Steadfast Group Limited · ASX:SDF
Steadfast — H1 2014 Earnings Presentation
33 slides from Steadfast's earnings presentation, Feb 24, 2014
Slide 1: 1H FY14 Results
Investor Presentation 1H FY14 Results 24 February 2014 Presenters: Robert Kelly, Managing Director & CEO Stephen Humphrys, Chief Financial Officer
Slide 2: Important notice
Important notice This presentation contains general information in summary form which is current as at 24 February 2014. It presents financial information on both a statutory basis (prepared in accordance with Australian accounting standards which comply with International Financial Reporting Standa
Slide 3: Agenda
Agenda Who we are Service provider and consolidator Steadfast GWP growth 1H FY14 highlights Financial information Strategy & outlook 3
Slide 4: Who we are: largest general insurance broker network in Australia
Who we are LARGEST general insurance broker network in Australia 1 Founded in 1996 as a collective buying 455 offices across Australia and New Zealand and service group for independent brokers Network has grown from 43 to 285 insurance broker businesses representing over $4.0bn in GWP Equity interes
Slide 5: Service provider and consolidator
Service provider and consolidator 18 years as a broker cluster group; first year as a consolidator Steadfast Steadfast Network Steadfast Equity Ancillary Underwriting Premium Funding Brokers Brokers Businesses Agencies Services provided Equity interests Equity interests 50% joint Equity interests to
Slide 6: Strong GWP growth
Strong GWP growth Network Brokers Equity Brokers Gross Written Premium (GWP) Gross Written Premium (GWP) 4.0 $3.8bn 1,000 $1.0bn 3.5 $0.9bn $3.2bn 3.0 800 2.0 487.8 512.6 2.5 1.6 $bn 600 $m 2.0 400 1.5 446.6 454.7 487.5 1.0 1.8 2.0 200 1.5 0.5 0 0.0 1H/FY12 & 1H/FY13 & 1H/FY14 FY12 FY13 1H/FY14 2H/F
Slide 7: Drivers of Network GWP growth
Drivers of Network GWP growth $billion 6.9% organic (price and volume) + 2.1% new broker growth = 9.0% 1 Based on the increase in average price per premium broked by the Steadfast Network (sample size of over 775,000 policies in 1H FY14) 7
Slide 8: Solid pro-forma 1H FY14 results
Solid pro-forma 1H FY14 results Pro-forma revenue (IFRS view) of $73.6m, up 6.8% compared to 1H FY13 Pro-forma EBITA pre Corporate Office expenses (IFRS view) of $33.0m, an increase of 14.4% 1H/2H split: achieved 49% of FY14 pro-forma prospectus forecasted EBITA pre Corporate Office expenses (
Slide 9: Financial information
Financial information <> Steadfast STRENGTH WHEN YOU NEED IT
Slide 10: Continuing growth
Continuing growth Click to Edit Title Pro-forma IFRS summary Pro-forma EBITA pre Corporate Office expense FY14 FY end 30 June 1H FY14 1H FY13 % growth Prospectus Forecast 67.9 70 EBITA pre Corporate 61.1 33.0 28.9 14.4% 67.9 Office expense ($m) 60 54.3 52.3 NPAT ($m) 14.5 13.4 7.7% 30.1 50 Reported
Slide 11: Strong profit growth
Strong profit Click to Edit Title growth Pro-forma Statement of Income (IFRS View) FY14 % $ millions 1H FY14 1H FY13 Prospectus growth Forecast Revenue up 6.8% yoy Fees and commissions 46.8 43.9 6.4% 100.1 M&A Fees up 11.8% yoy M&A Fees 13.7 12.2 11.8% 26.0 reflecting Network GWP Interest income
Slide 12: Drivers of M&A Fee growth
Drivers of M&A Fee growth $million 6.9% premium growth + 4.3% more M&A products + 0.6% premium funding = 11.8% 12
Slide 13: Contributions to profit growth
Contributions to profit growth Breakdown of the change in EBITA pre Corporate Office expenses $million 40 35 0.2m 33.0m 0.0m 0.8m 1.1m 2.7m 28.9m -0.6m 30 25 20 15 10 5 0 IFRS EBITA Consolidated Equity Macquarie Steadfast Underwriting Ancillary IFRS EBITA 1H FY13 brokers accounted Premium Group agen
Slide 14: Healthy profit margins
Healthy Click to Editprofit Title margins EBITA margin pre Corporate Office expenses (Aggregated View) FY14 $ millions 1H FY14 1H FY13 % growth Prospectus Forecast Improved profit margin for Consolidated brokers consolidated brokers 32.2% 27.5% 4.7% 32.6% Equity accounted Underwriting agencies m
Slide 15: Balance sheet positioned for growth
Balance Click to Editsheet Title positioned for growth 31/12/12 Pf $ millions 31/12/13 post IPO Cash and cash equivalents 52.2 70.4 Cash held on trust 56.5 50.9 Conservative balance sheet Receivables & other 77.1 68.8 (consolidated basis) Total current assets 185.8 190.1 $29m cash on hand for Eq
Slide 16: Healthy increase in cash and cash equivalents
Healthy increase in cash and cash equivalents Click to Edit Title Dividends from equity accounted investments due by mid February Cash held in trust balances high $millions 1H FY14 1H FY13 when Steadfast purchased equity stakes in brokers causing $21m Cash flows from operating activities outflow i
