Steadfast Group Limited · ASX:SDF
Steadfast — Macquarie conference 2017
33 slides from Steadfast's conference presentation, May 4, 2017
Slide 1: Presenters
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 4 May 2017. This presentation is not a recommendation or advice in relation to Steadfast or any product or service offered by S
Slide 3: Steadfast Group
Steadfast Group <> Steadfast
Slide 4: Intermediated Australian insurance market
Australian insurance market $36.7 billion of general insurance GWP written in 2016 1 Australian market – gross written premium Domestic motor Private health and CTP $22.6 bn $12.9 bn General $36.7 bn Commercial lines Domestic $15.9 bn home Life $7.9 bn $22.7 bn Intermediated market 2 $15.6 bn Focu
Slide 5: Group overview
Group overview Structure Vision To enhance the value of Steadfast-aligned businesses through our combined strength, creating exceptional value for our shareholders Steadfast Network Equity brokers Network of 352 general insurance brokers in Co-owner and consolidator of broking businesses Austral
Slide 6: Steadfast history
Steadfast history 21 years of operation, nearly 4 years as a listed company Post-IPO Pre-IPO © 2017 Steadfast Group Limited | 6
Slide 7: Size and scale
Steadfast today Size and scale Largest general insurance broker Largest underwriting agency group network in Australia and New Zealand in Australia Annual GWP Annual GWP $4.5 billion $745 million 352 Steadfast Network Brokers 23 Agencies Steadfast Network Collects Marketing & Administration (M&A) Fe
Slide 8: Steadfast Network
Steadfast Network Worldwide office Network 1 Service provider Europe Broker Network offices 352 broker businesses 15 23 underwriting agencies Asia Equity participation 13 62 broker businesses Northern Territory 240 Queensland 23 underwriting agencies 113 Life broker 65 77 337 Western
Slide 9: Steadfast Underwriting Agencies
Steadfast Underwriting Agencies 23 agencies, 72 products Steadfast aims to highlight each agency’s specialised service by preserving its brand and unique offering which is important as approximately 50% of our agencies’ business is placed with non-Steadfast brokers Residential and Mobile plant and
Slide 10: Business strategy
Business strategy Clear strategy to grow Group Improve margins by increasing revenue and creating Develop our strategic partner relationships cost efficiencies Retain and develop senior management team Expand and roll out our offshoring division for IT, Continue to review potential acquisi
Slide 11: Group financials
Group financials <> Steadfast
Slide 12: Group financial performance
Group financial performance Strong underlying EBITA growth Underlying EBITA: FY 13 – 1H 17 Underlying EBITA contribution – 1H 17 140 $129.6m 10% 120 100 $90.4m $69.2m $ million 80 +11% pcp 50% $62.3m $57.4m $55.6m 60 40% $32.4m $29.6m 40 $66.7m $60.4m 20 $29.9m $34.9m $27.8m 0 FY13 FY14 FY15 FY16 1H
Slide 13: Contributions to 1H underlying EBITA
Contributions to 1H 17 underlying EBITA Organic and acquisition growth Breakdown of the growth in 1H 17 underlying EBITA Total acquisition growth: Total organic growth: $3.0m (+5%) 80 $3.3m (+6%) 70 $66.7m $1.7m $1.3m $1.5m $1.8m $ million $60.4m 60 50 40 1H16 EBITA Organic growth Bolt-ons Acquisiti
Slide 14: Cash conversion
Cash conversion High conversion of cash to profit and dividends NPATA1 to operating cash flow: FY 15 – 1H 17 Underlying EPS (NPAT) to DPS: FY 15 – 1H 17 90 10 80 70 8 60 5.90 cents per share 6 50 $ million 5 40 4 30 2.6 20 2 10 0 0 FY15 FY16 1H17 FY15 FY16 1H17 Operating cash flow NPATA Underlying E
Slide 15: Statutory balance sheet summary
Statutory balance sheet summary Healthy balance sheet with leverage capacity Corporate debt Available at $ million 31 Dec 16 30 Jun 16 facilities, $ million Maturity Total 31 Dec 2016 Total assets 1,693.1 1,712.5 Facility A Aug 2019 235 61 Total liabilities 787.2 814.4 Facility B Aug 2020 50 50 Net
Slide 16: Shareholder returns
Shareholder returns Significant half on half underlying EPS growth Underlying EPS (NPAT)1: FY 13 – 1H 17 Underlying EPS (NPATA)1: FY 13 – 1H 17 9 12 8.09 11.00 8 7.24 10 9.79 7 6.24 7.94 6 8 5.90 5.40 4.51 cents per share cents per share 6.77 +7% 5 4.30 +12% 5.76 3.46 pcp 6 4.32 pcp 4 2.81 3.50 3 4
Slide 17: Steadfast Network
Steadfast Network <> Steadfast
Slide 18: Benefits for members and customers
Steadfast Network Benefits for members and customers Scale and strength Market access Exclusive products and services Exclusive policy wordings Technology Steadfast Network Marketing Helplines - Legal - Contractual - Liability - Compliance - Human Resources - Technical Steadfast Direct Steadfast tri
