FY22, 60% are subject to an average annual growth rate (AAGR) hurdle set out in Part (a) below
(EPS PSRs) and 40% of PSRs issued will be subject to the total shareholder return hurdle set out in Part (b) below (TSR PSRs).
For PSRs issued in FY23 and FY24, 40% are subject to a compound annual growth rate (CAGR) hurdle set out in Part (a) below
(EPS PSRs), 40% of PSRs issued will be subject to the total shareholder return hurdle set out in Part (b) below (TSR PSRs) and
20% subject to an average of 3 years return on invested capital hurdle (ROIC PSRs) set out in part (c) below.
For the purposes of calculating the compound annual growth rate (CAGR) or Annual average growth rate (AAGR), an underlying
form of earnings per share will be utilised (Underlying EPS) being, in respect of any financial year, the consolidated net profit
after tax of the Company for that year excluding the effects of non-recurring events or other items not representative of the
underlying operating items of income and expenditure which do not represent the underlying performance of the Group and
segments of the Group, such as restructuring costs, acquisition costs, fair value gain/losses, profits on sale, amortisation of
broking registers and impairments (Underlying NPAT) divided by the weighted average number of shares on issue during the
financial year. Other adjustments to the Underlying NPAT calculation may be made in limited circumstances where the Board
considers it to be appropriate.
Subject to satisfaction of the performance based conditions referred to in paragraphs (a), (b)and (c) below, the PSRs will vest
3 years (5 years for sign-on grant – see part (d)) after the start of the performance period.
There is no holding lock on shares acquired on vesting of PSRs granted before 30 June 22. There is a post exercise holding lock
of one year for PSRs granted in FY23 and FY24 which is designed to act as a mechanism for executives to achieve additional
AUB Group equity ownership. Shares allocated on vesting and conversion are subject to the terms of AUB Group’s Share Trading
Policy and carry full dividend and voting rights upon allocation.
a.
Earnings Per Share Growth hurdles are as follows:
issued in FY20
issued in FY21 and FY22
issued in FY23 and FY24
AAGR EPS
EPS vesting
AAGR EPS
EPS vesting
CAGR EPS
EPS vesting
less than 5%
NIL
less than 7%
NIL
less than 7%
NIL
5%
50%
7%
50%
7%
50%
5-7%
50% - 100%
7-10%
50%- 100%
7-12%
50%- 100%
7% or more
100%
10% or more
100%
12% or more
100%
b.
TSR hurdles for all grant years are as follows:
Relative TSR performance is assessed over a three-year period which commences at the start of the financial year during which
the PSRs are granted.
For any PSRs to vest pursuant to the Relative TSR vesting condition, AUB Group’s compound TSR must be equal to or greater
than the median ranking of constituents of the Peer Comparator Group.
TSR PSRs will be measured by comparing the TSR of the Company with the TSRs of the constituents of the S&P/ASX Small
Ordinaries Industrials Index (‘AXSID’) (Comparator Group).
Hurdles for TSR PSRs granted after 1 July 2020 (including 5 year CEO sign-on PSRs)
Less than 50th percentile of the Comparator Group
–
0% of the PSRs will vest.
50th percentile of the Comparator Group
–
50% of the PSRs will vest.
Between 50th percentile and 75th percentile of the
comparator Group
–
between 50% and 100% of the PSRs will vest.
75th percentile of the Comparator Group or higher
–
100% of the PSRs will vest.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
130
21
SHARE-BASED PAYMENT PLANS (CONTINUED)
c.
Return on Invested Capital (‘ROIC’)
The ROIC vesting condition for PSRs granted during FY23 and FY24 is measured based on the average of ROIC achieved in each
of the 3 years of the performance period.
ROIC PSRs granted in
FY23
FY24
Start of Performance period
1 July 2022
1 July 2023
Final year of the performance period
30 June 2025
30 June 2026
ROIC in each year is calculated as EBITA Less Tax, divided by Average Invested Capital, defined as follows:
EBITA Less Tax
Underlying NPAT plus interest expense (net of interest received from operating bank
account) as per consolidated accounts after tax
Invested Capital
The sum of equity attributable to equity holders of the parent and interest-bearing
borrowings and loans, less cash and cash equivalents (excluding cash held in trust).
Average Invested Capital
(Invested Capital at financial year end + Invested Capital at previous financial year end)/2
3 year average ROIC
Simple average of ROIC in each of the 3 years of the performance period
The percentage of ROIC PSRs that may vest is determined based on the following vesting schedule.
3 year average ROIC
PSRs subject to ROIC vesting condition that vest (%)
Less than 11%
11%
Greater than 11% to less than 12%
12% or more
0%
50%
Straight line between 50% and 100%
100%
d.
CEO 5 year sign-on PSRs - Performance Period
In FY20, a sign-on bonus of 200,000 PSRs was granted to the CEO that vest over 5 years. The TSR and EPS hurdles for the
sign-on PSR grant are as shown in part (a) and (b) above.
In FY22, one third of the PSRs were tested over the three year performance period from 1 July 2019 to 30 June 2022.
Based on the TSR and EPS outcomes (see previous year remuneration report), all 66,667 PSRs (both TSR PSRs and EPS PSRs)
satisfied the performance hurdles and will therefore remain on foot and vest at the end of the 5 year period ended 30 June 2024,
subject to the CEO’s employment conditions.
Based on the outcomes achieved at that time, all 66,667 PSRs (both TSR and EPS PSRs) satisfied the performance hurdles
and therefore remained on foot and vest at the end of the 5 year period ended 30 June 2024, subject to the CEO’s employment
conditions.
The remaining balance of 133,333 PSRs (TSR and EPS) were tested after the completion of the 5 year period ended 30 June
2024. The outcomes of the performance hurdles and vesting outcomes are shown in the FY24 Remuneration Report. Based
on the 5 year performance outcomes, all 200,000 sign on PSRS will vest on 31 August 2024 (both 133,333 tested after 30 June
2024 performance period and the 66,667, on foot after FY22 testing) and can be exercised on that date. There is no holding lock
on vested PSRs which are exercised and converted to shares.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
131
21
SHARE-BASED PAYMENT PLANS (CONTINUED)
Share Appreciation Rights (‘SARs’)
Key terms of the SARs are as follows:
The SARs granted in FY22 have five-year performance period which is intentionally longer than the 3 year performance period
for other PSRs granted under the LTI Plan. Additionally there is a further post exercise holding lock of two years which is
designed to align the Group’s medium term objectives with executives having additional AUB Group equity ownership.
SARs will be tested against a CAGR of the EPS of the Company during the five-year performance period covering 1 July 21 to
30 June 2026.
Vested SARs
Vesting will require stretch performance exceeding regular LTI plan maximum, as well as peer LTI maximum, together with
5 years of ongoing employment from 1 July 2021. Shares allocated on vesting and conversion of SARs are subject to the terms
of AUB Group’s Share Trading Policy and carry full dividend and voting rights upon allocation.
SARs will automatically vest and convert into Shares if the vesting conditions have been satisfied, expected to be on or around
31 August 2026. Vested SARs will be converted to shares in AUB Group Limited based on the formula below.
There is no conversion price or exercise price payable for the conversion of any vested SARs.
Vesting is conditional on meeting performance targets in line with table below.
