Slide 1: FY19 results and equity raising — Investor presentation
FY19 results and equity raising — Investor presentation 21 August 2019
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 Forward-looking statements The information in this presentation is for general information only and contains “forward looking statements” or statements about “future matters”. Such forward looking statements can be identified by the use of forward looking words such
Slide 4: Table of Contents
Table of Contents FY19 results and equity 05 Executive summary raising – Investor presentation 06 Financial and operational highlights 10 FY19 financial summary & FY20 outlook 20 Steadfast’s raising track record & details of the equity 27 Appendix 4
Slide 5: Executive summary
Executive summary Strong FY19 performance, FY20 guidance & proposed equity raising ▪ Strong FY19 performance, with 17.8% growth in underlying EBITA ➢ Driven by both organic growth +10.9% and acquisition growth +6.9% ➢ Record premium for both the Steadfast Network and Underwriting Agencies ▪ Continue
Slide 6: Financial highlights
Financial highlights Strong performance in-line with upgraded guidance 2 FY19 Underlying earnings¹ Underlying EBITA ($m) ▪ EBITA2 +17.8% to $193.3m 200 $193.3m ▪ NPAT +19.0% to $89.2m 180 ▪ NPATA3 +17.3% to $114.1m $164.1m 160 ▪ Diluted EPS (NPAT) +16.0% to 11.27 cps $143.3m 140 $106.8m ▪ Final divi
Slide 7: Operational highlights: Record premium for Steadfast Network
Operational highlights Record premium for Steadfast Network Steadfast Network Gross written premium ($bn) ▪ GWP +16% to $6.1 billion 7 ➢ Driven by price and volume increases, growth from authorised $6.1bn representatives (AR) and new network brokerages 6 $5.3bn ➢ 6% organic growth for year following
Slide 8: Operational highlights: Record premium for Underwriting Agencies
Operational highlights Record premium for Underwriting Agencies Steadfast Underwriting Agencies Gross written premium ($m) ▪ Steadfast Underwriting Agencies GWP +28% to $1.2 billion ▪ 22% organic growth driven by price and volume uplift 1,200 $1,173m ▪ Property and business lines particularly strong
Slide 9: Our insurTech
Our insurTech Steadfast Client Trading Platform and INSIGHT Steadfast Client Trading Platform (SCTP) ▪ 8 business lines and 13 insurer and underwriting agency partners live on SCTP ▪ SCTP delivers strong client outcomes, addressing several issues raised by the Hayne Royal Commission $440m GWP transa
Slide 10: FY19 financial summary & FY20 outlook
FY19 financial summary & FY20 outlook 10
Slide 11: Group financial performance
Group financial performance Strong underlying earnings growth 12 months to 30 June Underlying Underlying Year-on-year Cash flow summary $ million FY191 FY18 growth % $ million FY19 Revenue1,2 ($m) 688.3 567.0 21.4% Operating cash flow 117.7 EBITA2 ($m) 193.3 164.1 17.8% Full conversion of NPATA into
Slide 12: Drivers of 17.8% growth in underlying EBITA
Drivers of 17.8% growth in underlying EBITA Organic and acquisition growth Organic growth: $17.9m (+10.9%) Acquisition growth: $11.3m (+6.9%) 200 $4.2m ($4.0m) $11.1m $193.3m 190 $0.9m 2.6% (2.5%) $17.0m 180 6.8% 0.5% 170 $164.1m 160 10.4% 150 140 130 120 110 100 90 80 70 60 FY18 EBITA Organic growt
Slide 13: Equity brokers
Equity brokers Organic and acquisition growth Equity brokers – consolidated & equity accounted (assuming 100% ownership) Growth from 12 months to 30 June Underlying Underlying Year-on-year Organic acquisitions $ million FY19 FY18 growth % growth % & hubbing %1 Net fees & commissions2 383.4 334.8 14.
