Slide 1: FY16 results presentation – presenters
24 August 2016 PRESENTERS Robert Kelly – Managing Director & CEO Stephen Humphrys – Chief Financial Officer
Slide 2: Important notice
Important notice This presentation has been prepared by Steadfast Group Limited (“Steadfast”). This presentation contains information in summary form which is current as at 24 August 2016. This presentation is not a recommendation or advice in relation to Steadfast or any product or service offered
Slide 3: FY16 highlights
FY16 highlights Strong earnings growth in FY16 vs FY15 Underlying NPATA 45% to $82.0m Underlying Cash EPS 12% to 11.00 cps Statutory NPATA 67% to $95.0m Solid organic performance Organic results held firm in a flat pricing environment Broker performance enhanced by sales volume growth
Slide 4: Further growth in Network brokers
Further growth in Network brokers Steadfast Network Brokers 1 Gross Written Premium (GWP) 4.2% pcp 5.0 $4.5b 4.5 $4.4b FY16 vs FY15 $4.1b $3.9b 4.0 $3.4b 3.5 2.3 2.3 +1.5% organic growth 3.0 2.1 $billion 2.0 2H 2.5 1.8 1H +2.7% new brokers 2.0 1.5 1.0 1.6 1.9 2.0 2.1 2.2 4.2% total growth 0.5 0.0 FY
Slide 5: Steadfast Network – from strength to strength
Steadfast Network – from strength to strength 99 brokers have joined and only one broker has left the Network since the IPO Number of Steadfast Network Brokers 400 31 27 375 31 6 1 343 350 325 37 300 278 275 250 225 200 August 2013 New Brokers Allied NZ Insight Hubbing 1 Sold Leavers August 2016 3
Slide 6: Significant growth in underwriting agencies
Significant growth in underwriting agencies Gross Written Premium (GWP) Steadfast Underwriting 800 $745m 94% pcp Agencies is the largest 700 underwriting agency 600 group in Australia $million $367m 500 About 50% GWP placed 400 $385m 1H with non-Steadfast 300 2H brokers $284m $378m 200 $145m N
Slide 7: Successful launch of Steadfast Direct
Successful launch of Steadfast Direct Steadfast Agencies + Steadfast Direct Facility Gross Written Premium (GWP) Piloted in May 2015; 800 $785m launched in July 2015 $40m 700 Home, motor and now 600 landlord products $million 500 Sold through the Steadfast $385.5m $745m Virtual Underwriter 400
Slide 8: Hubbing journey
Hubbing journey 10 hubs at various stages of reaching full cost out synergies Synergies starting Partial synergies Full synergies to emerge realised realised WA2 SA2 SA1 NSW1 TAS QLD VIC1 WA1 VIC2 NSW2 © 2016 Steadfast Group Limited | 8
Slide 9: Financial information
Financial information <> Steadfast
Slide 10: Strong shareholder returns
Strong shareholder returns Third consecutive year of Underlying Cash EPS growth Underlying Cash EPS1: FY13 – FY16 12 11.00 12.4% pcp Total Shareholder 9.79 Return (TSR)2 7.94 cents per share 8 6.77 99% for the three years since the ASX listing in August 2013 4 26% CAGR 0 FY13 FY14 FY15 FY16 1 FY
Slide 11: Strong growth from acquisitions
Strong growth from acquisitions FY16 EBITA growth ($m) Year-on- Year-on- Underlying Underlying year year $39.2m 40 Year ended 30 June FY16 FY15 growth $ growth % $5.5m Organic growth Revenue ($m) 459.5 298.7 160.8 53.8% 35 30 EBITA pre CO ($m) 139.6 98.8 40.7 41.2% 25 EBITA ($m) 129.6 90.4 39.2 43.3
Slide 12: Statutory vs Underlying NPATA reconciliation
Statutory vs Underlying NPATA reconciliation 100 95.0m 23.9m 13.1m 2.3m 82.0m 80 60 $ million 40 20 0 FY16 Less: gain from Add: impairments Other incl. FY16 Statutory deferred associated with executive loan Underlying NPATA NPATA consideration FY15 acquisitions income estimates for FY15 acquisitions
Slide 13: Contributions to Underlying EBITA
Contributions to Underlying EBITA Breakdown of the growth in EBITA pre Corporate Office expenses Total acquisition growth: $35.2m Total organic 33.6m 1.6m 139.6m 140 growth: $5.5m 120 98.8m 3.6m 1.9m 100 $ million 80 60 40 20 FY15 EBITA pre Organic growth Bolt-ons Acquisitions Hubbing FY16 EBITA pre
Slide 14: Broking operations (Aggregate)
Broking operations (Aggregate)1 Solid performance in a flat market Brokers – consolidated & equity accounted Growth from Underlying Underlying FY16 vs FY15 Organic acquisitions Year ended 30 June, $million FY16 FY15 growth % growth % & hubbing% Net Fees & Commissions² 267.0 241.3 10.7% 3.8% 6.9% Net
Slide 15: Underwriting agencies (Aggregate)