Achieving a CAGR of Underlying EPS of
Vesting outcomes of SARs
Less than 12%
0%
12%
25%
Greater than 12% but less than 14%
Pro rata straight line vesting between 25% and 100%
14% or more
100%
If the vesting conditions are satisfied, the SARs will convert into that number of shares based on the following formula:
Number of vested SARs x
Conversion Price - Initial VWAP
Conversion Price
Where:
–
Number of vested SARs means the number of SARs that vested after the EPS calculation has been undertaken at the end of
the 5 year performance period;
–
Conversion Price means the VWAP of the shares traded on the ASX over the 60 trading days prior to 30 June 2026;
–
Initial VWAP means $20.33, being the VWAP of the Shares traded on the ASX over the 60 trading days prior to 1 July 2021
(the first day of the Performance Period);
–
The base underlying EPS at 30 June 2021 was 87.93 cents per share (86.12 cents per share TERP adjusted).
Tysers Incentive Scheme
On 1 September 2023, the Group granted 1,812,000 PSRs to employees of Tysers as part of a retention programme for Tysers
key producers. The performance hurdles for the PSRs will be tested over the 3-year period 1 July 2023 to 30 June 2026.
Vesting of PSRs will be tested against Tysers Underlying Net Profit After Tax (‘TUNPAT’) growth targets for the Performance
Period. TUNPAT follow the same principles as AUB’s UNPAT, however the base year (FY23) is normalised to represent 12 months
of AUB Group ownership.
During FY24, no PSRs lapsed due to employees who resigned before the end of the performance period.
TUNPAT Compound Annual Profit Growth (CAGR)
hurdles over the performance period
Vesting outcomes of PSRs
Less than 7.5%
0%
7.5%
25%
Greater than 7.5% but less than 12.5%
Pro rata straight line vesting between 25% and 100%
12.5% or more
100%
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
132
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
22 PARENT ENTITY INFORMATION
The parent company’s summary financials are presented below:
2024
$’000
2023
$’000
ASSETS
Cash and cash equivalents
170,663
111,311
Current assets
488,972
414,986
Non-current assets
1,270,529
1,202,789
Total assets
1,930,164
1,729,086
LIABILITIES
Current liabilities
50,799
92,728
Non-current liabilities - Interest-bearing loans and borrowings
550,000
514,500
Total liabilities
600,799
607,228
NET ASSETS
1,329,365
1,121,858
EQUITY
Issued capital
1,141,428
945,687
Reserves
7,597
17,684
Retained earnings
180,340
158,487
TOTAL SHAREHOLDERS EQUITY
1,329,365
1,121,858
Profit for the year before income tax
78,545
91,659
Income tax (expense)/credit
15,939
4,192
Net profit after tax for the year
94,484
95,851
Other comprehensive (expense)/income after income tax for the year
(42)
9
Total comprehensive income after tax for the year
94,442
95,860
Other information
Guarantees entered into by the parent entity in relation to the debts of its controlled entities or
associates:
–
–
AUB Group Limited has guaranteed loan facilities provided to controlled entities and associates in
proportion to its shareholding
15,985
18,542
Total Guarantees
15,985
18,542
AUB GROUP ANNUAL REPORT 2024
133
23 COMMITMENTS AND CONTINGENCIES
The Group’s commitments and contingencies are presented below:
2024
$’000
2023
$’000
Commitments - Group
- Not later than one year
113
88
- Later than one year and not later than five years
22
–
- Later than five years
–
–
135
88
Contingent liabilities and Commitments
Estimates of the maximum amounts of contingent liabilities that may become payable:
AUB Group Limited has guaranteed loan facilities provided to associates in proportion to its
shareholding
2,118
2,118
AUB Group Limited has guaranteed loan facilities provided to others
6,946
–
Committed transactions*
158,450
–
167,514
2,118
*
AUB has entered into a binding agreement to purchase 70% of Pacific Indemnity for $105.0m, with a contingent consideration estimated to be for $35.0m
subject to FY25 performance. The acquisition completed on the 1st of July 2024.
On 10 June 2024, AUB has entered into a binding agreement to purchase a 40% equity stake in Momentum Broker Solution, a leading Authorised Representative
network based in the UK, for GBP 9.7m. The acquisition completed on the 31st of July 2024.
AUB will fund the acquisitions through the recent capital raise of $200m, refer to Note 20.
Contingent liabilities
AUB Group Limited has provided indemnities to other shareholders of related entities and associates in relation to guarantees
given by those shareholders, to financiers of or lessors to entities in which AUB Group Limited has an equity interest.
AUB Group Limited has entered into agreements with various financiers and shareholders of related entities and associates,
granting options to put shares held in related companies to AUB Group Limited.
From time to time AUB Group Limited is exposed to contingent risk and liabilities arising from the conduct of its business
including actual and potential disputes, claims and legal proceedings, including litigation arising from the provision of insurance
policies to its clients. Such matters ore often highly complex and uncertain. Where appropriate, provisions have been made
(refer to Note 16 for further details on provisions).
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
134
24 AUDITORS’ REMUNERATION
The Group’s payments to audit firms are presented below:
Consolidated
2024
$
2023
$
Amounts received or due to Ernst & Young (Australia and overseas EY firms) for:
Audit of the financial statements of Group and its controlled entities in Australia
1,805,000
1,646,000
Audit of the financial statements of controlled entities overseas
3,106,000
3,017,000
Other statutory assurance services in Australia
230,000
214,000
Other assurance related services in Australia
145,000
–
Total audit services
5,286,000
4,877,000
Non-audit services due to Ernst & Young Australia
Taxation advice
–
–
Taxation compliance services
80,000
57,000
Consulting services
–
–
Total non-audit services due to Ernst & Young Australia
80,000
57,000
Total services provided by Ernst & Young
5,366,000
4,934,000
Amounts received or due to non Ernst & Young audit firms for:
Audit and review of financial statements
766,816
661,721
Other statutory assurance services
12,500
164,707
Other assurance related services
–
85,000
Total audit services
779,316
911,428
Non-audit services
Taxation advice
40,525
–
Taxation compliance services
19,710
26,640
Other consulting services
73,482
59,329
Total non-audit services
133,717
85,969
Total services provided by other auditors
913,033
997,397
Total Auditors' remuneration
6,279,033
5,931,397
25 RELATED PARTY DISCLOSURES
a. Details of Key Management Personnel (KMP)
The directors of the company in office throughout the year and until the date of signing this report are:
D. C. Clarke
Chair (non-executive)
P. A. Lahiff
Director (non-executive) (retired 23 August 2023)
M. S. Laing
Director (non-executive) (appointed 2 November 2023)
R. J. Low
Director (non-executive) (retired 2 November 2023)
C. L. Rogers
Director (non-executive)
P. G. Harmer
Director (non-executive)
R. D. Deutsch
Director (non-executive)
A. J. Kendrick
Director (non-executive)
The following persons were the executives with the greatest authority for the planning, directing and controlling the activities of
the consolidated entity during the financial year:
M.P.C. Emmett
Managing Director and Chief Executive Officer
M. J. Shanahan
Chief Financial Officer
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
135
25 RELATED PARTY DISCLOSURES (CONTINUED)
b. There are no loans outstanding owing by KMP at 30 June 2024 (2023: NIL).
c. Compensation of KMP’s by Category
2024
$
2023
$
Salary, fees and short-term incentives
5,259,131
4,034,894
Post employment benefits
133,073
119,639
Other long-term benefits
–
–
Termination benefits
–
–
Share-based payments
2,450,185
2,058,537
Total
7,842,389
6,213,070
d. STI amounts included above relate to the accrued provision in respect of the current year’s performance that will be
paid during the following financial year. The 2024 amounts have been approved by the Remuneration Committee.
e. The following related party transactions occurred during the year:
i.
Transactions with related parties in parent, controlled entities and associates
1. Entities within the Consolidated Group charge associates management fees for expenses incurred and services
rendered. Refer to Note 4.
