Steadfast Group Limited · ASX:SDF
Steadfast — FY2022 Earnings Presentation
77 slides from Steadfast's earnings presentation, Aug 17, 2022
Slide 1: FY22 Results, Insurance Brands Australia acquisition, Trapped Capital update and equity raising
2022 Steadfast Group FY22 Results, Insurance Brands Australia acquisition, Trapped Capital 17 August 2022 update and equity raising
Slide 2: Important notice and disclaimers
Important notice and disclaimers Important Notice and Disclaimer IMPORTANT: You are advised to read the following carefully before making any use of the information contained in this presentation. This presentation has been prepared by Steadfast Group Limited (ABN 98 073 659 677) (Steadfast or the C
Slide 3: Important notice and disclaimers
Important notice and disclaimers No representation or warranty, express or implied, is made as to the fairness, accuracy, adequacy, completeness, correctness or reliability of any statements, estimates, opinions, conclusions or other information contained in this presentation. To the maximum extent
Slide 4: Important notice and disclaimers
Important notice and disclaimers Market data Certain market and industry data used in this presentation may have been obtained from research, surveys or studies conducted by third parties, including industry or general publications. Neither Steadfast nor its representatives or its advisers have inde
Slide 5: Table of content
Table of content FY22 results, Insurance Brands Australia acquisition, Trapped Capital update and equity raising 06 FY22 Highlights and Key Updates 16 FY22 Financial Summary Acquisition of Insurance Brands Australia, Trapped Capital update and 24 equity raising 36 FY23 Guidance Appendices 39 5
Slide 6: FY22 Highlights and Key Updates
FY22 Highlights and Key Updates 6
Slide 7: Steadfast Group: Increase in underlying NPAT of 29.3%
Steadfast Group Increase in underlying NPAT of 29.3% Statutory earnings1 Broker and underwriting agency growth NPAT of $171.6m (FY21 $143.0m) Equity brokers and network aggregate underlying EBITA +23.6% (refer slide 20) Underwriting agencies’ underlying EBITA +22.5% (refer slide 21) Underlying
Slide 8: Trapped Capital acquisitions update
Steadfast Group Trapped Capital acquisitions update FY221 Annualised Acquisition EBITA cost 23 completed acquisitions Trapped Capital $44.4 million $525 million FY232 Estimated Estimated Annualised Acquisition cost EBITA 2 completed acquisitions $1.4 million $12 million IBA acquisition $21.2 million
Slide 9: IBA Acquisition overview
IBA Acquisition overview Insurance Brands Australia (IBA) is a large Australian unlisted insurance distribution business • Insurance Brands Australia was established in 1983 is one of Australia’s leading private insurance distribution firms • Insurance Brands Australia has a network of over 400 insu
Slide 10: Steadfast Broking
Steadfast Broking Sustained growth and further network acquisitions Financial highlights FY22 vs FY21 Steadfast Network GWP +13.1% to $11.1 billion driven by: 10.2% organic growth for the period GWP of $11.1bn vs $9.8bn GWP is 86% commercial lines, 14% retail +10.2% organic growth: 7.7% price
Slide 11: Steadfast Underwriting Agencies
Steadfast Underwriting Agencies Sustained growth driven by price and volume Financial highlights FY22 vs FY21 Steadfast Underwriting Agencies GWP +19.9% to $1.8 billion Driven by price and volume uplift GWP of $1.8bn vs $1.5bn Property line pricing remains strong +17.1% organic growth Opport
Slide 12: Final dividend up 11.4%
Final dividend up 11.4% Final FY22 dividend Final FY22 dividend of 7.8 cps (fully franked), up from 7.0 cps in FY21, +11.4% 16.0 Dividend Reinvestment Plan (DRP) to operate for final FY22 dividend 14.0 No discount will be applied 12.0 Key dates for final FY22 dividend: Ex dividend date: 22
Slide 13: FY22 operating update
FY22 operating update Steadfast Risk Group product expansion • Rolled out Steadfast Insurer Value Score system • Continue the rollout of our comprehensive suite of enhanced risk management solutions and systems • Extended our team of risk experts in their field of expertise, in alternative risk tran
Slide 14: Our insurTech
Our insurTech Continued broker take up of our technology platforms Steadfast Client Trading Platform SCTP delivers strong client outcomes, addressing several concerns raised by the $945m GWP transacted through SCTP in FY22 Hayne Royal Commission +19% Genuine contestable marketplace, generating i
Slide 15: Continued strong track record since listing on ASX