Underwriting agencies (Aggregate) 1 Acquisitions enhanced growth and margins Agencies – consolidated & equity accounted Underlying Underlying Year-on-year Organic Growth from Year ended 30 June, $million FY16 FY15 growth % growth % acquisitions % Net Fees & Commissions² 134.2 70.0 91.7% 9.2% 82.6% N
Slide 16: Strong conversion of profit to cash
Strong conversion of profit to cash Statutory cash flow statement Year to 30 June, $ million Cash flows from operating activities FY16 FY15 102% of underlying NPATA converted into cash flow Receipts from customers 376.9 258.9 Payments to suppliers and employees, and network (289.2) (214.6) broker re
Slide 17: Healthy balance sheet with leverage capacity
Healthy balance sheet with leverage capacity Statutory balance sheet $ million 30 Jun 16 31 Dec 15 Cash and cash equivalents Cash held on trust 67.5 224.7 79.9 215.1 16% corporate gearing ratio 1 Receivables & other 341.9 266.1 versus Board approved maximum Total current assets 634.1 561.1 gearing r
Slide 18: Total FY16 dividend uplifted by 20%
Total FY16 dividend uplifted by 20% Final FY16 dividend of 3.6 cps (fully franked), up 20% pcp 7.0 Total FY16 dividend payout ratio is 75% of 6.0 20% pcp 6.0 net profit after tax (excluding non-trading 5.0 cents per share items), in line with targeted 65% to 85% 5.0 4.5 4.0 3.6 Dividend Reinve
Slide 19: Strategy & outlook
Strategy & outlook <> Steadfast
Slide 20: Business strategy
Business strategy 1 Continue to grow, maintain and provide services to the Network Brokers 2 Continue to develop and market new products from the Steadfast Agencies Underwriting Agencies to the market 3 Seek to buy, merge, hub or assist the Network brokers to grow, Brokers reduce costs and improve t
Slide 21: Business strategy (continued)
Business strategy (continued) 8 Extend the London ‘super’ binder into domestic and international Group arena 9 Extend Steadfast Client Trading Platform beyond Business Pack to Brokers include: Professional Lines Public/Products Liability Commercial Motor Property 10 Retain Senior Management
Slide 22: Rollout common IT systems
Rollout common IT systems INSIGHT – intuitive search function, cloud-based Launched at Steadfast Roll out to Convert existing Synergies to Further synergies Convention; 115 new users users emerge to emerge Network brokers (Jul 16 - Apr 18) signed up UnderwriterCENTRAL – turnkey solution, interfaces
Slide 23: Steadfast Client Trading Platform (SCTP)
Steadfast Client Trading Platform (SCTP) Benefits from using the platform: Clients: extra cover, wider choice, triage access, competitive pricing and claims expedition Brokers: best-in-class products and the benefits of using the Steadfast Virtual Underwriter (e.g. cost savings, business intel
Slide 24: Trading Platform rollout
Trading Platform rollout FY17 FY18 Business pack June 2016 Professional lines September 2016 Liability December 2016 Commercial motor March 2017 Property 31 May 2017 $4.5b is the potential prize © 2016 Steadfast Group Limited | 24
Slide 25: London 'super' binder – they said it couldn't be done
London ‘super’ binder – they said it couldn’t be done SUA to rationalise and consolidate its London market placement into a single What is the ‘super’ binder? binder with a select number of carriers and co-brokers – JLT and Steadfast Re A delegated authority given to a Steadfast Underwriting Age
Slide 26: SUA placement into Lloyd's of London
SUA placement into Lloyd’s of London Old arrangement New arrangement 30 syndicates 6 syndicates 16 binders 1 binder 3 brokers 1 co-broking solution Expensive and inefficient Much simpler solution Substantial cost savings Better access to the Steadfast Network Client centric underwriter neg
Slide 27: The momentum is shifting
The momentum is shifting “Commercial Insurance continues to target Capital profitable growth through pricing actions, Strong flows profits into continued focus on meeting customer and broker market needs, and successfully entering new markets.” Rates Rates rise start Suncorp’s FY16 Analyst Pack, 4 A
Slide 28: FY17 guidance
FY17 guidance FY17 underlying NPATA guidance range of $85m-$90m, driven by: Underlying NPATA 1 Organic growth 95 85-90 82.0 Growth from strategic initiatives 85 75 Key assumptions include flat market conditions and no material acquisitions 65 $ million 56.7 55 Acquisition opportunities con
Slide 29: Summary – delivering
