Steadfast Group Limited · ASX:SDF
Steadfast — FY2015 Earnings Presentation
37 slides from Steadfast's earnings presentation, Aug 26, 2015
Slide 1: Stronger Together: FY2015 Results
STRONGER TOGETHER FY2015 Results 26 August 2015 Presenters Robert Kelly, Managing Director & CEO Stephen Humphrys, Chief Financial Officer Steadfast, the Steadfast logos, Strength when you need it, None of us is as good as all of us, SVU and Steadfast Virtual Underwriter are registered trademarks of
Slide 2: Important notice
Important notice This presentation has been prepared by Steadfast Group Limited (“Steadfast”). This presentation contains general information in summary form which is current as at 26 August 2015. This presentation is not a recommendation or advice in relation to Steadfast or any product or service
Slide 3: FY15 summary
FY15 summary ! DELIVERED on growth and earnings despite soft premium rates ! NPATA1 of $56.7m, up 38% ! Cash EPS1 of 9.79 cps, up 23%, ahead of original 10-13% guidance, and in line with Feb15 guidance of 22-25% ! ACQUIRED Calliden and QBE agencies to become the largest underwriting agency group in
Slide 4: FY15 financial highlights
FY15 financial highlights1 Strong growth despite soft market Underlying Pro-forma % 12 months ended 30 June FY152 FY144 growth Revenue ($m) 298.7 173.4 72.3% EBITA post Corporate Office ($m) 90.4 62.3 45.1% NPATA ($m) 56.7 41.2 37.6% Cash EPS (cents)3 9.79 7.94 23.3% ! Growth from significant underw
Slide 5: Network Brokers GWP growth
Network Brokers GWP growth Network Brokers 1,2,3,4 Gross Written Premium (GWP) 8.4% - 5.5% price reduction 5.0 $4.4b (-$225m) 4.5 $4.1b $3.9b 4.0 3.5 $3.4b +5.2% volume growth $3.0b 3.0 $2.8b 2.1 2.3 ($214m) 2.0 $2.4b $billion 2.5 1.8 2H 2.0 1H +5.8% NZ network 1.5 ($237m) 1.0 1.9 2.0 2.1 0.5 1.6 +2
Slide 6: Resilient SME customer base
Resilient SME customer base 1,2,3 Steadfast Network Brokers’ GWP mix Corporate Other Retail 2% 2% ! 87% of customer base relates to small to Retail – Home/Motor medium size enterprises (SMEs) 9% Medium less pricing volatility enterprises 32% ! Focus is on advice clientele ! Low exposure to Corporate
Slide 7: Diversified sales footprint
Diversified sales footprint 1 Diversified by geography1,2 Diversified by product line Business Pack & Financial 22% Commercial Motor 13% VIC 27% Commercial Property & ISR 13% NSW 23% Retail Home & Motor 9% WA 18% Liability 8% QLD 13% Statutory Covers 8% NZ 8% Professional Risks 8% SA 7% Strata 5% TA
Slide 8: Earnings mix diversified
Earnings mix diversified The Group has diversified its earning mix in the financial sector. FY14 EBITA pre CO split1 Run Rate FY15 EBITA pre CO split² Complementary Complementary businesses 11% businesses 18% Insurance Insurance broking Underwriting agencies broking 71% 11% 45% Underwriting agencies
Slide 9: Largest underwriting agency portfolio
Largest underwriting agency portfolio Steadfast Underwriting Agencies Distribution split 1 Gross Written Premium (GWP) based on FY15 run rate GWP 800 $765m 700 Non- Steadfast brokers 600 50% 87.7 500 165% Steadfast Network $million $385m Brokers 400 50% $765m 300 200 $145m $114m 100 0 Pf FY13 Pf FY1
Slide 10: Strong M&A Fee growth
Strong M&A Fee1 growth 35 $1.4m $0.9m $0.1m $30.7m ! 13.8% yoy growth 30 $1.4m driven by more M&A $27.0m 0.3% 5.0% 3.3% products and rate 25 5.1% increases 20 ! M&A Fee pays for $ million 15 provision of services 29.8 27.0 28.4 to the network and 10 rebates 5 0 FY14 Insurance Insurance Insurance Pre
Slide 11: Strong earnings uplift
Strong earnings uplift 1,2 FY15 vs FY14 50% 45.1% Growth in 40% 37.6% ! GWP 30% ! F&C 20% 13.8% ! M&A 10% 4.7% ! EBITA 0% -5.5% 2.1% ! NPATA -10% despite reduced Price Equity Equity Gross M&A EBITA NPATA Broker GWP Broker F&C Fees premium rates 1 Non-IFRS financial information including Underlying P