Continued strong track record since listing on ASX Steadfast Group 1 Steadfast Network GWP ($bn) Steadfast Underwriting Agencies GWP ($m) Underlying EBITA ($m) 12 2,000 360 320 10 1,500 280 8 240 200 6 1,000 160 4 120 500 80 2 40 0 0 0 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY14 FY15 FY16 FY17
Slide 16: FY22 Financial Summary
FY22 Financial Summary 16
Slide 17: Reconciliation of statutory NPAT to underlying NPAT
Reconciliation of statutory NPAT to underlying NPAT Reconciliation of statutory NPAT to underlying NPAT Statutory vs Statutory vs underlying 12 months to 30 June underlying reconciliation $ million reconciliation FY22 FY21 Statutory NPAT 171.6 143.0 Adjusted for non-trading items (net of tax and non
Slide 18: Group financial performance
Group financial performance Strong underlying earnings growth Underlying earnings 12 months to 30 June Underlying Underlying Period-on-period $ million FY221 FY211 growth % Revenue ($m) 1,135.9 899.9 26.2% EBITA ($m) 340.4 262.7 29.5% NPAT ($m) 169.0 130.7 29.3% Diluted EPS (NPAT) (cents) 17.58 15.0
Slide 19: Drivers of 29.5% growth in underlying EBITA
Drivers of 29.5% growth in underlying EBITA1 Organic and acquisition growth Organic Growth: $35.1m/13.3% Acquisition Growth $42.7m/16.2% $400.0m $350.0m $5.5m / 2.1% $77.7m / 29.5% $37.1m / 14.1% $6.8m / 2.5% $300.0m $28.3m / 10.8% $250.0m $340.4m $200.0m $262.7m $150.0m $100.0m FY21 EBITA Organic G
Slide 20: Steadfast Broking
Steadfast Broking Organic and acquisition growth Equity brokers and network - consolidated & equity accounted (assuming 100% ownership) 12 months to 30 June 2022 Underlying Underlying Period-on-period Organic Growth from $ million FY221 FY211 growth % growth % acquisitions % Net revenue 716.1 589.1
Slide 21: Steadfast Underwriting Agencies
Steadfast Underwriting Agencies Organic growth driven by price and volume Steadfast Underwriting Agencies – consolidated & equity accounted (assuming 100% ownership) 12 months to 30 June 2022 Underlying Underlying Period-on-period Organic Growth from $ million FY221 FY211 growth % growth % acquisiti
Slide 22: Continued conversion of profits to cash
Continued conversion of profits to cash FY22 cash flow statement Cash flow summary¹ $ million FY22 FY213 $ million FY22 FY213 Adjusted net cash from operating activities 247.0 196.0 Statutory operating cash flow² 261.0 210.0 Cash used for dividends (107.9) (61.3) Less lease obligation payments (14.0
Slide 23: Conservatively geared balance sheet
Conservatively geared balance sheet Statutory balance sheet $ million 30 June 22 30 June 21 Corporate debt facilities (excludes premium funding) $ million Maturity Total Cash and cash equivalents 280 231 Facility A – Revolving Nov 2024 320 Cash held on trust 665 506 Facility B – Term Nov 2024 140 Pr
Slide 24: Acquisition of Insurance Brands Australia, Trapped Capital update and equity raising
Acquisition of Insurance Brands Australia, Trapped Capital update and equity raising 24
Slide 25: IBA acquisition summary
IBA acquisition summary IBA acquisition strengthens Steadfast’s position as the leading general insurance broker network in Australasia Strategic alignment of Insurance Brands Australia acquisition Acquisition of Insurance Brands Australia summary • Highly successful business with an excellent growt
Slide 26: Overview of Insurance Brands Australia
Overview of Insurance Brands Australia Insurance Brands Australia is comprised of five different business divisions providing earnings diversification Insurance broking – Underwriting agencies – Authorised Reps – Digital – Life Insurance – Insurance House Armada & ProRisk Insurance House Advance ins
Slide 27: Insurance Brands Australia financial performance trends
Insurance Brands Australia financial performance trends Insurance Brands Australia has a track record of strong revenue growth and operating leverage GWP ($m) EBITA ($m)1 450 25 20 410 15 370 10 330 5 290 0 FY20 FY21 FY22 FY23F 250 FY20 FY21 FY22 Net Revenue ($m)1 EBITA Margin (%)1 70 30% 65 25% 60
Slide 28: Benefits to Steadfast Group
Benefits to Steadfast Group Enhancing Steadfast’s earnings growth profile • Acquisition strengthens Steadfast’s position as the leading general insurance broker network in Australasia • Strong strategic alignment with Steadfast’s insurance broking network • Enhances Steadfast’s platform and offering
Slide 29: Steadfast's acquisition track record
Steadfast’s acquisition track record Steadfast has a proven track record of successfully completing earnings accretive acquisitions Established track record of evaluating, executing and integrating M&A opportunities Long standing dedicated internal acquisitions team In line with previous acqui
Slide 30: Increasing Steadfast Group's share of growing Network GWP
