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be heard 2003 Concise Report BANKING INSURANCE INVESTMENT Suncorp-Metway Ltd ABN 66 010 831 722 Contents Year in Review IFC CONCISE REPORT Vision 1 30 June 2003 Financial Highlights 2 The Concise Report incorporating the financial Chairman’s Letter to Shareholders 4 statements and specific disclosures required by Managing Director’s Letter to Shareholders 8 Accounting Standard AASB 1039 ‘Concise Financial Group Overview 14 Reports’ has been derived from the consolidated Banking 14 entity’s consolidated financial statements for the General Insurance 18 financial year. Other information included in the Wealth Management 20 Concise Report is consistent with the consolidated Our Community 24 entity’s Annual Report. Group Executive 26 The Concise Report does not, and cannot be Board of Directors 27 expected to, provide as full an understanding of Corporate Governance 28 the financial performance, financial position and Directors’ report 34 financing and investing activities of the Summary of key financial information 38 consolidated entity as does the consolidated Statement of financial performance 39 financial report. Statement of financial position 42 Statement of cash flows 44 A copy of the 2003 Annual Report, which includes Notes to the financial statements 46 the consolidated financial statements and the Directors’ declaration 59 independent audit report, is available to all Independent audit report 60 shareholders, and will be sent to shareholders on Ratio definitions 61 request without charge. Shareholder information 62 The 2003 Annual Report can be requested by Key dates 68 telephoning (07) 3835 5797 and by the internet at Contact details IBC www.suncorp.com.au Suncorp 2003 Concise Report Year in Review ‘be heard’ GIO is our main insurance brand outside The brand promise for our newly launched Queensland and all our branches now provide marketing and branding campaign. We listen to banking, insurance and wealth management our customers’ needs and deliver the relevant products and services nationally. solutions through extraordinary customer service. Vision To be the most desirable financial services company in Australia • For our customers to do business with • For our employees to work for • For the community to be associated with • For our shareholders to invest in Suncorp 2003 Concise Report 1 Newspix/David Lucietto We have secured naming rights to the Suncorp Suncorp and GIO were in Canberra to help Stadium Brisbane until 2009. Enthusiastic customers when devastating bushfires damaged spectators enjoy outstanding facilities in one of and destroyed dozens of houses and other the country’s finest sporting arenas. property. We paid $26 million in claims. Financial Highlights • Net profit up 23.5% to $384 million, compared with $311 million in 2002. • Half year profit increased by 45.8% to a record $229 million. • Underlying profit increased by 26% to $582 million. • Earnings per ordinary share, before goodwill, on a cash basis, rose 19% to 82 cents. • Return on equity, on a cash basis, fully diluted, increased from 11.9% to 12.7% and reached 14.5% in the second half. Suncorp 2003 Concise Report Operating profit after tax Dividends interim/final Cash earnings per share diluted $m cents Half Year % 2 395 47.8 30 384 29 28 41.5 41.7 335 26 25 39.0 311 24 24 35.4 2222 22 35.2 33.8 34.2 247 28.5 22.9 99 00 01 02 03 98-99 99-00 00-01 01-02 02-03 98-99 99-00 00-01 01-02 02-03 Interim December Final June • The final dividend increased by 1 cent to 30 cents per share, taking the annual dividend to 56 cents per share, up 2 cents. • Banking pre-tax profit increased 8.5% to $318 million, profit before bad debts and tax, increased 10% to $367 million. • General insurance pre-tax profit more than doubled to $233 million. Insurance Trading Result increased 85% to $209 million, equal to 10% of net premium revenue. • Wealth Management pre-tax profit fell 29% to $41 million. Excluding an $8 million one-off Suncorp gain in the prior year, profit was down 18%. 2003 Concise Report Banking General Insurance Wealth Management Profit before tax and goodwill Profit before tax and goodwill Profit before tax and goodwill* $m $m $m 3 318 233 58 56 293 284 211 229 169 163 41 31 157 110 25 99 00 01 02 03 99 00 01 02 03 99 00 01 02 03 * Excludes Life and Super policy owners’ interests, and tax. Chairman’s Letter to Shareholders Dear Shareholder, You can see that the increase in profit was mainly due to a strong improvement in general insurance results, which The 2003 year was a period of major organisational rose by 112 percent to $233 million for the year. This change and financial progress for your Company. reflects the fact that the benefits of the GIO general At a board level, the year saw the retirement of the former insurance