Slide 12: Soft premium rates
Soft premium rates 1 Price growth 2% 0.6% Flattening 1H FY14 0% 2H FY14 market -2% -2.2% 1H FY15 2H FY15 evidenced by lower reduction -4% -4.0% -6% -8% -7.1% in rates in 2H FY15 1 Price growth based on the year-on-year change in average price per premium brokered by Steadfast Network Brokers excludi
Slide 13: Australian General Insurance Statistics
Australian General Insurance Statistics1 Houseowners/householders Commercial motor vehicle Domestic motor vehicle Premiums and Claims by Class of Business Y ear End Jun Y ear End Jun Y ear End Jun Y ear End Jun Y ear End Jun Y ear End Jun 2014 2015 2014 2015 2014 2015 Gross written premium ($m) 7,45
Slide 14: Australian General Insurance Statistics
Australian General Insurance Statistics1 Fire and ISR CTP motor vehicle Public and product l iability Professional i ndemnity Premiums and Claims by Class of Business Y ear End Jun Y ear End Jun Y ear End Jun Y ear End Jun Y ear End Jun Y ear End Jun Y ear End Jun Y ear End Jun 2014 2015 2014 2015 2
Slide 15: Financial Information
Financial Information a <g> Steadfast STRENGTH WHEN YOU NEED IT
Slide 16: Strong earnings growth
Strong earnings Click to Edit Title growth Growth from Organic Underlying Pro-forma Year-on-year acquisitions and growth % 12 months ended 30 June FY151 FY14 growth % hubbing %⁴ Revenue ($m) 298.7 173.4 72.3% 5.1% 67.2% EBITA post Corporate Office1 ($m) 90.4 62.3 45.1% -3.3% 48.4% NPAT ($m) 42.1 32.
Slide 17: Track record of earnings growth
Track Click to record Edit Titleof earnings growth Resilient nature of business model demonstrated by track record of earnings growth 1,2 1,2 Full year cash EPS Full year EBITA pre and post Corporate Office expenses 23% 98.8 10.0 9.79 100 90.4 90 9.0 80 17% 70.4 Cents per share 70 62.3 7.94 61.1 58.
Slide 18: Broking operations
Broking operations Click to Edit Title (Aggregate)1,2,3 Brokers (Consolidated & Equity Accounted) Growth from Underlying Pro-forma Year-on-year Organic acquisitions & 12 months ended 30 June FY15 FY14 growth % growth % hubbing%4 Fees & Commissions 244.2 213.8 14% 5% 10% Other income 38.4 30.3 27% 20
Slide 19: Underwriting agencies
Underwriting 1,2,3 Click to Edit Title agencies (Aggregate) Agencies (Consolidated & Equity Accounted) Growth from Underlying Pro-forma Year-on-year Organic acquisitions 12 months ended 30 June FY15 FY14 growth % growth % % Fees & Commissions 127.8 45.9 178% -2% 180% Of which broker commission expen
Slide 20: EBITA margins
EBITA margins Click to Edit Title EBITA margins (Aggregated View)1 Brokers 12 months ended 30 June FY13 FY14 FY15 Consolidated & equity accounted brokers 28.6% 31.2% 28.5% ! Margins impacted by soft market Underwriting agencies2 26.0% 33.9% 37.2% ! Margins returned to Total EBITA margin (pre CO FY13
Slide 21: Growth from IPO acquisitions
Growth from IPO acquisitions (IFRS View)¹ IPO entities 2 EBITA pre Corporate Office expenses 70 +11.7% 9% 68 -2.7% EBITA growth 66 64 since FY13, 62 despite soft $ million 60 58 68.2 66.3 market 56 61.1 conditions 54 52 50 Pf FY13 Pf FY14 FY15 Premium rate reduction -0.7% -5.5% 1 Where used in this
Slide 22: Profit converted to free cash flow
Profit converted Click to Edit Title to free cash flow 12 months ended 30 June, $ millions FY15 FY14 Cash flows from operating activities Receipts from customers 258.9 138.4 ! 79% of underlying Payments to suppliers and employees, and network NPATA converted into -214.6 -124.1 broker rebates cash fl
Slide 23: Healthy balance sheet
Healthy Click to EditBalance Title sheet $ millions 30 Jun 15 30 Jun 14 Cash and cash equivalents 67.6 38.6 Cash held on trust 172.2 76.7 ! Reflects additional equity Receivables & other 343.3 152.7 raising together with Total current assets 583.1 268.0 increased gearing to fund Equity accounted inv