Increasing Steadfast Group’s share of growing Network GWP Steadfast Network Since IPO, Steadfast has successfully implemented the dual strategies of growing our network as well as increasing equity stakes in the network The acquisition of Insurance Brands Australia increases our equity ownership
Slide 31: Trapped Capital pipeline acquisitions and equity raising
Trapped Capital pipeline acquisitions and equity raising Current Trapped Capital acquisitions pipeline of c.$400 million at an average EBITA multiple of c.10x $95 million debt capacity, pre capital raise and post $220 million utilised in IBA acquisition Steadfast has launched a fully underwritte
Slide 32: Sources and uses
Sources and uses Fully underwritten Institutional Placement to raise $225 million Source of funds Fully underwritten Institutional Placement1 $225.0m Steadfast scrip issued to Insurance Brands Australia vendors $56.1m Debt funding for acquisition of IBA $244.9m Total $526.0m Use of funds Transaction
Slide 33: Pro-forma gearing and debt capacity
Pro-forma gearing and debt capacity Post equity raise and IBA acquisition debt capacity of $320m Pro-forma IBA pre Trapped $ million 30 June 22 acquisition2 Equity raising3 Capital Debt (excluding premium funding) 425.8 219.9 -225.0 420.7 Equity 1,813.9 56.1 225.0 2,095.0 Debt + equity 2,239.7 276.0
Slide 34: Pro forma FY23 acquisitions estimated to provide c.3% annualised EPS accretion
Pro forma FY23 acquisitions estimated to provide c.3% annualised EPS accretion Other Trapped Capital pipeline opportunities to add incremental earnings accretion FY23 estimated earnings contribution1 FY23 IBA EBITA (annualised basis)2 $21m FY23 IBA NPAT (annualised basis)2 $11m FY23 Trapped Capital
Slide 35: Pro forma FY23 acquisitions estimated to provide c.3% annualised EPS accretion
Pro forma FY23 acquisitions estimated to provide c.3% annualised EPS accretion Other Trapped Capital pipeline opportunities to add further EPS accretion FY23 acquisitions estimated Annualised EPS (NPAT) growth Annualised EPS accretion: c.3% 6% -3% -1% -5% $295m of debt capacity1 6% plus additional c
Slide 36: FY23 guidance
FY23 guidance Steadfast continues to deliver growth in earnings and meet guidance FY23 Guidance Range1 Key assumptions: Strategic partners continue premium price increases Underlying EBITA $400 million - $420 million Completion of Insurance Brands Australia acquisition $250m equity raised (Ins
Slide 37: Equity raising – Placement and SPP overview
Equity raising – Placement and SPP overview Placement offer • Fully underwritten institutional placement to raise approximately $225 million (“Placement”) structure and size • The final Placement issue price (“Issue Price”) is expected to be announced to ASX on Thursday, 18 August 2022 prior to resu
Slide 38: Equity raising – timetable
Equity raising – timetable1 Event Date1 (2022) Record date for SPP Tuesday, 16 August 2022 (7.00pm) Trading halt and announcement of the Placement Wednesday, 17 August 2022 Placement bookbuild Wednesday, 17 August 2022 Announcement of the outcome of the Placement Thursday, 18 August 2022 Trading hal
Slide 39: Appendices
Appendices Key risks and Jurisdictions (slide 40) Steadfast Group (slide 53) Steadfast Network (slide 57) Steadfast Underwriting Agencies (slide 64) Our InsurTech (slide 66) FY22 detailed financials (slide 70) 39
Slide 40: Key risks and International offer restrictions
Key risks and International offer restrictions 40
Slide 41: Key risks
Key risks 1. INTRODUCTION The future performance of Steadfast and the future investment performance of the Steadfast shares (before and after the Insurance Brands Australia acquisition) may be influenced by a range of factors, many of which are outside the control of Steadfast and its directors. A n
Slide 42: Key risks continued
Key risks continued Reliance on strategic partners Steadfast is continually adding new strategic partners and attempts to maintain and strengthen relationships with strategic partners, many of which are longstanding. If, however, strategic partners are lost and not replaced within an appropriate tim
Slide 43: Key risks continued
Key risks continued 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 significant loss of
Slide 44: Key risks continued
Key risks continued Technology and cyber security risk Steadfast faces risks relating to failure of critical technology assets, infrastructure and services and the risk of loss from theft or unauthorised access to systems including the compromise of an IT asset’s confidentiality, integrity or availa
Slide 45: Key risks continued
