Solid Result For AXA
(All figures are reported in Australian dollars)
14 December 2000
Operating Profit after Tax and Before
Abnormals up 16% to $309m
A Solid Result
AXA Asia Pacific Holdings Limited today announced an operating profit for the full year to 30 September 2000 of $309.4 million after tax and before abnormals, up 16 per cent from the corresponding period last year (1999 - $266.7m).
Total profit after tax and abnormals of $374.1million for the year was up 24 per cent (1999 - $302.0m). Abnormal items include one-off accounting profits of $102.6 million resulting from reorganisation of the Group holding structure and provisions of $37.9million in respect of the transformation program in Australia and New Zealand. Total profit after income tax and abnormals for Australia and New Zealand was $131.7million (1999 - $160.6).
The Directors have declared a final dividend of 5 cents per share franked to 30 per cent which follows an interim dividend of 4.5 cents which was franked to 60 per cent. (1999 was 9 cents franked to 60 per cent).
2000 1999 % Change
Operating Earnings 237.5 190.9 24
Investment Earnings 198.8 145.9 36
Corporate Expenses (37.0) (5.8) (538)
Interest Expense (72.0) (28.8) (150)
Other (17.9) (35.5) 49
Operating Profit after Income Tax before Abnormals 309.4 266.7 16
Abnormals 64.7 35.3 83
Total Profit after Income Tax and Abnormals 374.1 302.0 24
Restructuring Provisions (37.9) (8.2)
Write-off of AC&L goodwill (46.7)
Profit on Transfer of AXA CR 149.3 -
Profit on NMFM Business Sale - 28.8
Profit on China Everbright Sale - 14.7
Abnormal Items 64.7 35.3
Dividend Interim Dividend
Dividend 5.0c 4.5c 9.5c 9.0c 6
Franking 30% 60%
EPS (cps)* 17.6 15.1 16
ROE** 11.4% N/A
* EPS has been adjusted from the 16.6 cps shown in the 1999 accounts to be consistent with 2000. The difference relates to the categorisation of certain expenses in 1999 as abnormals.
** Calculated as profit before abnormals as a percentage of average shareholders equity. 1999 not available as 1998 shareholder equity not restated on AASB 1038 basis.
Australia and New Zealand
Operating profit after tax and before abnormals for the year ended 30 September 2000 was $169.6million (1999 -$166.8m).
Operating earnings were $97.8 million, up 16 per cent (1999 - $84.2m) and investment earnings were $90.4million (1999 - $111.0m, which included substantial one-off gains) The Health Business was particularly strong with operating earnings improving 188 per cent to $39.8million (1999 - $13.8m)
2000 1999 %
Operating Earnings 97.8 84.2 16
Investment Earnings 90.4 111.0 (19)
Non-recurring costs (18.6) (28.4) 34
Operating Profit after Income Tax before Abnormals 169.6 166.8 2
Restructuring Provision (37.9) (6.2) (511)
Total Profit after Income Tax and Abnormals 131.7 160.6 (18)
AXA China Region
On a proforma basis, profit after tax increased by 39 per cent to $259.2million (1999- $187.1m). Operating earnings were marginally lower at $139.6million (1999 - $145.7m) while investment earnings grew strongly by 151 per cent to $119.6million (1999 - $47.7). The Group’s share of profit after tax and abnormals was $247.9million (1999 – $137.6m).
Group Share Proforma
2000 1999 2000 1999 % Change
Operating Earnings 133.9 106.7 139.6 145.7 (4)
Investment Earnings 114.0 34.9 119.6 47.7 151
Change in Liability Basis - (4.0) - (6.3) 100
Total Profit after Income Tax and Abnormals 247.9 137.6 259.2 187.1 39
AXA Life Singapore contributed $5.2million
after tax and abnormals following the acquisition of this
business on 30 September 1999.
Group Chief Executive Officer’s comments
Commenting on the results and on prospects for the future, Group Chief Executive Les Owen said:
“The last 12 months has seen major change for the company as we seek to turn around the performance of the Australian and New Zealand businesses and, seen in this context, these are a solid set of results.
The highlights are the contribution to operating earnings from AXA China Region which has benefited from strong investment returns, and from our Health business.
I am also pleased that following two years of losses in our income protection business the changes we have implemented over the last six months are starting to produce results. There is still some way to go but we are moving in the right direction.
Twelve months ago we were in a position of having a low and declining market share in the fast growing investment and superannuation markets. We have set out a very clear strategic focus – wealth accumulation and financial protection – a focus which is consistent with AXA’s global strategy.
We have laid out five aspirational goals to be achieved by 2003:
To double the value of new
To reach the top five in terms of net retail funds inflows
To reduce our management/expense ratio by 50 per cent
To be rated in the top quartile in terms of service and support to advisers
To be one of the best companies in the AXA group in terms of employee satisfaction
There is now a clear sense of direction in the Australian and New Zealand business.
I was delighted to be able to announce in October the formation of a partnership with Alliance Capital Management, one of the global leaders in asset management. This has been very well received by the market and we are on target for completion in December. We expect to have completed the integration of the two businesses by the end of February 2001. We will have top class investment teams operating in Melbourne, Sydney and Wellington. We have already launched our first new product to be managed by the joint venture company – a Global Equity Growth Fund. I am confident that this partnership will form the foundation for growth in the investment and superannuation markets over the next three years and will give us sustainable competitive advantage.