Slide 24: FY15 dividend increased
FY15 Click todividend Edit Title increased 6.0 ! Final dividend 11% declared: 3.0 5.0 Interim dividend cents per share, 4.0 Final dividend fully franked cents per share 3.0 2.7 3.0 ! DRP available at 2.0 2.5% discount 1.0 1.8 2.0 ! Dividend payout ratio: 65%-85% 0.0 FY14 FY15 of NPAT All dividends a
Slide 25: Strategy & Outlook
Strategy & Outlook a <e9 Steadfast “
Slide 26: Strategic initiatives
Strategic initiatives Business Steadfast Steadfast Development Direct & New Zealand MetLife Hubbing, Asian Acquisition Offshoring, Presence Pipeline Project 360° 26
Slide 27: Mergers and Hubs
Mergers and Hubs ! Hubs established in six states ! 26 entities merged into eight ! On track to deliver 7% cost savings improvement for Hubs Brisbane 3 into 1 hub 64% owned Perth Adelaide Sydney 3 brokers into 1 5 into 2 hubs 6 into 2 hubs 67% owned 71% owned 60% owned 100% owned 100% owned Melbourn
Slide 28: FY16 outlook - delivering on strategy
FY16 outlook - delivering on strategy 1,2 Underlying NPATA ! FY16 cash EPS growth guidance range of 41-46% 10-14%, driven by: 85 $80 – $83m ! Uplift from FY15 acquisitions 75 ! Organic growth 65 $ millions 56.7 55 ! FY16 NPATA guidance range of $80-$83m, 41.2 45 up 41-46% 35.2 35 25 ! Key assumption
Slide 29: Questions
y <g> Steadfast STRENGTH WHEN YOU NEED IT
Slide 30: Appendix
Appendix y <g> Steadfast STRENGTH WHEN YOU NEED IT
Slide 31: Statutory P&L
Statutory P&L Click to Edit Title $ millions FY15 FY14 Revenue M&A fees 29.6 26.4 Adjustments made Revenue from wholly owned entities 236.3 131.6 Share of profits of associates and joint venture 10.4 13.3 to Statutory NPATA Other revenue 3.5 0.4 outlined on slide Total revenue 279.9 171.8 32. EBITA
Slide 32: Statutory vs Underlying FY15 NPATA
Statutory vs Underlying FY15 NPATA 70 $3.3m $0.9m $1.2m $0.6m 60 $56.8m $0.6m $56.7m 50 40 $ million 30 58.0 55.6 55.6 20 10 0 Statutory Less: executive Add: stamp Less: deferred Less: fair value Less: Calliden Underlying NPATA loan income duty, due acquisition adjustments tax adjustment NPATA dilig
Slide 33: Statement of income (1H vs 2H, Underlying IFRS view)
Statement of income (1H vs 2H, Underlying IFRS view) Click to Edit Title Underlying Underlying Underlying Pro-forma Pro-forma Pro-forma 12 months ended 30 June, $ millions 1H FY15 2H FY15 FY15 1H FY14 2H FY14 FY14 Fees and commissions 78.2 156.0 234.2 52.4 65.9 118.3 M&A Fees 15.6 14.0 29.6 13.7 12.
Slide 34: Statement of income (Underlying IFRS view)
Statement of income (Underlying IFRS view) Click to Edit Title % growth from Underlying Pro-forma Organic acquisitions & 12 months ended 30 June, $ millions FY15 FY14 % growth growth % hubbing1 Fees and commissions 234.2 118.3 98% 4% 94% M&A Fees 29.6 26.4 12% 7% 5% Interest income 5.7 2.7 106% 41%
Slide 35: Revenue and EBITA pre CO expenses (Aggregate view)
Revenue and EBITA pre CO expenses (Aggregate view)¹ Click to Edit Title Organic Growth % from Underlying Pro-forma % growth acquisitions & $ millions FY15 FY14 Growth % hubbing⁴ 1 Aggregate refers to the 100% Gross written premiums aggregation of all investees’ Consolidated brokers 674.2 376.5 79.1%
Slide 36: P&L items (IFRS view)
P&L items Click to (IFRS view) Edit Title Other revenue Underlying Pro-forma $ millions FY15 FY14 Variance Fee income for other professional services 18.2 16.5 1.7 Legal fee disbursements recovered 2.6 2.9 (0.3) Other income 8.4 6.6 1.8 Total other revenue 29.2 26.0 3.2 Other expenses Underlying Pro
Slide 37: Key dates
Key dates Date Event 11 September 2015 Final dividend ex dividend date 15 September 2015 Final dividend record date 16 September 2015 Final dividend DRP record date 14 October 2015 Final dividend payment date 30 October 2015 Annual General Meeting 25 February 2016 Half year FY16 results 26 August 20