2. Entities within the Consolidated Group provide funds to other related entities within the Group. These funds are
interest-bearing, excluding small working capital advances, and are repayable on demand. See Note 11 for amounts
receivable from related parties and Note 15 for payables to related parties.
These transactions are at normal commercial terms and conditions.
2024
$
2023
$
Entities within the Consolidated Group have advanced funds to other related parties
Associates
383,935
5,912,764
Related persons/Companies – Shareholder Loan
11,563,183
9,147,665
Loans to association members
3,237,305
1,864,908
ii.
Transactions with other related parties
2024
$
2023
$
Other payables - related parties
Associates
1,636,343
2,527,183
Related persons/Companies – Trust distribution
3,422,377
1,461,629
Related persons/Companies – Shareholder Loan
1,637,130
859,652
Entities within the Consolidated Group provide Shareholder loans to enable key employees to buy into the business (as part of the
Group’s strategy to retain key employees). These loans (except one loan payable in 10 years) are payable within 5 years, are fully
securitised on the shares of the company, and mechanisms for repayments include garnishing rights over associated dividends.
These transactions are at normal commercial terms and conditions.
iii.
Transactions with directors and director-related entities
Entities within the Consolidated Group receive fees for arranging insurance cover for directors and /or director related entities.
These transactions are at normal commercial terms and conditions.
Other than disclosed above and in Notes 25(b) and 25(c), there were no other transactions with director or director related entities.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
136
26 SUBSEQUENT EVENTS
On 1 July 2024, the Group completed the acquisition of Pacific Indemnity for $105.0m, plus a deferred consideration estimated
to be $35m.
On 16 August 2024, the Group executed an agreement to acquire a significant equity stake in UK based Movo group, which is
subject to regulatory approval.
On 21 August 2024, the Directors of AUB Group Limited determined a final dividend on ordinary shares in respect of the 2024
financial year. The total amount of the dividend is $68.79m which represents a fully franked dividend of 59.0 cents per share.
The dividend has not been provided for in the 30 June 2024 financial statements.
27 OTHER POLICIES
Other Policies
For the basis of preparation, significant accounting policies, and changes to accounting refer to Note 2.
For accounting policies on material balances refer to notes above.
Current versus non-current classification
The Group presents assets and liabilities in the Consolidated Statement of Financial Position based on current and non-current
classification.
An asset is current when it is:
–
expected to be realised, or intended to be sold, or consumed in the normal operating cycle;
–
expected to be realised within twelve months after the reporting period;
–
held primarily for the purpose of trading; or
–
cash or cash equivalents unless restricted from being exchanged or used to settle a liability for at least twelve months after
the reporting period.
A liability is current when:
–
it is expected to be settled in the normal operating cycle;
–
it is held primarily for the purpose of trading;
–
it is due to be settled within twelve months after the reporting period; or
–
there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The Group classifies all other assets and liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Deferred acquisition costs
Deferred customer acquisition costs represent costs associated with acquiring a new customer contract where a relationship is
bound by contractual agreement. The costs are capitalised only when they are determined to be recoverable per the customer
contract. Deferred acquisition costs are amortised over the term of the customer contract.
Deferred revenue from contracts with customers
Revenue from broking and agency activities are partially (1%, 2023: 1%) deferred for premium settlement and claims handling services
(1.5%, 2023: 1.5%) and cancellations (5%, 2023: 5%). The amount of deferral is based on historic data (on time and cost such activities)
adjusted for any forward looking anticipated changes, and margin on service of a standalone service (based on available external
data). The revenue is recognised over time, generally 90 days for premium settlement, and within 12 months for claims handling.
Dividends received
The Group recognises dividends received within the Consolidated Statement of Cash Flows as cash from operating activities.
The Group’s strategy involves investing into other businesses (see Note 7). Cash flows from the Group’s investment in associates
is derived in the form of dividends received. As the Group intends to hold such businesses for the long term, dividends from
associates represents operating cash flows from the Group’s equity investments. The parent actively monitors dividend payout
ratios compared to net profits generated by each business in which the parent has a direct investment.
Leases
The Group has entered into leases for premises, car parking and fixed assets for varying periods of up to seven years. The lease
contracts are recognised on the balance sheet at commencement of the lease, with the exception of short-term leases not
exceeding 12 months and leases of low-value assets. The Group applied practical expedients and the exemptions to short-term
leases and low-value underlying assets available in the accounting standard.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
137
27 OTHER POLICIES (CONTINUED)
Pursuant to some of its lease agreements, the Group has the option to renew the lease for a period of up to ten years. The Group
has no restrictions placed upon the lessee by entering into these leases. The Group applies judgement and considers all relevant
factors in assessing whether it is reasonably certain to exercise an option. This assessment is performed periodically, and when
the Group is reasonably certain to exercise an option to extend the duration of a lease, that option is then taken into account in
calculating or recalculating the right-of-use asset and lease liability.
Where the Group sub leases a premises, it derecognises the right-of-use asset and immediately recognising a Lease Net
Investment asset representing the net present value of all future net cash flows expected from the sub lease. Any gain or loss is
charged against profit and loss.
Non-controlling Interests
This is measured at their proportionate share of the identifiable net assets and proportion of goodwill.
Other taxes
Revenues, expenses and assets are recognised net of the amount of Goods and Services Tax (‘GST’)/Value Added TAX (‘VAT’)
except
–
when the GST/VAT incurred on a purchase of goods and services is not recoverable from the taxation authority, in which
case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
–
receivables and payables, which are stated with the amount of GST/VAT included.
The net amount of GST/VAT recoverable from, or payable to, the taxation authority is included as part of receivables or payables
in the Consolidated Statement of Financial Position.
Cash flows are included in the Consolidated Statement of Cash Flows on a gross basis and the GST/VAT component of
cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are
classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST/VAT recoverable from, or payable to, the taxation
authority.
Property, plant and equipment
Property, plant and equipment, is stated at cost less depreciation and any impairment in value.
Depreciation is calculated on a straight-line over the estimated useful life of the asset as follows:
–
Motor vehicles: 5 to 8 years;
–
Plant and equipment: 5 to 10 years.
Impairment
The carrying value of property, plant and equipment is reviewed for impairment at each reporting date, with recoverable amount
being estimated when events or changes in circumstances indicate the carrying value may be impaired.
For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash
generating unit to which the asset belongs. If any such indication exists and where the carrying value exceeds the estimated
recoverable amount, the asset or cash generating unit is written down to their recoverable amount.
Derecognition and disposal
An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits
are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is
derecognised.
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
AUB GROUP ANNUAL REPORT 2024
138
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2024
28.1 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
The accounting policies and methods of computation are the same as those adopted in prior years except for new and amended
accounting standards which came into effect on 1 July 2023.
The 30 June 2024 financial statements, and respective notes to the financial statements have been prepared in accordance with
the new and amended accounting standards. The accounting policies in the notes below have also been updated to reflect the
new and amended accounting standards in effect during the year.
The Group has applied the following standards and amendments for the first time for the annual reporting period commencing
1 July 2023:
–
AASB 2021-2 Amendments to Australian Accounting Standards – Disclosure of Accounting Policies and Definition of
Accounting Estimates;
–
AASB 2021-5: Amendments to Australian Accounting Standards – Deferred Tax related to Assets and Liabilities arising from
a Single Transaction;
–
AASB 2022-1 Amendments to AASs –Initial Application of AASB 17 and AASB 9 – Comparative Information;
–
AASB 2022-6 Amendments to Australian Accounting Standards – Non-current Liabilities with Covenants;
–
AASB 2022-7 Editorial Corrections to AASs and Repeal of Superseded and Redundant Standards; and
–
AASB 2022-8 Amendments to AASs – Insurance Contracts – Consequential Amendments.