Key risks continued The Coronavirus (Covid) pandemic Despite the global rollout of vaccine programs, the Covid pandemic continues to impact the domestic and global economy such as increased volatility and negative investor sentiment in financial, capital and retail markets both in Australia and glob
Slide 46: Key risks continued
Key risks continued ⁻ any regulatory body commences any public action against an officer of Steadfast in his or her capacity as an officer of Steadfast or announces that it intends to take any such action or an officer of Steadfast is charged with an indictable offence or is disqualified from managi
Slide 47: Key risks continued
Key risks continued Reduction in GWP in the insurance market Steadfast has a number of revenue sources linked to the size and growth of GWP in the insurance market (in particular, the general insurance market in Australia), including dividends from its operating businesses, which are influenced by t
Slide 48: Key risks continued
Key risks continued Technological developments Insurance providers are increasingly seeking to reduce administrative costs and heighten efficiency through the use of technology. Both Australian and international insurers have been investing heavily in insurance technology (Insurtech). Insurtech has,
Slide 49: Key risks continued
Key risks continued Change of Control The Insurance Brands Australia acquisition may trigger change of control clauses in some material contracts to which Insurance Brands Australia is a party. When triggered, the change of control clause will often require Steadfast to seek the counterparty’s conse
Slide 50: International offer restrictions
International offer restrictions International Offer Restrictions This document does not constitute an offer of new ordinary shares (New Shares) of the Company in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Shares may
Slide 51: International offer restrictions
International offer restrictions Hong Kong (continued) No advertisement, invitation or document relating to the New Shares has been or will be issued, or has been or will be in the possession of any person for the purpose of issue, in Hong Kong or elsewhere that is directed at, or the contents of wh
Slide 52: International offer restrictions
International offer restrictions Switzerland (continued) Neither this document nor any other offering or marketing material relating to the New Shares may be publicly distributed or otherwise made publicly available in Switzerland. The New Shares will only be offered to investors who qualify as "pro
Slide 53: Steadfast Group
Steadfast Group 53
Slide 54: Business units focused on the intermediated general insurance market
Business units focused on the intermediated general insurance market Steadfast Group as at 30 June 2022 Steadfast Group (listed on ASX) Steadfast Network UnisonSteadfast Steadfast Underwriting Agencies Complementary Businesses 427 general insurance brokers 272 brokers in UnisonSteadfast 28 underwrit
Slide 55: Size and scale
Size and scale Steadfast Group as at 30 June 2022 Largest general insurance broker network in Australasia Largest group of underwriting agencies in Australasia $11.1 billion 427 $1.8 billion 28 Annual GWP1 Steadfast Network brokers Annual GWP1 Underwriting agencies Steadfast Network collects profess
Slide 56: Our market
Our market $31 billion of intermediated general insurance GWP written in CY21 Australian market – gross written premium1 Steadfast Group is focused on the intermediated $31bn general insurance market, Intermediated market with a primary focus on SME Steadfast Network brokers CY21 $10.5bn Intermediat
Slide 57: Steadfast Network
Steadfast Network 57
Slide 58: Largest general insurance broker Network in Australasia
Largest general insurance broker Network in Australasia Steadfast Network Steadfast Network Strategy Steadfast Network $11.1bn The Steadfast Network has 427 general Exclusive to Steadfast Network brokers Be the best solution for our clients’ needs insurance brokers in Australia, New Zealand Oper
Slide 59: Steadfast Network brokers have joined the Network since IPO
Steadfast Network 284 brokers have joined the Steadfast Network since IPO Number of Steadfast Network brokers 600 22 113 77 550 500 31 16 427 450 31 4 123 400 350 300 276 250 200 August New brokers Allied NZ Insight IBNA Singapore Merged Sold externally Leavers June 2022 2013 (IPO) In FY22, 14 bro
Slide 60: Worldwide broker offices (excluding UnisonSteadfast)
Steadfast Network Worldwide broker offices (excluding UnisonSteadfast) 1 United Kingdom 46 Asia 13 404 Northern Territory 210 Queensland 114 Western Australia South Australia 559 New South Wales 134 22 North Island 525 Australian Capital Territory Victoria 2,091 broker offices 32 across Australia, 3
Slide 61: Australia – resilient SME client base