Slide 19: Steadfast Network - Technology
Steadfast Network - Technology Common IT systems supporting the Network IT is a competitive advantage as it creates significant cost synergies and efficiencies We have elected to build our own systems – we don’t want to have a third party controlling our destiny or our data Quotes and issues p
Slide 20: Steadfast Client Trading Platform (SCTP)
Steadfast Client Trading Platform (SCTP) Supporting the Network Launched in June 2016, exclusive to Steadfast Network brokers, their clients and select insurer partners Benefits from using the platform: Insurer partners on platform consist of: AIG, Allianz, Allied World, Berkley, Calibre, CGU,
Slide 21: New brokers joining the Network
Steadfast Network New brokers joining the Network Number of Steadfast Network brokers (as at 30 April 2017) 400 31 29 375 7 31 2 352 350 50 325 Largest general 300 insurance broker 278 network in Australia 275 with 28% market share 250 of GWP in Australia2 225 200 August New Brokers Allied NZ Insigh
Slide 22: Significant growth in Gross Written Premium
Steadfast Network Significant growth in Gross Written Premium Steadfast Network Brokers 1 Gross Written Premium (GWP) 1H 17 vs 1H 16 5.0 $4.5b 4.5 $4.4b $4.1b 4.0 $3.9b GWP of $2.5b vs $2.2b 3.5 $2.3b $2.3b +3.5% organic growth 3.0 $2.1b +12.7% $2.0b $ billion pcp 2.5 +5.0% AR network 2.0 1.5 +4.2%
Slide 23: Equity brokers
Equity brokers Organic performance and acquisitions driving EBITA growth Underlying EBITA pre CO for brokers – consolidated & equity accounted (assuming 100% ownership) 90 $83.4m $79.9m 80 $76.0m 70 $68.0m Significant underlying EBITA growth driven by: 60 +27.7% pcp Volume uplift 50 $ million
Slide 24: Equity brokers
Equity brokers Continuing to invest and create synergies Equity brokers (including bolt-ons) 1H 17 2H 16 1H 16 Acquisitions 7 8 2 Increased equity holdings 7 7 4 Total 14 15 6 Hubbed 5 1 3 Total 19 16 9 Actively acquiring and hubbing brokers Brokers acquired in 1H 17 were all part of the Steadfa
Slide 25: Australia - resilient SME customer base
Steadfast Network Australia - resilient SME customer base 1,2,3 Steadfast Network Brokers’ GWP mix Corporate Other Retail 2% 2% 88% of customer base relates to Retail – small to medium size enterprises Home/Motor 8% Medium (SMEs) with less pricing volatility enterprises 32% Focus is on advice
Slide 26: Australia - diversified footprint
Steadfast Network Australia - diversified footprint1 2 Diversified by geography Diversified by product line Diversified by insurer VIC 28% Business Pack 22% CGU 14% NSW 21% Commerical Motor 13% QBE 14% WA 18% Retail Home & Motor 10% Allianz 9% QLD 16% Commercial Property & ISR 9% Vero 8% SA 6% Profe
Slide 27: Underwriting Agencies
Steadfast Underwriting Agencies
Slide 28: Solid growth in Gross Written Premium
Steadfast Underwriting Agencies Solid growth in Gross Written Premium Steadfast Underwriting Agencies Gross Written Premium (GWP) 800 $745m 700 1H 17 vs 1H 16 600 $367m GWP of $386m vs $378m 500 +2% $ million $385m pcp 400 +2% total growth 300 $284m 200 $378m $386m $145m 100 $88m Largest underwritin
Slide 29: Underwriting Agencies EBITA growth
Steadfast Underwriting Agencies Major acquisitions and organic performance driving EBITA growth Underlying EBITA pre CO for Agencies – consolidated & equity accounted (assuming 100% ownership) 70 $63.2m 60 50 Acquired Calliden and QBE agencies in FY15 Solid organic growth from existing agencies
Slide 30: London 'super' binder
Steadfast Underwriting Agencies London ‘super’ binder Rationalised and consolidated our London market placement into a single binder with a What is the ‘super’ binder? select number of carriers and co-brokers – JLT and Steadfast Re A delegated authority given to a Steadfast underwriting agency
Slide 31: Outlook
Outlook <9? Steadfast ”
Slide 32: Premium pricing outlook
Premium pricing outlook First signs of improvement in the SME market Insurance cycle Capital Strong flows profits into Rates rise market strongly Rates start to fall Market Insurers capacity chase eroded market First signs of price share Hardening Softening improvement in SME Market Market Rates (sm
Slide 33: FY guidance
FY 17 guidance Organic growth and strategic initiatives FY 17 guidance range as noted in Underlying EBITA³ 1H 17 results announcement: 160 $140m-$150m 140 Underlying EBITA of $140m-$150m 120 Underlying NPATA1 of $85m-$90m 100 $ million Underlying NPAT of $63m-$68m 80 $129.6m 60 Guidance dr