The amendments listed above did not have any material impact on the amounts recognised in prior periods and are not
expected to significantly affect the current or future periods.
28.2 STANDARDS ISSUED BUT NOT YET EFFECTIVE
There are a number of new accounting standards and amendments issued, but not yet effective, none of which have been
early adopted by the Group in this Financial Report. The new standards and amendments (noted below), when applied in future
periods, are not expected to have a material impact on the financial position of the Group.
–
AASB 2014-10 Amendments to AASs – Sale or Contribution of Assets between an Investor and its Associate or
Joint Venture;
–
AASB 2020-1 Amendments to AASs – Classification of Liabilities as Current or Non-current;
–
AASB 2022-5 Amendments to AASs – Lease Liability in a Sale and Leaseback;
–
AASB 2023-1 Amendments to AASs – Amendments to AASB 107 and AASB 7 – Disclosures of Supplier Finance
Arrangements; and
–
AASB 2023-5 Amendments to Australian Accounting Standards – Lack of Exchangeability.
AASB 18 Presentation and Disclosure in Financial Statements, issued on 14 June 2024, will first apply to the Group in financial year
ending 30 June 2028. The Group are yet to assess the impact of this new standard on the Group’s financial statements.
AUB GROUP ANNUAL REPORT 2024
139
CONSOLIDATED ENTITY DISCLOSURE STATEMENT
YEAR ENDED 30 JUNE 2024
CONSOLIDATED ENTITY DISCLOSURE STATEMENT
The following entities were part of the Group at the end of the financial year:
Entity name
Entity type
Country of
incorporation
Ownership
Country of
tax residency
360 Accident & Health Pty Ltd
Body Corporate
Australia
33.3%
Australia
360 Aviation Pty Ltd
Body Corporate
Australia
33.3%
Australia
360 Casualty Pty Ltd
Body Corporate
Australia
66.6%
Australia
360 Commercial Limited
Body Corporate
New Zealand
59.9%
New Zealand
360 Commercial Motor Pty Ltd
Body Corporate
Australia
36.6%
Australia
360 Commercial Pty Ltd
Body Corporate
Australia
59.9%
Australia
360 Complex Risks Pty Ltd
Body Corporate
Australia
33.9%
Australia
360 Consolidated Investments Pty Ltd
Body Corporate
Australia
66.6%
Australia
360 Construction and Engineering Pty Ltd
Body Corporate
Australia
33.3%
Australia
360 Farm & Regional Pty Ltd
Body Corporate
Australia
66.6%
Australia
360 Financial Lines Pty Ltd
Body Corporate
Australia
33.3%
Australia
360 Group Services NZ Limited
Body Corporate
New Zealand
66.6%
New Zealand
360 Group Services Pty Ltd
Body Corporate
Australia
66.6%
Australia
360 Hospitality Pty Ltd
Body Corporate
Australia
39.9%
Australia
360 Landlords Pty Ltd
Body Corporate
Australia
33.3%
Australia
360 Marine Cargo and Transit Pty Ltd
Body Corporate
Australia
59.9%
Australia
360 Mid Market Property Pty Ltd
Body Corporate
Australia
39.9%
Australia
360 Mid Market Pty Ltd
Body Corporate
Australia
39.9%
Australia
360 Mobile Plant & Equipment Pty Ltd
Body Corporate
Australia
66.6%
Australia
360 Plant and Equipment Pty Ltd
Body Corporate
Australia
83.3%
Australia
360 Prestige Motor Pty Ltd
Body Corporate
Australia
33.3%
Australia
360 Professional and Financial Risks Pty Ltd
Body Corporate
Australia
44.9%
Australia
360 Quick Construct Pty Ltd
Body Corporate
Australia
33.3%
Australia
360 Underwriting Solutions Pty Ltd
Body Corporate
Australia
66.6%
Australia
AB Phillips Group Pty Ltd
Body Corporate
Australia
57.8%
Australia
AB Phillips Professional Lines Pty Ltd
Body Corporate
Australia
57.8%
Australia
AB Phillips Pty Ltd
Body Corporate
Australia
57.8%
Australia
ABAFF Pty Ltd
Body Corporate
Australia
95.0%
Australia
ABFS (ACT) Pty Ltd
Body Corporate
Australia
95.1%
Australia
ABFS (NSW - S) Pty Ltd
Body Corporate
Australia
95.1%
Australia
ABFS (QLD) Pty Ltd
Body Corporate
Australia
95.1%
Australia
ABFS (VIC) Pty Ltd
Body Corporate
Australia
95.1%
Australia
ABFS (WA) Pty Ltd
Body Corporate
Australia
95.1%
Australia
Able Insurance Pty Ltd
Body Corporate
Australia
100.0%
Australia
ABP & AG Pty Ltd
Body Corporate
Australia
57.8%
Australia
Adroit Bellarine Pty Ltd
Body Corporate
Australia
82.9%
Australia
Adroit Eureka Pty Ltd
Body Corporate
Australia
72.8%
Australia
Adroit FS Pty Ltd
Body Corporate
Australia
100.0%
Australia
Adroit Holdings Pty Ltd
Body Corporate
Australia
100.0%
Australia
Adroit Hume Pty Ltd
Body Corporate
Australia
90.0%
Australia
Adroit Insurance & Risk Pty Ltd
Body Corporate
Australia
100.0%
Australia
Adroit Latrobe Pty Ltd
Body Corporate
Australia
97.7%
Australia
AUB GROUP ANNUAL REPORT 2024
140
Entity name
Entity type
Country of
incorporation
Ownership
Country of
tax residency
Adroit Management Services Pty Ltd
Body Corporate
Australia
100.0%
Australia
Adroit MHL Insurance & Risk Pty Ltd
Body Corporate (Trustee)
Australia
89.8%
Australia
Adroit MHL Unit Trust
Trust
Australia
N/A
Australia
Adroit Professional Risk Pty Ltd
Body Corporate
Australia
100.0%
Australia
Adroit Sandhurst Pty Ltd
Body Corporate
Australia
50.5%
Australia
Adroit Workcom Investments Pty Ltd
Body Corporate
Australia
100.0%
Australia
AEI Canberra Pty Ltd
Body Corporate
Australia
61.3%
Australia
AEI Insurance Group Pty Ltd
Body Corporate
Australia
61.3%
Australia
Allegiant IRS Pty Ltd
Body Corporate
Australia
56.5%
Australia
Aquila Group Investments Limited
Body Corporate
UK
100.0%
UK
Aquila Underwriting LLP
Body Corporate
UK
100.0%
UK
Ascend Insurance Network Pty Ltd
Body Corporate
Australia
70.0%
Australia
Astute Insurance Services Pty Ltd
Body Corporate