Slide 14: Steadfast Underwriting Agencies
Steadfast Underwriting Agencies Strong organic growth driven by price and volume Steadfast Underwriting Agencies – consolidated & equity accounted (assuming 100% ownership) Growth from 12 months to 30 June Underlying Underlying Year-on-year Organic acquisitions $ million FY19 FY18 growth % growth %
Slide 15: Statutory balance sheet
Statutory balance sheet Strong balance sheet with capacity for future growth $ million 30 Jun 19 30 Jun 18 Corporate debt facilities, $ Available at Cash and cash equivalents 117 77 million Maturity Total 30 Jun 2019 Cash held on trust 427 311 Facility A Aug 2021 335 69 Premium funding receivables 7
Slide 16: Acquisition of IQumulate
Acquisition of IQumulate Impact on balance sheet and statutory profit IQumulate ▪ Steadfast Group acquired the remaining 50% of Macquarie Premium 30 Jun 19 Group Group Pro forma 30 Jun 19 Funding (renamed IQumulate) late in FY19 to hold 100% - now held $ million 30 Jun 19 impact Pro forma on balance
Slide 17: Acquisition of professional services fees from IBNA and Network brokerages
Acquisition of professional services fees from IBNA and Network brokerages Impact on statutory results IBNA ▪ As previously announced, proposed takeover offer for IBNA for consideration of up to $70m in Steadfast Group shares ➢ Up to 21.4m shares to be issued based on a volume weighted average share
Slide 18: Final FY19 dividend
Final FY19 dividend Final dividend up 13% ▪ Final FY19 dividend of 5.3 cps (fully franked), 12.0 up from 4.7 cps in FY18, +12.8% ▪ Total FY19 dividend of 8.5 cps (fully franked), +13.3% 10.0 ➢ Final dividend payout ratio of 76%, within target of 65% to 85% of underlying NPAT ▪ Dividend Reinvestment
Slide 19: FY20 guidance
FY20 guidance Continued growth in earnings Outlook and assumptions ▪ Strategic partners continuing to drive moderate premium price increases; Guidance2,3 ▪ Increased contribution from insurTech; Underlying EBITA $215 million - $225 million ▪ Ongoing technology investment; Underlying NPAT $100 millio
Slide 20: Steadfast track record & details of the equity raising
Steadfast track record & details of the equity raising 20
Slide 21: Our track record since listing on the ASX
Steadfast Group Our track record since listing on the ASX Steadfast Network GWP ($bn) Steadfast Underwriting Agencies GWP ($m) Underlying EBITA ($m) 1,200 200 6 1,000 160 5 800 4 120 600 3 80 2 400 40 1 200 0 0 0 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY14 FY15 FY16 FY17 FY18 FY19 FY13 FY14 FY15 FY16 FY
Slide 22: Steadfast Group's acquisition track record
Steadfast Group’s acquisition track record ▪ Steadfast Group has a proven track record of successfully completing strategic acquisitions ▪ Established capabilities to evaluate and execute M&A opportunities for long-term growth, including brokers, agencies and complementary businesses ▪ Due diligence
Slide 23: Use of net proceeds available from equity raising - placement
Use of net proceeds available from equity raising - placement ▪ Steadfast Group is expected to have a further $89 million Potential use of funds1 available for future acquisitions following the placement Consideration for possible PSF Rebate ▪ Steadfast's potential acquisition pipeline is strong wit
Slide 24: Pro forma debt capacity
Pro forma debt capacity Incl. activity since 30 June Activity post 30 2019 and As at June 2019 and proposed Debt facility 30 June 2019 future outflows placement Available at 30 June 2019 $90m $90m $90m Drawn down for acquisitions and corporate activity since 30 June 2019 ($31m) ($31m) Deferred acqui
Slide 25: Equity raising – Placement and SPP overview
Equity raising – Placement and SPP overview Placement offer structure and size ▪ Fully underwritten institutional Placement expected to raise approximately $100 million (“Placement”) ▪ The final Placement issue price ("Offer Price") is expected to be announced to ASX on Thursday, 22 August 2019 prio
Slide 26: Equity raising timetable
Equity raising timetable1 Event Date (2019)2 Record date for SPP Tuesday, 20 August 2019 (7:00pm) Trading halt and announcement of the Placement Wednesday, 21 August 2019 Placement bookbuild Wednesday, 21 August 2019 Announcement of the outcome of the Placement Thursday, 22 August 2019 Trading halt
Slide 27: Appendix
Appendix 27
Slide 28: Key risks
Key risks 1.1 INTRODUCTION The future performance of Steadfast and the future investment performance of the Steadfast Shares may be influenced by a range of factors, many of which are outside the control of Steadfast and its directors. A non-exhaustive list of key risks, including those specific to
Slide 29: Key risks (continued)
Key risks (continued) 1.2 RISKS SPECIFIC TO STEADFAST (d) Reduction in rates for Steadfast PSF, commission rates or dividends Steadfast derives revenue from a variety of sources including Steadfast PSF paid to Steadfast from strategic partners such as insurers. The Steadfast PSF is normally calculat
