Chair Address and CEO Address - Annual General Meeting

For personal use only

10 November 2021

The Manager

Market Announcements Office

Australian Securities Exchange Ltd

Level 6, Exchange Centre

20 Bridge Street

Sydney NSW 2000

FOR RELEASE TO THE MARKET

Chair's Address and CEO's Address - Annual General Meeting

Please find attached for immediate release in relation to AUB Group Limited (ASX: AUB) the following documents:

• Chair's Address; and
• Managing Director and CEO's address.

ENDS

This release has been authorised by the AUB Board.

For further information, contact Richard Bell, Group General Counsel and Company Secretary, on [phone] or [e-mail].

About AUB Group

AUB Group Limited is an ASX200 listed group comprising insurance brokers and underwriting agencies operating in ~500 locations across Australia and New Zealand. Over 3,000 team members work with our 850,000 clients to place more than $4.0bn in insurance premiums with local and foreign insurers.

For personal use only

AUB Group - Annual General Meeting

Wednesday 10 November 2021 | 10:00am | Virtual Meeting

Chair's Address

David Clarke | Chair of the Board

Opening

At our meeting today Mike and I will report to you on AUB Group's performance and the outlook for the year ahead. This is my sixth year as Chairman of this company, a year of continued success and change with an execution focus aligned to our strategic agenda, and an excellent financial result for AUB Group shareholders.

Financial Performance

FY21 has been a challenging and difficult economic environment for our clients, partners and communities. I am however pleased to report our business continues to deliver resilient financial performance driven by strong organic growth.

In FY21, AUB Group delivered above our original guidance with another strong result where the Underlying Net Profit After Tax (UNPAT) increased by 22.9% compared to the previous year.

Capital Position & Dividend

Despite a challenging and uncertain macroeconomic environment, our balance sheet remains strong, and the corporate entity was cash generative with $60mn in operating cashflow We have access to $89.5m in cash and debt funding, and the gearing ratio improved to 28.5% as at 30 June 2021.

As a result of our financial performance and capital position, the Directors approved a final fully franked dividend of 39.0 cents per share, paid on 11 October 2021. This, together with the interim dividend of 16.0 cents, results in a full year dividend of 55.0 cents, a 10.0% increase on FY20 and a payout ratio of 62.5% on Underlying NPAT.

Strategic Agenda

The Group's focus on delivery and execution of its Strategic Priorities continued to be a success with key highlights including an acquisition of 360 Underwriting which became the cornerstone for our restructure of the Underwriting Agencies division. Additionally, acquisitions of Experien, QRM and YDR continue to validate the success of our M&A agenda. The Group also successfully exited Altius, following the exit from Allied Health in FY20 and this completed our strategic exit from the Health and Rehabilitation sector.

Looking ahead, the Group's FY22 strategic focus will be primarily a continuation of the previous year's objectives, however the ongoing economic uncertainty will make future assumptions difficult.

For personal use only

Board Changes

In July 2021, we welcomed Peter Harmer to the Board as a Non-Executive Director, and he is standing for election at this meeting. Peter is a respected senior executive from the Insurance industry and brings considerable industry and executive expertise and experience to the Board. Peter previously served as the Managing Director and CEO of IAG Limited, CEO of Aon Limited UK, and is currently serving as a Non- Executive Director of Commonwealth Bank of Australia and nib Holdings. The appointment follows the planned retirement of Ray Carless from the AUB Group Board on 31 August 2021. Ray has been an outstanding contributor to AUB during his time as a Director and I want to thank Ray sincerely for his service and contribution and wish him all the very best for the future.

Corporate Responsibility - Environment, Social and Governance

Robust environmental, social and governance (ESG) practices remain an area of focus for the Board and Management, while our clients, colleagues and shareholders are becoming increasingly interested in how we manage sustainability within our business. In the past year, we were pleased by the material progress made towards establishing an integrated approach to ESG which will result in increased transparency, accountability, and reporting against objectives.

The Board is committed to ensuring the business acts responsibly in how we engage with our partners, clients and suppliers, how we support our colleagues, how we manage our impact on the environment and how we contribute to the communities in which we operate. As a result, we have implemented policies, training, recruitment, and recognition practices that deliver a diverse and inclusive workplace, and we are building our capability to proactively manage our impact on the environment.