Steadfast Network Australia – resilient SME client base 1 GWP mix Diversified by product line Diversified by geography Diversified by insurer 2% 14% 5% 28% 14% 37% Micro (Policy size <$650) Small Enterprise (Policy size $650 - $5,000) Business Pack 17% VIC 36% QBE 17% Small Enterprise (Policy size $
Slide 62: International footprint
International footprint Steadfast Network model replication 1. New Zealand 50 brokers in the Network Steadfast Underwriting Agencies building market presence utilising NZ$664m of gross written premium Network distribution in FY22 Strong buy-in from insurer partners SCTP introduced 2. Asia
Slide 63: International footprint: UnisonSteadfast
International footprint UnisonSteadfast Steadfast Group has an equity ownership stake of 60% in UnisonSteadfast One of the world’s largest global general insurance broker networks, offering multi-jurisdictional coverage 600+ Referrals between the Steadfast Network and UnisonSteadfast Superviso
Slide 64: Steadfast Underwriting Agencies
Steadfast Underwriting Agencies 64
Slide 65: Steadfast Underwriting Agencies
Steadfast Underwriting Agencies 28 agencies, over 100 niche products Complete farm package Caravans, campervans, Commercial and Accident and health Residential and commercial Marine hull and other cabins, trailers and horse residential strata strata marine industry floats Specialised and exotic Emer
Slide 66: Our insurTech
Our insurTech 66
Slide 67: Steadfast Client Trading Platform – benefits for clients, brokers and insurers
Our insurTech Steadfast Client Trading Platform (SCTP) – benefits for clients, brokers and insurers Market-leading technology – exclusive to Steadfast Network brokers, clients and participating insurers Benefits for clients: Genuine contestable marketplace generating improved pricing, competit
Slide 68: Insurer and underwriting agency partners on the SCTP
Our insurTech Insurer and underwriting agency partners on the SCTP Commercial property Domestic home, Business pack Professional risks Liability Commercial motor Strata & ISR motor & landlords CY22 3Q CY22 FY23 Key: indicates new insurers joining SCTP product lines 68
Slide 69: Steadfast Technologies
Our insurTech Steadfast Technologies Steadfast Client Trading Platform (SCTP) The Steadfast Client Trading Platform is a digital INSIGHT is an insurance broking platform with a UnderwriterCentral is a cloud-based agency marketplace which provides Steadfast Network insurance powerful search engine wh
Slide 70: FY22 Detailed Financials
FY22 Detailed Financials 70
Slide 71: FY22 detailed financials
FY22 detailed financials Reconciliation of statutory to underlying earnings 12 months ended 30 June 2022 Total statutory Reclassifications Non-trading items Total underlying $ million Net fee and commissions income 793.2 200.4 - 993.6 Premium funding interest income 72.8 - (0.5) 72.3 Share of profit
Slide 72: FY22 detailed financials
FY22 detailed financials Statement of underlying income (IFRS view) 12 months ended 30 June 2022 Underlying Underlying Period-on-period Organic Acquisitions & $ million FY22 FY21 growth % growth %2 hubbing growth %3 Fees and commissions1 993.6 791.9 25.5% 12.2% 13.3% Other revenue 142.3 108.0 31.7%
Slide 73: FY22 detailed financials
FY22 detailed financials Statement of income (underlying IFRS view) Underlying Underlying Underlying Underlying Underlying Underlying $ million 2H22 1H22 2H21 1H21 2H20 1H20 Fees and commissions¹, 2 540.7 452.9 410.4 381.5 357.4 349.5 Other revenue 74.3 68.0 51.7 56.3 58.1 61.3 Revenue – Consolidate
Slide 74: FY22 detailed financials
FY22 detailed financials Statutory cash flow statement $ million FY22 FY212 $139.1m free cash flow in FY22 Cash flows from operating activities Cash from operations1 261.0 Net cash from operating activities before customer Less lease obligation payments (14.0) 261.0 210.0 trust account and premium f
Slide 75: Australian General Insurance Statistics
Australian General Insurance Statistics1 Premiums and claims by class of business Houseowners/householders Domestic motor vehicle CTP motor vehicle Premiums and Claims by class of Business Year End Year End Year End Year End Year End Year End Mar 2021 Mar 2022 Mar 2021 Mar 2022 Mar 2021 Mar 2022 Gro
Slide 76: Australian General Insurance Statistics
Australian General Insurance Statistics1 Premiums and claims by class of business Commercial motor vehicle Fire and ISR Public and product liability Professional indemnity Premiums and Claims by class of Business Year End Year End Year End Year End Year End Year End Year End Year End Mar 2021 Mar 20
Slide 77: Steadfast
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