Australia
53.6%
Australia
Attento Underwriting Agency Limited
Body Corporate
UK
51.0%
UK
AUB Group NZ Broking Limited
Body Corporate
New Zealand
100.0%
New Zealand
AUB Group NZ Limited
Body Corporate
New Zealand
100.0%
New Zealand
AUB Group Services Pty Ltd
Body Corporate
Australia
100.0%
Australia
AUB Hospitality Pty Ltd
Body Corporate
Australia
100.0%
Australia
AUB Three Sixty NZ Limited
Body Corporate
New Zealand
66.6%
New Zealand
AUB Three Sixty Pty Ltd
Body Corporate
Australia
66.6%
Australia
AUBCC Pty Ltd
Body Corporate
Australia
90.0%
Australia
Aust Re Brokers Pty Ltd
Body Corporate
Australia
100.0%
Australia
Austagencies Pty Ltd
Body Corporate
Australia
100.0%
Australia
Austbrokers ABS Pty Ltd
Body Corporate (Trustee)
Australia
80.0%
Australia
Austbrokers ABS Strata Pty Ltd
Body Corporate (Trustee)
Australia
100.0%
Australia
Austbrokers ABS Strata Unit Trust
Trust
Australia
N/A
Australia
Austbrokers ABS Unit Trust
Trust
Australia
N/A
Australia
Austbrokers AEI Pty Ltd
Body Corporate
Australia
61.3%
Australia
Austbrokers Canberra Pty Ltd
Body Corporate
Australia
100.0%
Australia
Austbrokers CE McDonald Pty Ltd
Body Corporate
Australia
76.1%
Australia
Austbrokers City State Pty Ltd
Body Corporate
Australia
55.0%
Australia
Austbrokers Compensation Services Pty Ltd
Body Corporate (Trustee)
Australia
57.8%
Australia
Austbrokers Corporate Pty Ltd
Body Corporate
Australia
80.0%
Australia
Austbrokers Cyber Pro Pty Ltd
Body Corporate
Australia
50.0%
Australia
Austbrokers InterRisk Pty Ltd
Body Corporate
Australia
75.5%
Australia
Austbrokers Investments Pty Ltd
Body Corporate
Australia
100.0%
Australia
Austbrokers Life Pty Ltd
Body Corporate
Australia
95.1%
Australia
Austbrokers Life SA Pty Ltd
Body Corporate
Australia
72.8%
Australia
Austbrokers Member Services Pty Ltd
Body Corporate
Australia
100.0%
Australia
Austbrokers Professional Services Pty Ltd
Body Corporate
Australia
80.0%
Australia
Austbrokers Pty Ltd
Body Corporate
Australia
100.0%
Australia
Austbrokers RIS Pty Ltd
Body Corporate
Australia
95.0%
Australia
Austbrokers RWA Pty Ltd
Body Corporate
Australia
75.5%
Australia
Austbrokers Southern Pty Ltd
Body Corporate
Australia
75.5%
Australia
CONSOLIDATED ENTITY DISCLOSURE STATEMENT
YEAR ENDED 30 JUNE 2024
CONSOLIDATED ENTITY DISCLOSURE STATEMENT (CONTINUED)
AUB GROUP ANNUAL REPORT 2024
141
Entity name
Entity type
Country of
incorporation
Ownership
Country of
tax residency
Austbrokers Sydney Pty Ltd
Body Corporate
Australia
100.0%
Australia
Austbrokers Trade Credit Pty Ltd
Body Corporate
Australia
75.0%
Australia
Austplacements Pty Ltd
Body Corporate
Australia
100.0%
Australia
Australian Bus and Coach Underwriting Agency Pty Ltd
Body Corporate
Australia
93.3%
Australia
Austrbrokers Info Tech Pty Ltd
Body Corporate
Australia
50.0%
Australia
Bestmark Insurance Brokers Pty Ltd
Body Corporate
Australia
76.1%
Australia
Blumberg Pty Ltd
Body Corporate
Australia
57.8%
Australia
BrokerWeb Risk Services Limited
Body Corporate
New Zealand
72.1%
New Zealand
Bruce Park Pty Ltd
Body Corporate
Australia
57.8%
Australia
Busguard Underwriting Australia Pty Ltd
Body Corporate
Australia
95.0%
Australia
BWRS Life and Health Limited
Body Corporate
New Zealand
64.4%
New Zealand
Capricorn02 Pty Ltd
Body Corporate
Australia
100.0%
Australia
Carriers Insurance Brokers Pty Ltd
Body Corporate
Australia
55.1%
Australia
CCP Bidco Ltd
Body Corporate
UK
100.0%
UK
CCP Midco Ltd
Body Corporate
UK
100.0%
UK
Chegwyn Insurance Brokers Pty Ltd
Body Corporate
Australia
61.3%
Australia
Cinesure Global Pty Ltd
Body Corporate
Australia
54.0%
Australia
Cinesure Global Unit Trust
Trust
Australia
N/A
Australia
Citycover (Aust) Pty Ltd
Body Corporate
Australia
76.1%
Australia
Colonnade Pte Ltd
Body Corporate
Singapore
100.0%
Singapore
Comsure Insurance Brokers Pty Ltd
Body Corporate
Australia
76.1%
Australia
Construction Underwriting Trust
Trust
Australia
N/A
Australia
Country Wide Insurance Brokers Pty Ltd
Body Corporate
Australia
89.1%
Australia
Dawson Insurance Brokers Limited
Body Corporate
New Zealand
64.1%
New Zealand
Direct Underwriting Agency Pty Ltd
Body Corporate
Australia
53.0%
Australia
eSentry Technology Pty Ltd
Body Corporate
Australia
33.3%
Australia
eSentry Underwriting Pty Ltd
Body Corporate
Australia
33.3%
Australia
Experien Financial Services Pty Ltd
Body Corporate
Australia
73.1%
Australia
Experien General Insurance Services Pty Ltd
Body Corporate
Australia
73.1%
Australia
Experien Insurance Services Pty Ltd
Body Corporate
Australia
73.1%
Australia
Film Insurance Underwriting Agencies Pty Ltd
Body Corporate
Australia
100.0%
Australia
Finsura Financial Planning & Risk Pty Ltd
Body Corporate
Australia
70.0%
Australia
Finsura Financial Services Pty Ltd
Body Corporate
Australia
70.0%
Australia
Finsura Holdings Pty Ltd
Body Corporate
Australia
70.0%
Australia
Finsura Insurance Broking (Australia) Pty Ltd
Body Corporate
Australia
70.0%
Australia
Finsura Insurance Broking Unit Trust
Trust
Australia
N/A
Australia
Finsura Insurance Management Services Pty Ltd
Body Corporate (Trustee)
Australia
70.0%
Australia
Finsura Regional Pty Ltd
Body Corporate
Australia
70.0%
Australia
Finsura Wealth Management Pty Ltd
Body Corporate
Australia
49.0%
Australia
Finzane Group Pty Ltd
Body Corporate
Australia
70.0%
Australia
Fleetsure Pty Ltd
Body Corporate
Australia
49.9%
Australia
Forte Underwriters LLC
Body Corporate
US
70.0%
US
Forte Underwriters Suscritores de Riscos Ltda.