The Group has met the challenges of the pandemic and resultant public health orders to redesign our approach to the workplace. The Group has undertaken a variety of market-leading initiatives designed to materially uplift employee welfare including remote working, home-office allowances, mandatory ergonomic checks, access to health and wellbeing programs as well as vaccine incentivisation to support Health authorities to deliver a path out of the pandemic. The initiatives have required financial and non- financial investment deemed essential for the long-term welfare of our employees and the business.

Outperformance Plan

We have an additional remuneration item to vote on this year compared to previous years. Your Board believes the company has significant opportunities to grow over the next 5 years. Part of accessing those opportunities and where appropriate acting on them requires all aspects of the company to be performing. We have a Management Team led by Mike Emmett who are showing a rare combination of risk awareness, growth orientation, and high-level Leadership skills.

The key purposes of the one-off scheme put forward for consideration under Resolution 6 are to provide a potential reward for transforming the business and longer-term outperformance of stretch performance targets, drive a longer-term focus and ensure that executives have a stronger sense of share ownership to align the management team with the interests of shareholders. We believe the company, with the current management team has a very exciting future ahead of it and retaining for the long term and incentivising our key leaders is an important component of achieving that future.

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For personal use only

Conclusion

On behalf of the Board, I would like to thank our shareholders for your commitment and support in FY21. I'd also like to commend and express my gratitude to AUB Group partners and employees for their continued resilience and focus during a challenging year, while also acknowledging the ongoing support from our clients. Although the uncertainty from the pandemic continues to loom over us, I'm hopeful that we will see a return to a more normal business life in the near future.

I would now like to hand over to Mike to give you an update on your business and the key results as well as an outlook for financial year 2022.

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For personal use only

CEO and MD's Address

Mike Emmett | Chief Executive Officer and Managing Director

Opening

Thank you, David, and Good Morning everyone.

FY21 Financial Performance

While the past year held immense challenges for our clients, our staff, and our partner businesses, it is the disciplined execution of our growth and profitability strategies that enabled us to deliver record financial performance. The Group placed ~$4.0bn in premium, a significant increase on prior years and premium retention improved to an all-time high of 93%. Once again, the foundations of our strong business model - the strength of our client value proposition, the depth of client relationships and the diversity of our portfolio delivered a solid result for the Group with Underlying NPAT growing by 22.9% to $65.3m. The Underlying NPAT includes the impact of a change in the accounting treatment for costs of IT projects utilising Software as a Service solutions. During the year, excellent organic profit growth of 16.3% was supplemented by an accretive 10.9% profit contribution from acquisitions.

FY21 Underlying Revenue grew by 11.6% on the prior year to $651.8m. Progress from strategic initiatives helped strengthen our EBIT margin by 360bps to 31.9%. Australian Broking, our largest operating business, is performing well. Revenue grew and the operating margin expanded. Broking margins have now improved by 400bps since FY19. Our investment in BizCover has been very positive, with annual growth in revenue of 35% and profit before tax of 66% on a proforma basis since investment. In the Agencies Division, a new operating structure, the acquisition of 360 Underwriting, and rollout of the new Sentinel Agency system are all contributing to performance improvements, with FY21 profit before tax growing by 14% and margin expanding by 100bps. We anticipate further growth in Agency profits as momentum builds in FY22. Financial results in New Zealand are expected to improve in early FY23 as the business is still in the early stages of transformation with a large system implementation currently underway.

An Update on Strategic Priorities

The execution of key projects has assisted the acceleration of underlying revenue, margin, and profit growth over the past two years. During FY21, we initiated numerous business mergers, realigned client portfolios, made strategic disposals, and rationalised entities to create scale and a simpler business. Over the past two years, we have reduced the number of operating entities from 105 to 75. In the process, we have improved the performance of low-profit and, in some cases, loss-making portfolios and created specialised businesses that are winning new clients in the market. The objective is to leverage the scale and margin benefits of more significant Austbrokers members to develop fewer, bigger, better run and more profitable operations in the AUB portfolio.

Our focus on strategically aligned and disciplined acquisition has continued with investments during FY21 in Experien, Bestmark, QRM, 360 Underwriting, YDR, and TLC Underwriting. We continue to be able to add quality businesses to our group although I will say we are highly selective in our approach to acquisitions

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