acquisition are now flowing strongly through to Chairman, John Lamble AO in March. I would like to take the group’s profit results. this opportunity to thank John for his inspirational The acquisition has proven to be a great success, making leadership during his six years as Chairman. During that Suncorp the second largest insurance company in time, he presided over the initial merger of Suncorp, Australia, strengthening our business base and delivering Metway and QIDC in 1996, then led the Company significant returns for shareholders. through the acquisition of the GIO insurance business in 2001. I congratulate him on his success and I would like to Banking profit increased by 8.5 percent to $318 million thank my Board colleagues and shareholders for giving me during the year and showed a strong improvement in the opportunity to serve as Chairman of the Company in earnings in the second half due to a sharper focus on cost his place. controls and increased non-interest income. The year also saw the appointment of John Mulcahy as Wealth Management profits were down on the previous Managing Director and Chief Executive Officer, replacing year due to difficult conditions within the investment Steve Jones, who resigned in September last year. John industry, and because the prior year included some Suncorp took up the role in January, following a distinguished one-off gains. However, the division continues to make a career in a number of senior roles at the Commonwealth meaningful contribution to group profits, reporting a pre- 2003 Concise Report Bank, and before that at Lend Lease. He already has tax result of $41 million for the year, and showing a proven to be an outstanding appointment and has had a 9 percent improvement in second half results to $24 million. major impact in reorganising the Company, refining the The board is satisfied with the financial progress of the group strategy and implementing new disciplines to Company, with the earnings per share, on a cash basis deliver stronger financial results. before goodwill, increasing by a healthy 19 percent to 82 cents in the year. Financial Performance Summary 4 I am pleased to report a 23.5 percent increase in net profit Strategic Review to $384 million for the year to June. The improvement in When John Mulcahy joined the group in January, one of profit is very satisfying, and included a record half year his key tasks assigned by the Board was to develop and result of $229 million for the final six months of the year – implement a group strategy for the next five years. up 45.8 percent on the prior corresponding period. Following the completion of the GIO integration, the The Board has declared a final dividend of 30 cents per Company needed a new strategic plan to continue to share, up one cent, taking the full year dividend to grow the business and drive improved profitability. 56 cents per share, fully franked, and continuing the The review involved a fundamental reassessment of the group’s recent record of uninterrupted dividend increases. Company’s businesses and the opportunities available in The financial results are summarised in the following table: the rapidly evolving but fiercely competitive financial services sector. Year ended The results of the review were announced in June, and 2003 2002 Change $m $m % were well received by the investment community, which had been eager to see some clarification of the Company’s Profit Overview agenda for the future. Banking 318 293 8.5 In essence, the Company intends to retain its existing General Insurance 233 110 111.8 Wealth Management* 41 58 (29.3) business lines and will operate as a financial services Other 9 8 12.5 conglomerate. This builds on the group’s previous Allfinanz approach and takes advantage of the Company’s Profit before tax and goodwill 601 469 28.2 strong cross-sell capabilities. The difference is, however, Goodwill amortisation 62 60 3.3 that each business line, including a separate line for each Tax 155 98 58.2 of retail banking and business banking, is structured and Net profit 384 311 23.5 operated as a separate business unit, responsible and * Excludes Life and Super policy owners’ interests, and tax. accountable for its own performance. We believe that the Suncorp 2003 Concise Report 5 “The board is optimistic about the outlook for the coming year. While global economic conditions are somewhat subdued, within Australia the economy appears resilient, with good growth rates and low inflation forecast to continue.” John Story, Chairman Chairman’s Letter to Shareholders financial conglomerate strategy will enable us to achieve resignation, was appointed an executive director in returns for our shareholders that are consistently superior November. This appointment recognises both Chris’ skills to our peers in the financial services sector.