We have also implemented a new organisational structure with more focus on distinct distribution segments and strengthened our marketing capability. These changes have been supported by a significantly strengthened senior management team and I am delighted with the calibre of the people that we have been able to attract.
We have made further progress in reducing the cost base of the business and have successfully disposed of non-core businesses in lending and trustee services in Australia and New Zealand.
We have also completed a review of our eCommerce strategy. We are focusing on supporting and developing our existing advice based distribution channels and on process redesign and service enhancements.
Our business in Hong Kong – AXA China Region – has performed well in the face of fierce competition as the market matures. Competition from the banks has been particularly strong with the new Mandatory Provident Fund. Despite this we have captured about eight per cent of the market and are one of only five companies appointed by the government as a provider to their employees. Approximately 40 per cent of employers in Hong Kong have yet to choose an MPF provider and this, together with the expected exit from the market of subscale providers, offers opportunities to increase our share over the next 12 months.
While we have lost some agents as a result of competitor poaching activity, the effect on our business from this is relatively small. We are determined to maintain the quality and reputation that helped us win the Best Insurance Company in Hong Kong (2000) award from Capital Magazine. The practice of paying high upfront payments to entice agents to move and then encouraging them to churn in-force business to the detriment of customers is not one that will deliver longterm shareholder value. We have taken legal action against a number of our former agents and against one of our competitors in Hong Kong to deter this kind of behaviour.
Agent productivity in Hong Kong has been very encouraging in recent months and we are confident that we will start to grow our agency force and, with the introduction of our new unit linked product range in January, we expect return to new business growth.
The last 12 months has seen us, in partnership with AXA and Minmetals, establish our business in Shanghai. We now have a full product range in the marketplace and more than 700 agents in place. We are strategically well positioned in a market that has enormous long-term potential.
Our international businesses in Indonesia, the Philippines, Singapore and Thailand have all had extremely strong new business growth ranging from increases of 64 per cent to over 500 per cent. We have also made good progress in developing bancassurance relationships with our partners – Metrobank in the Philippines and Krung Thai Bank in Thailand – and we are confident that these will contribute to future growth.
Looking forward, we have much to do if we are to deliver the performance that we aspire to. In Australia and New Zealand we need to build on the initial steps we have taken to instil a performance culture, to maximise the advantages that our partnership with Alliance Capital will bring, to launch new mutual funds and enhance superannuation products next year, to continue the turnaround in profitability of our income protection portfolio, to increase the productivity of our aligned advisers and to develop stronger relationships with independent adviser businesses and dealerships.
In Hong Kong we must return our highly successful agency team to growth without sacrificing quality and professionalism. We will also be expanding distribution capability through the development of salaried advisers in the corporate market. And in our international businesses we are looking for continuation of the strong new business growth we have seen, and will be moving towards a regional management and operational model leveraging synergies in support areas and achieving cost efficiencies.
The last 12 months have been about getting the right structure, people and capabilities in place. The next 12 months will be about strengthening our offer in the marketplace and developing and strengthening our distribution relationships. If we can continue to build on the solid start we have made there is no reason why our aspirations cannot be achieved.”
Robin Burns 03 9616 3631
Simon Morgan 03 9618 4944 or 0401 991 579
AXA Asia-Pacific Holding’s Full Year Results
New Zealand Comment
For immediate release
In line with the AXA Asia-Pacific full year profit figures, AXA New Zealand today announced an annual net profit to 30 September of $22.1m. This compares to $24.5m last year.
Profits for AXA New Zealand were affected by the profitability of the Income Protection business and restructuring costs resulting from a change project aimed at focusing AXA New Zealand on its core businesses of Investments and Life Insurance.
This focusing has seen the recent sales of non-core assets including AXA New Zealand Health to Tower, New Zealand Permanent Trustees to the Public Trust and AXA New Zealand’s lending assets also to the Public Trust.
“The results are what we expected given the amount of change we have made to our business. AXA New Zealand is now in a much better position to grow its market share in funds management and life insurance” says AXA New Zealand Chief Executive, Ross McEwan.
“AXA New Zealand is beginning to see the benefit of the changes it has made. We have had overall business improvements in investment performance, life sales and cost reduction and it is our intention to build on these early signs of success in 2001.”
“We have a highly proactive external partner working with our Income Protection claimants to rehabilitate them and manage them back to work so there should be considerable improvement in our profitability in this area over the course of this year.” Mr McEwan added.
AXA New Zealand highlights:
New corporate strategy
launched – focusing on Investments and Life Insurance sold
through a multi-channel sales operation
NZ Life Insurance new business is up 16% on last year
NZ expenses reduced by 35% over the last two years
New Joint Venture with Alliance Capital Management formed
NZ non-core assets sold: New Zealand Permanent Trustees, Lending assets and AXA New Zealand Health (after 30 September 2000)
Key senior appointments – Julian Moore to GM of Marketing and Kevin McLean to head up Financial Planning area
For more information on AXA New Zealand results please contact:
Chief Executive Officer
Office – 04 474 4765
Cellphone – 025 333 993
General Manager, Marketing
Cellphone – 021 890 792
AXA Asia Pacific Holdings
Senior Management Team