Summary – delivering Delivered strong Cash EPS growth throughout the insurance cycle Transforming the Network with Steadfast Client Trading Platform and the London ‘super’ binder Rolling out our own revolutionary IT systems FY17 guidance shows resilience of a diversified business model and t
Slide 30: © 2016 Steadfast Group Limited | 30
© 2016 Steadfast Group Limited | 30
Slide 31: Questions
Questions <> Steadfast
Slide 32: Appendices
Appendices <> Steadfast
Slide 33: Size Scale Steadfast
Size Scale Steadfast Largest general insurance broker Largest underwriting agency group network in Australia and New Zealand in Australia + Direct facility Current run rate annual GWP Current run rate annual GWP $4.5 billion $785 million 343 Steadfast Network Brokers 22 Agencies + Steadfast Direct S
Slide 34: Resilient SME customer base
Resilient SME customer base 1,2,3 Steadfast Network Brokers’ GWP mix Corporate Other Retail 2% 4% 84% of customer base relates to Retail – small to medium size enterprises Home/Motor 10% Medium (SMEs) with less pricing volatility enterprises 32% Focus is on advice Low exposure to Corporate (2%
Slide 35: Diversified sales footprint
Diversified sales footprint 1,2 1 Diversified by geography Diversified by product line VIC 28% NSW 22% QLD 18% Business Pack 20% Commerical Motor 14% WA 16% SA 6% NZ 6% Professional Lines 11% Commercial Property & ISR 10% TAS 2% ACT 1% NT 1% Liability 9% Statutory Covers 8% Retail Home & Motor 8% St
Slide 36: Statutory P&L
Statutory P&L $ million FY16 FY15 Revenue M&A fees 32.4 29.6 Revenue from wholly owned entities 349.8 222.5 Reconciliations to Share of profits of associates and joint venture 11.2 10.4 Underlying Revenue 3.4 Other revenue 396.8 2.5 on slide 37 and to Total revenue 265.0 EBITA from core operations (
Slide 37: Statutory vs Underlying Revenue reconciliation
Statutory vs Underlying Revenue reconciliation 104.4m 23.9m 500 1.6m 11.2m 5.1m 459.5m 450 396.8m 400 $ million 350 300 250 200 150 100 Statutory Revenue Add: Commissions Less: gain from Less: profit on fair Less: share of profit Less: other income Underlying Revenue paid (grossed up in deferred val
Slide 38: Cash EPS reconciliation
Cash EPS reconciliation1 Cents per share FY16 FY15 FY14 FY13 NPATA 82.0 56.7 41.2 35.2 Previous weighted average share # n/a n/a 501.1 501.0 Revised weighted average share # 745.2 579.8 519.7 519.5 Previous Cash EPS n/a n/a 8.23 7.02 Revised Cash EPS 11.00 9.79 7.94 6.77 FY13-FY14 Cash EPS restate
Slide 39: Statement of income (Adjusted IFRS view)
Statement of income (Adjusted IFRS view) Organic % growth from Year ended 30 June, $ millions FY16 FY15 Growth % growth2 % acquisitions & hubbing3 Fees and commissions¹ 384.4 234.2 64.1% 5.8% 58.4% M&A Fees 32.4 29.6 9.4% 9.4% 0.0% Interest income 6.7 5.7 18.5% -5.5% 24.0% Other revenue 36.0 29.2 23
Slide 40: Revenue and EBITA pre CO expenses
Revenue and EBITA pre CO expenses (Aggregate view) Organic Growth % from Underlying Underlying Growth growth3 acquisitions & $ millions FY16 FY15 % % hubbing4 1 Includes gross up of wholesale Gross written premiums broker commission expense of Consolidated brokers 844.5 674.2 25.3% $11.0m in FY16 ($
Slide 41: Statement of income (Adjusted IFRS view)
Statement of income (Adjusted IFRS view) Underlying Underlying Underlying Underlying Pro-forma Pro-forma Year ended 30 June, $ millions 2H FY16 1H FY16 2H FY15 1H FY15 2H FY14 1H FY14 Fees and commissions 195.4 189.0 156.0 78.2 65.9 52.4 M&A Fees 15.8 16.6 14.0 15.6 12.7 13.7 Interest income 3.3 3.4
Slide 42: P&L items
P&L items Other revenue $millions FY16 FY15 Variance Fee income for other professional services 22.2 18.2 4.0 Legal fee disbursements 2.7 2.6 0.1 Other income 11.1 8.4 2.7 Total other revenue 36.0 29.2 6.8 Other expenses $millions FY16 FY15 Variance 1Commission/administration expenses: Rebate to Ste
Slide 43: Australian General Insurance Statistics
Australian General Insurance Statistics1 Houseowners/householders Domestic motor vehicle CTP motor vehicle Premiums and Claims by Class of Business Year End Jun Year End Jun Year End Jun Year End Jun Year End Jun Year End Jun 2015 2016 2015 2016 2015 2016 Gross written premium ($m) 7,598 7,837 8,041
Slide 44: Australian General Insurance Statistics
Australian General Insurance Statistics1 Commercial motor vehicle Fire and ISR Public and product liability Professional indemnity Premiums and Claims by Class of Business Year End Jun Year End Jun Year End Jun Year End Jun Year End Jun Year End Jun Year End Jun Year End Jun 2015 2016 2015 2016 2015