Body Corporate
Brazil
70.0%
Brazil
Galileo Underwriting LLP
Body Corporate
UK
100.0%
UK
CONSOLIDATED ENTITY DISCLOSURE STATEMENT
YEAR ENDED 30 JUNE 2024
CONSOLIDATED ENTITY DISCLOSURE STATEMENT (CONTINUED)
AUB GROUP ANNUAL REPORT 2024
142
Entity name
Entity type
Country of
incorporation
Ownership
Country of
tax residency
George Yard International Investments Ltd
Body Corporate
Guernsey
100.0%
Guernsey/UK
George Yard Investments Ltd
Body Corporate
UK
100.0%
UK
George Yard Services Ltd
Body Corporate
UK
100.0%
UK
H2 Integro Pty Ltd
Body Corporate
Australia
100.0%
Australia
H2 Tysers NZ Limited
Body Corporate
New Zealand
100.0%
New Zealand
Hawkes Bay Holdings Limited
Body Corporate
UK
100.0%
UK
Hawkes Bay Specialty Limited
Body Corporate
Hong Kong
100.0%
Hong Kong/UK
Hawkes Bay Underwriting Limited
Body Corporate
Hong Kong
36.0%
Hong Kong
Horizon Underwriting Pty Ltd
Body Corporate
Australia
57.8%
Australia
IA (NZ) Equity Partners Limited
Body Corporate
New Zealand
35.8%
New Zealand
IA Equity Partners Pty Ltd
Body Corporate
Australia
53.0%
Australia
IAAF Pty Ltd
Body Corporate
Australia
53.0%
Australia
IAAF Trust
Trust
Australia
N/A
Australia
iaAnyware Pty Ltd
Body Corporate (Trustee)
Australia
100.0%
Australia
iaAnyware Unit Trust
Trust
Australia
N/A
Australia
ICIB (Wellington) Limited
Body Corporate
New Zealand
43.3%
New Zealand
ICIB Brokerweb North Shore Limited
Body Corporate
New Zealand
43.3%
New Zealand
ICIB Financial Independence Limited
Body Corporate
New Zealand
42.6%
New Zealand
ICIB Hawkes Bay Limited
Body Corporate
New Zealand
36.8%
New Zealand
ICIB Life (Hawkes Bay) Limited
Body Corporate
New Zealand
36.8%
New Zealand
ICIB Life Limited
Body Corporate
New Zealand
72.1%
New Zealand
ICIB Limited
Body Corporate
New Zealand
72.1%
New Zealand
Independent Risk Insurance Advisory Services BV
Body Corporate
Belgium
90.0%
Belgium
Insurance Advisernet Australia Pty Ltd
Body Corporate (Trustee)
Australia
55.5%
Australia
Insurance Advisernet Holdings Pty Ltd
Body Corporate (Trustee)
Australia
55.5%
Australia
Insurance Advisernet Holdings Unit Trust
Trust
Australia
53.0%
Australia
Insurance Advisernet Life Pty Ltd
Body Corporate
Australia
53.0%
Australia
Insurance Advisernet New Zealand Limited
Body Corporate (Trustee)
New Zealand
53.0%
New Zealand
Insurance Advisernet New Zealand Unit Trust
Trust
New Zealand
N/A
New Zealand
Insurance Advisernet Unit Trust
Trust
Australia
53.0%
Australia
Insurance Brokers Alliance Limited
Body Corporate
New Zealand
67.4%
New Zealand
Integro Australia Holding Pty Ltd
Body Corporate
Australia
100.0%
Australia
Integro Australia Pty Ltd
Body Corporate
Australia
100.0%
Australia
Integro Insurance Brokerage Services LLC
Body Corporate
US
100.0%
US/UK
Integro Insurance Brokers Holdings Limited
Body Corporate
UK
100.0%
UK
InterRISK Life Pty Ltd
Body Corporate
Australia
80.0%
Australia
JC & JD Holding LLC
Body Corporate
US
70.0%
US
JUA Holdings Pty Ltd
Body Corporate
Australia
78.9%
Australia
JUA Underwriting Agency Pty Ltd
Body Corporate
Australia
78.9%
Australia
Lebrina Pty Ltd
Body Corporate
Australia
76.1%
Australia
Limehouse Agencies Ltd
Body Corporate
UK
100.0%
UK
Longitude Insurance Pty Ltd
Body Corporate
Australia
100.0%
Australia
Ludgate Limited
Body Corporate
UK
100.0%
UK
Ludgate US Corp
Body Corporate
US
100.0%
US
CONSOLIDATED ENTITY DISCLOSURE STATEMENT
YEAR ENDED 30 JUNE 2024
CONSOLIDATED ENTITY DISCLOSURE STATEMENT (CONTINUED)
AUB GROUP ANNUAL REPORT 2024
143
Entity name
Entity type
Country of
incorporation
Ownership
Country of
tax residency
McNaughton Gardiner Insurance Brokers Pty Ltd
Body Corporate
Australia
75.0%
Australia
Mexbrit Brasil Corretora de Resseguros Ltda.
Body Corporate
Brazil
70.0%
Brazil
Mexbrit LLC
Body Corporate
US
70.0%
US
Mexbrit Mexico Intermediario de Reaseguro, S.A.
de C.V.
Body Corporate
Mexico
68.3%
Mexico
North Coast Insurance Brokers Pty Ltd
Body Corporate
Australia
39.8%
Australia
Northern Tablelands Insurance Brokers Pty Ltd
Body Corporate
Australia
78.0%
Australia
Northlake Holdings Pty Ltd
Body Corporate
Australia
89.1%
Australia
NZ Brokers Limited
Body Corporate
New Zealand
100.0%
New Zealand
NZbrokers Management Limited
Body Corporate
New Zealand
100.0%
New Zealand
NZbrokers Technology Limited
Body Corporate
New Zealand
100.0%
New Zealand
Prime Leasing & Finance Pty Ltd
Body Corporate
Australia
76.1%
Australia
Primesure Brokers Limited
Body Corporate
New Zealand
66.9%
New Zealand
Primesure Financial Services Limited
Body Corporate
New Zealand
66.9%
New Zealand
Prism Group Limited
Body Corporate
New Zealand
72.1%
New Zealand
QRM Claims Management Pty Ltd
Body Corporate
Australia
60.0%
Australia
RFIB Group Ltd
Body Corporate
UK
100.0%
UK
RFIB Holdings Ltd
Body Corporate
UK
100.0%
UK
RI Hornsby Pty Ltd
Body Corporate
Australia
70.0%
Australia
RIS Financial Solutions Pty Ltd
Body Corporate
Australia
95.0%
Australia
Risk Transfer Group Ltd
Body Corporate
Jersey
100.0%
Jersey/UK
Royal West Asset Pty Ltd
Body Corporate
Australia
89.1%
Australia
Rubix Underwriting Pty Ltd
Body Corporate
Australia
100.0%
Australia
Rubix Underwriting Unit Trust
Trust
Australia
N/A
Australia
Run Off Solutions LLC
Body Corporate
US
70.0%
US
Runacres Insurance Limited
Body Corporate
New Zealand
81.4%
New Zealand
Servicios Administrativos Internacionales,
S.A. de C.V.
Body Corporate
Mexico
70.0%
Mexico
SRS Broking Pty Ltd
Body Corporate
Australia
80.0%
Australia
Stand Underwriting Pty Ltd
Body Corporate
Australia
33.7%
Australia
Staple Hall Risk Solutions (SA) (Proprietary) Limited
Body Corporate
South Africa
100.0%
South Africa/UK
Strata Unit Underwriting Agency Pty Ltd
Body Corporate
Australia
100.0%
Australia
SURA Construction Pty Ltd
Body Corporate (Trustee)
Australia
60.0%
Australia
SURA Engineering Pty Ltd
Body Corporate (Trustee)
Australia
60.0%
Australia
Sura Film & Entertainment Pty Ltd
Body Corporate
Australia
100.0%
Australia
Sura Hospitality Pty Ltd
Body Corporate
Australia
66.6%
Australia
SURA Labour Hire Pty Ltd
Body Corporate
Australia
100.0%
Australia
SURA Liability Pty Ltd
Body Corporate
Australia
100.0%
Australia
SURA NZ Limited
Body Corporate
New Zealand
100.0%
New Zealand
SURA Professional Risks Pty Ltd
Body Corporate
Australia
80.0%
Australia
Sura Pty Ltd
Body Corporate
Australia
100.0%
Australia
Svalinn 1319 Limited
Body Corporate
UK
100.0%
UK
Terrace Insurance Brokers Pty Ltd
Body Corporate
Australia
50.5%
Australia
The Breakdown Underwriting Trust
Trust
Australia
N/A
Australia
The Insurance Alliance Pty Ltd
Body Corporate
Australia
100.0%
Australia
CONSOLIDATED ENTITY DISCLOSURE STATEMENT
YEAR ENDED 30 JUNE 2024
CONSOLIDATED ENTITY DISCLOSURE STATEMENT (CONTINUED)
AUB GROUP ANNUAL REPORT 2024
144
Entity name
Entity type
Country of
incorporation
Ownership
Country of
tax residency
TLC Insurance Limited
Body Corporate
New Zealand
49.9%
New Zealand
Tyser & Co. Ltd
Body Corporate
UK
100.0%
UK
Tyser Group Services Limited
Body Corporate
UK
100.0%
UK
Tyser Risk Management Bangladesh Limited
Body Corporate
Bangladesh
100.0%
Bangladesh
Tysers (Bermuda) Ltd.