Slide 30: Key risks (continued)
Key risks (continued) 1.2 RISKS SPECIFIC TO STEADFAST (cont'd) (f) Regulatory risk Steadfast, its operating entities, and Steadfast Network Brokers are required to individually comply with their Australian financial services licence requirements and financial services regulations. There are penaltie
Slide 31: Key risks (continued)
Key risks (continued) 1.2 RISKS SPECIFIC TO STEADFAST (cont'd) Steadfast’s balance sheet includes a significant level of investments and intangible assets recognised as a result of its various acquisitions. Investments and intangible assets must be regularly tested for impairment. Impairment results
Slide 32: Key risks (continued)
Key risks (continued) 1.2 RISKS SPECIFIC TO STEADFAST (cont’d) (j) People risk Steadfast is reliant on its key employees and key employees within the management team or the operating businesses may retire or resign. Material business interruption and loss of key customer relationships may follow the
Slide 33: Key risks (continued)
Key risks (continued) 1.2 RISKS SPECIFIC TO STEADFAST (cont’d) (m) Fraudulent or inappropriate conduct by employees Steadfast has appropriate policies and procedures implemented in relation to the risk of fraud. However, particularly in relation to businesses where Steadfast does not control the day
Slide 34: Key risks (continued)
Key risks (continued) 1.3 GENERAL AND INDUSTRY RISKS (a) Dilution If shareholders do not participate in the SPP then their percentage shareholding in Steadfast will be diluted. Even if a shareholder does take up their full entitlement under the SPP, their percentage shareholding in Steadfast may be
Slide 35: Key risks (continued)
Key risks (continued) 1.3 GENERAL AND INDUSTRY RISKS (cont'd) (c) Investment in capital markets The price of Steadfast shares on the ASX may rise or fall due to numerous factors, including: ▪ Australian and international general economic conditions, including inflation rates, the level of economic a
Slide 36: Key risks (continued)
Key risks (continued) 1.3 GENERAL AND INDUSTRY RISKS (cont'd) (f) Economic conditions The operating and financial performance of Steadfast is influenced by a variety of general economic and business conditions, including levels of consumer spending, inflation, interest rates and exchange rates, supp
Slide 37: Key risks (continued)
Key risks (continued) 1.4 RISKS RELATING TO TAKEOVER OFFER In addition to the risks specific to Steadfast and general and industry risks referred to above, there are additional risks that investors should consider given the Takeover Offer. They can be outlined as follows: (a) Analysis of IBNA Steadf
Slide 38: Key risks (continued)
Key risks (continued) 1.4 RISKS RELATING TO TAKEOVER OFFER (cont’d) (c) Potential termination of Steadfast Licence Agreements The Steadfast Licence Agreement is able to be terminated for convenience by either party on 60 days’ notice. There is a risk that IBNA Brokers who join the Steadfast Network
Slide 39: 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 not be offered or sold, in any
Slide 40: International offer restrictions
International offer restrictions Canada (Alberta, British Columbia, Ontario and Quebec provinces) (cont'd) The following is a summary of the statutory rights of rescission or to damages, or both, available to purchasers in Ontario. In Ontario, every purchaser of the New Shares purchased pursuant to
Slide 41: International offer restrictions
International offer restrictions Hong Kong WARNING: This document has not been, and will not be, registered as a prospectus under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong, nor has it been authorised by the Securities and Futures Commission in Hong Kong
Slide 42: International offer restrictions
International offer restrictions New Zealand This document has not been registered, filed with or approved by any New Zealand regulatory authority under the Financial Markets Conduct Act 2013 (the "FMC Act"). The New Shares are not being offered or sold in New Zealand (or allotted with a view to bei
Slide 43: International offer restrictions
International offer restrictions Singapore This document and any other materials relating to the New Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore. Accordingly, this document and any other document or materials in co
Slide 44: International offer restrictions
International offer restrictions United Kingdom Neither this document nor any other document relating to the offer has been delivered for approval to the Financial Conduct Authority in the United Kingdom and no prospectus (within the meaning of section 85 of the Financial Services and Markets Act 20