Slide 17: Fully franked dividend of 1.8 cents
Fully franked dividend of 1.8 cents Dividend payout ratio target: 65% to 85% of net profit after tax, and a minimum of 50% of net profit after tax before amortisation and impairment of intangibles Fully franked dividend of 1.8 cents Expected interim/final dividend split: 40%/60% Dividend Rei
Slide 18: 1H FY14 statutory results
1H ClickFY14 to Edit statutory Title results Reflects 5 months of operations from IPO acquisitions and a number of non-recurring items $ millions 1H FY14 1H FY13 Revenue M&A fees 13.5 12.2 Statutory M&A Fees adjusted for M&A Revenue from wholly owned entities 49.1 1.7 Fees from Steadfast underwrit
Slide 19: Strategy & outlook
Strategy & outlook <> Steadfast STRENGTH WHEN YOU NEED IT
Slide 20: Strategic initiatives
Strategic initiatives Continue to provide and enhance the Network services that our brokers rely upon Maintain and expand our strategic partnerships Finalise initial hubs in each state Convert, where appropriate, the acquisitions and other opportunities under consideration Develop and acqu
Slide 21: Project 360˚ Vision
Project 360˚ Vision Clients Insurance Broking Account Insurer Payments Electronic Deposits Electronic Deposit Report for Receipting Designated Partner 21
Slide 22: Hubbing
Hubbing Sydney now 80% owned Estimated synergies to pilot Project 360 emerge over the next 2 Melbourne years starting in FY15 80% owned Impact for brokers: Perth 67% owned, developed 7% uplift in profits, i.e. 2%+ uplift in Brisbane EBITA margin continued development Tasmania
Slide 23: Acquisition pipeline
Acquisition pipeline Steadfast is the natural acquirer of further interests in Steadfast Network Brokers, and a potential acquirer of non-aligned brokers and underwriting agencies Active dialogue with potential acquisitions Strict criteria being followed. Acquisitions must be EPS accretive to sh
Slide 24: Steadfast 2014 Convention
Steadfast 2014 Convention Largest insurance conference in Australia 4 day event focused on networking, products and services and education around regulation, risks, technology, growth opportunities, etc. Open only to the Steadfast Network, its strategic partners and service providers Venue a
Slide 25: Conclusion
Conclusion Steadfast has performed strongly Strategic initiatives being delivered with success Robust acquisition and organic pipeline for growth Experienced team to implement strategy 25
Slide 26: Steadfast
<> Steadfast STRENGTH WHEN YOU NEED IT
Slide 27: Appendices
Appendices <> Steadfast STRENGTH WHEN YOU NEED IT
Slide 28: Pro-forma statement of income (IFRS view)
Pro-forma statement of income (IFRS Click toview) Edit Title FY14 $ millions 1H FY14 1H FY13 % growth Prospectus Forecast Fees and commissions 46.8 43.9 6.4% 100.1 M&A Fees 13.7 12.2 11.8% 26.0 Interest income 1.3 1.7 -21.5% 3.2 Other revenue 11.8 11.2 6.9% 22.7 Revenue – Consolidated entities 73.6
Slide 29: Pro-forma revenue and EBITA pre CO expenses (Aggregate view)
Pro-forma revenue and EBITA pre CO expenses (Aggregate view) Click to Edit Title FY14 $ millions 1H FY14 1H FY13 % growth Prospectus Forecast Revenue Consolidated brokers 47.3 45.7 3.4% 99.8 Equity accounted 71.5 69.8 2.5% 149.2 Revenue from brokers 118.8 115.5 2.9% 249.0 Underwriting agencies 10.8
Slide 30: Pro-forma results (Aggregate view)
Pro-forma results (Aggregate view) Click to Edit Title Revenue and EBITA margin pre Corporate Office expenses (Aggregated View) FY14 $ millions FY11 FY12 1H FY13 FY13 1H FY14 Prospectus Forecasts Revenue Consolidated brokers 87.6 92.0 45.7 94.2 47.3 99.8 Equity accounted 123.8 135.6 69.8 143.6 71.5
Slide 31: Reconciliation between Pro-forma and Statutory profit for 1H FY14
Reconciliation between Pro-forma and Statutory Click to Editprofit Title for 1H FY14 35 5.6m 0.5m 33.0m xx 30 26.9m 25 x $million 20 x 15 x 10 5 - Statutory EBITA pre CO July trading IPO expenses Pro forma EBITA pre CO from core operations from core operations 31
Slide 32: Pro-forma P&L items (IFRS view)
Pro-forma P&L items (IFRS view) Click to Edit Title Other revenue $millions 1H FY14 1H FY13 Variance Management fee income 0.5 0.5 -0.0 Fee income for other 8.5 7.8 0.7 professional services Other income 2.9 2.8 0.1 Total other revenue 11.9 11.1 0.8 Other expenses $millions 1H FY14 1H FY13 Variance
Slide 33: Ordinary shares on issue
Ordinary Click to Edit shares Title on issue millions No. of ordinary shares1 Ordinary shares on issue 172.5 million shares 501.0 as at 31 December 2013 under escrow until 31 Made up of:2 August 2014 Re-weighting Shares 65.7 Escrow shares are Executive Shares 10.9 owned by Steadfast Consideratio