Body Corporate
Bermuda
100.0%
Bermuda/UK
Tysers Belgium NV
Body Corporate
Belgium
90.0%
Belgium
Tysers for Reinsurance Brokerage LLC
Body Corporate
Saudi Arabia
60.0%
Saudi Arabia
Tysers Holdings Limited
Body Corporate
Hong Kong
60.0%
Hong Kong/UK
Tysers Insurance Brokers Limited
Body Corporate
UK
100.0%
UK
Tysers Ireland Limited
Body Corporate
Ireland
100.0%
Ireland
Tysers Live Holdings LLC
Body Corporate
US
50.0%
US
Tysers Live Insurance Brokerage Services LLC
Body Corporate
US
50.0%
US
Tysers Live North America Services Inc.
Body Corporate
US
50.0%
US
Tysers Retail Limited
Body Corporate
UK
100.0%
UK
Tysers Singapore Pte. Ltd
Body Corporate
Singapore
100.0%
Singapore
Umbrella Insurance Brokers Pty Ltd
Body Corporate
Australia
57.8%
Australia
WRI Insurance Brokers Pty Ltd
Body Corporate
Australia
76.1%
Australia
CONSOLIDATED ENTITY DISCLOSURE STATEMENT
YEAR ENDED 30 JUNE 2024
CONSOLIDATED ENTITY DISCLOSURE STATEMENT (CONTINUED)
AUB GROUP ANNUAL REPORT 2024
145
DIRECTORS’ DECLARATION
YEAR ENDED 30 JUNE 2024
In accordance with a resolution of the directors of AUB Group Limited, we state that:
In the opinion of the directors:
a. the financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001 (Cth),
including:
i. giving a true and fair view of the consolidated entity’s financial position as at 30 June 2024 and of its performance for
the year ended on that date;
ii. complying with Australian Accounting Standard (including the Australian Accounting Interpretations) and the Corporations
Regulations 2001;
b. the financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 2.1; and
c. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable.
d. this declaration has been made after receiving the declarations required to be made to the Directors in accordance with
section 295A of the Corporations Act 2001 (Cth) for the financial year 30 June 2024.
e. the consolidated entity disclosure statement required by section 295(3A) of the Corporations Act 2001 (Cth) is true and
correct.
On behalf of the Board
D.C. Clarke
M. P. C. Emmett
Chair
Chief Executive Officer and Managing Director
Sydney, 21 August 2024
Sydney, 21 August 2024
AUB GROUP ANNUAL REPORT 2024
146
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Independent Auditor’s Report to the Members of AUB Group Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of AUB Group Limited (the Company) and its subsidiaries (collectively the Group), which
comprises the consolidated statement of financial position as at 30 June 2024, the consolidated statement of comprehensive
income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes
to the financial statements, including material accounting policy information, the consolidated entity disclosure statement and
the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a.
Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2024 and of its consolidated
financial performance for the year ended on that date; and
b.
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent
of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia.
We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in
forming our opinion thereon, but we do not provide a separate opinion on these matters. For each matter below, our description
of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Financial Report section of
our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to
respond to our assessment of the risks of material misstatement of the financial report. The results of our audit procedures,
including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
Impairment assessment of goodwill and broking registers
Financial report reference: Notes 2, 14
Why significant
How our audit addressed the key audit matter
As at 30 June 2024, the Group’s statement of financial position includes
goodwill and insurance broking registers totalling $2 billion, representing
50% of total assets. These assets are the result of acquisitions in the
current and previous periods.
Our audit procedures included the following:
Assessed the CGUs and their use in the impairment model,
based on our understanding of the nature of the Group's
business and management's internal reporting.
Assessed the determination of the initial recognition of
goodwill and intangible assets arising from business
combinations during the year.
INDEPENDENT AUDITOR’S REPORT
AUB GROUP ANNUAL REPORT 2024
147
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 2
Why significant
How our audit addressed the key audit matter
In assessing the recoverability of goodwill and insurance broking registers,
the Group performs an annual impairment assessment, or more frequently,
if impairment indicators are present.
The Group has disclosed in Note 2.1(d) and Note 14 to the financial report
the methodology and significant assumptions used in the impairment
assessment of goodwill and the results of the impairment assessment.
The Group’s impairment assessment involves significant judgments and
estimates including:
Determination of Cash Generating Units (‘CGUs’);
Applicable Revenue and Earnings Before Interest and Tax (EBIT)
multiples; and
Discount rates, terminal growth rates and forecast cash flows
including assumptions within Discounted Cashflow (DCF)
models, where required.
These assumptions are subject to estimation uncertainty, with potential
changes in assumptions leading to changes in the recoverable value of the
assets. Accordingly, we considered this to be a key audit matter.
Evaluated the Group's process regarding impairment
assessments of goodwill and insurance broking registers and
the determination of any asset impairment outcomes.
Assessed the competence, capabilities and objectivity of
management's valuation specialist who advised management
on EBIT multiples across the Group's CGUs as well as our EY
valuation specialist.
Involved EY valuation specialists to assist in assessing the
appropriateness of the methodology and assumptions used by
management In their DCF and EBIT multiples calculations.
Tested the mathematical accuracy of the impairment models
and agreed relevant data back to management's cash flow
forecasts and business plans, audited year end results and
other supporting documentation to support the carrying value
of the CGUs.
Assessed the reasonableness of the estimated useful life
attributed to identifiable insurance broking register intangible
assets.
Assessed the Group's sensitivity analysis and evaluated
whether any reasonably foreseeable change in assumptions
could lead to an impairment.
Assessed the adequacy and appropriateness of the disclosures
associated with the impairment assessment included in Note
2.1(d) and 14 to the financial report.
Mergers and acquisitions
Financial report reference: Note 2, 7
Why significant
How our audit addressed the key audit matter
The Group undertook a number of mergers and acquisitions throughout the
year, as disclosed in the accounting policy relating to business
combinations in Note 2(c). The summary of the impact of the mergers and
acquisitions, including new investments in associates, changes in holdings
or disposals, are disclosed in Note 7 – 9 to the financial report.
The accounting for acquisitions have a material impact on the Group’s
results, as well as changes in ownership can be complex and requires
significant judgment in determining:
The value of identifiable intangible assets;
Fair value of other net assets acquired;
Goodwill acquired;
Total consideration payable, including estimating components
of deferred consideration; and
Fair value re-measurement gains resulting from a change in the
Group’s ownership from an associate to a controlled entity.
Accordingly, we considered this to be a key audit matter.
Our audit procedures included the following:
Assessed the purchase price accounting with reference to the
signed sale and purchase agreements relating to the business
acquisitions or new investments in associates.
Reviewed management’s assessment of when the Group
obtains control of the business combination.
Tested the accuracy of management’s calculations for the
significant mergers and acquisitions..
Tested the calculation of the total consideration payable as at
acquisition date and any changes to the consideration payable
within the earnout period.
Tested the fair value remeasurement gains resulting from a
change in the Group’s ownership moving from an associate to a
controlled entity.
Assessed the adequacy and appropriateness of the disclosures
associated with mergers and acquisitions included in Note 7
through 9 to the financial report.
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the information included in the Group’s
2024 Annual Report, but does not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any form of
assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion.
INDEPENDENT AUDITOR’S REPORT
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A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 3
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of:
►
The financial report (other than the consolidated entity disclosure statement) that gives a true and fair view in accordance
with Australian Accounting Standards and the Corporations Act 2001; and
►
The consolidated entity disclosure statement that is true and correct in accordance with the Corporations Act 2001; and
for such internal control as the directors determine is necessary to enable the preparation of:
►
The financial report (other than the consolidated entity disclosure statement) that gives a true and fair view and is free
from material misstatement, whether due to fraud or error; and
►
The consolidated entity disclosure statement that is true and correct and is free of misstatement, whether due to fraud or
error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
►
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide
a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
►
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
►
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the directors.
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A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 4
►
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on
the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
►
Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the
financial report represents the underlying transactions and events in a manner that achieves fair presentation.
►
Obtain sufficient appropriate audit evidence regarding the financial information of the business activities within the Group
to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the
Group audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant
audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on
our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the
financial report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine
that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 26 to 53 of the Directors’ Report for the year ended 30 June 2024.
In our opinion, the Remuneration Report of AUB Group Limited for the year ended 30 June 2024, complies with section 300A of
the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance
with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based
on our audit conducted in accordance with Australian Auditing Standards.
Ernst & Young
Ernst & Young
Michael Wright
Stacey Hooper
Partner
Partner
Sydney
Sydney
21 August 2024
21 August 2024
INDEPENDENT AUDITOR’S REPORT
AUB GROUP ANNUAL REPORT 2024
150
Additional information required by the ASX and not shown elsewhere in this report is as follows. The information is current as at
26 July 2024.
A.
DISTRIBUTION OF EQUITY SECURITIES
Ordinary share capital
–
116,587,434 fully paid ordinary shares are held by 5,576 individual shareholders. All issued shares carry one vote per share
and carry the rights to dividends.
–
9,018,974 fully paid ordinary shares are subject to voluntary escrow until 30 September 2024.
Performance Share Rights (PSRs)
–
2,485,758 PSRs are held by 141 individual holders. PSRs do not carry a right to vote.
Share Appreciation Rights (SARs)
–
1,016,776 SARs are held by 3 individual holders. SARs do not carry a right to vote.
There is no current on-market buy-back.
The number of shareholders, by size of holding, in each class are:
Range of shareholding
Number of
shareholders
Fully paid
ordinary
shares
Fully paid
ordinary
shares (%)
100,001 and over
30
107,052,434
91.82%
10,001 – 100,000
166
4,041,648
3.47%
5,001 – 10,000
223
1,520,432
1.30%
1,001 – 5,000
1,245
2,783,653
2.39%
1 – 1,000
3,912
1,189,267
1.02%
5,576
116,587,434
100.00%
Holding less than a marketable parcel of $5001
114
1
Based on a closing price of $31.70 on 26 July 2024.
The number of PSRs and SARs holders, by size of holding, in each class are:
Range of shareholding
Holders
of PSRs
Number
of PSRs
% of PSRs
Holders
of SARs
Number
of SARs
% of SARs
100,001 and over
2
499,825
20.11%
3
1,016,776
100.00%
10,001 – 100,000
56
1,451,501
58.39%
–
–
–
5,001 – 10,000
36
341,932
13.76%
–
–
–
1,001 – 5,000
47
192,500
7.74%
–
–
–
1 – 1,000
–
–
–
–
–
–
141
2,485,758
100.00%
3
1,016,775
100.00%
ASX ADDITIONAL INFORMATION
AUB GROUP ANNUAL REPORT 2024
151
YEAR ENDED 30 JUNE 2024
ASX ADDITIONAL INFORMATION
B.
SUBSTANTIAL SHAREHOLDERS
The following organisations have disclosed a substantial shareholding notice to ASX.
Date of Notice
Number
Fully Paid
Percentage
Integro Parent Inc.
29 May 2024
9,018,974
7.80%
The Capital Group Companies, Inc
27 April 2022
3,726,876
5.01%
C.
TWENTY LARGEST HOLDERS OF ORDINARY SHARES
Ordinary shareholders
Number
Fully paid
Percentage
1
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
39,044,162
33.49%
2
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
24,232,525
20.78%
3
CITICORP NOMINEES PTY LIMITED
18,297,284
15.69%
4
INTEGRO PARENT INC
9,018,974
7.74%
5
NATIONAL NOMINEES LIMITED
2,370,043
2.03%
6
BNP PARIBAS NOMS PTY LTD
2,201,815
1.89%
7
WASHINGTON H SOUL PATTINSON AND COMPANY LIMITED
2,018,501
1.73%
8
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
1,439,441
1.23%
9
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED
1,342,152
1.15%
10 BNP PARIBAS NOMINEES PTY LTD
974,421
0.84%
11 CITICORP NOMINEES PTY LIMITED
760,538
0.65%
12 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
566,758
0.49%
13 MASFEN SECURITIES LIMITED
537,737
0.46%
14 BNP PARIBAS NOMINEES PTY LTD
529,685
0.45%
15 PACIFIC CUSTODIANS PTY LIMITED
506,532
0.43%
16 NETWEALTH INVESTMENTS LIMITED
421,995
0.36%
17 MIRRABOOKA INVESTMENTS LIMITED
332,695
0.29%
18 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
303,888
0.26%
19 BNP PARIBAS NOMS (NZ) LTD
287,774
0.25%
20 MRS GAELEEN ENID ROUVRAY
236,723
0.20%
105,423,643
90.42%
AUB GROUP ANNUAL REPORT 2024
152
YEAR ENDED 30 JUNE 2024
DIVIDEND DETAILS
DIVIDEND DETAILS
Dividend
Amount
Franking
Ex Date
Record Date
Payment Date
Interim
20.0c Fully Franked
29/02/2024
01/03/2024
05/04/2024
Final
59.0c Fully Franked
06/09/2024
09/09/2024
27/09/2024
AUB GROUP ANNUAL REPORT 2024
153
YEAR ENDED 30 JUNE 2024
CORPORATE INFORMATION
This annual report covers the consolidated entity comprising AUB Group Limited and its subsidiaries. The Group’s functional
and presentation currency is AUD ($).
A description of the Group’s operations and of its principal activities is included in the operating and financial review in the
Directors’ report on pages 12-15.
DIRECTORS
D. C. Clarke (Chair)
M. P. C. Emmett (Chief Executive Officer and Managing Director)
R. D. Deutsch
P. G. Harmer
A. J. Kendrick
M. S. Laing
C. L. Rogers
COMPANY SECRETARIES
R. H. Bell
E. M. McGregor
ANNUAL GENERAL MEETING
The Annual General Meeting of AUB Group Limited will be held on Thursday 31 October 2024 at 10.00am.
REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS
AUB Group Limited
Level 14, 141 Walker Street
North Sydney NSW 2060
P: + 61 2 9935 2222
W: www.aubgroup.com.au
ACN: 000 000 715
SHARE REGISTRY
Link Market Services Limited
Level 12, 680 George Street
Sydney NSW 2000
P: 1800 194 270
W: www.linkmarketservices.com.au
AUB Group Limited shares are listed on the Australian Securities Exchange (ASX: AUB)
AUDITOR
Ernst & Young
200 George Street
Sydney NSW 2000
AUB GROUP ANNUAL REPORT 2024
154
www.aubgroup.com.au