Slide 1: Steadfast Group 1H19 results Analyst pack
20 February 2019 Steadfast Group 1H19 results Analyst pack Presenters: Robert Kelly - Managing Director & CEO Stephen Humphrys - Chief Financial Officer
Slide 2: Contents
1H19 results - analyst pack Contents ▪ 1H19 highlights 3 ▪ 1H19 financial summary 8 ▪ FY19 guidance 15 ▪ Appendices 17 © 2019 Steadfast Group Limited │2
Slide 3: 1H19 highlights
1H19 highlights © 2019 Steadfast Group Limited │3
Slide 4: Underlying earnings driven by organic and acquisition growth
Steadfast Group Underlying earnings driven by organic and acquisition growth Underlying earnings1 Organic growth ▪ EBITA2 +21.3% to $86.5m ▪ Underlying EBITA2 organic growth $9.5m, +13.3% ▪ NPAT +17.6% to $38.2m ▪ Driven by equity brokers and a particularly strong performance by ▪ NPATA3 +16.9% to $
Slide 5: Steadfast Network and equity broker
Steadfast Network and equity broker GWP and underlying EBITA growth driven by price and volume Financial highlights Operational highlights ▪ Steadfast Network GWP +12% to $2.9 billion ▪ Growth in Steadfast Network brokers +11 to 388 ▪ Driven by price and volume increases, growth from ▪ 332 brokers i
Slide 6: Steadfast Underwriting Agencies: record GWP and EBITA growth
Steadfast Underwriting Agencies Record GWP and underlying EBITA growth Financial highlights Operational highlights ▪ Steadfast Underwriting Agencies GWP +24% to $558 million ▪ 26 agencies offering over 100 niche products ▪ Primarily driven by price and volume uplift, with some ▪ Strong performance a
Slide 7: Our insurTech: Steadfast Client Trading Platform and INSIGHT
Our insurTech Steadfast Client Trading Platform and INSIGHT Steadfast Client Trading Platform (SCTP) GWP transacted through SCTP ($bn) ▪ 6 business lines and 13 insurer and underwriting agency partners live on SCTP 3 ▪ SCTP delivers strong client outcomes, addressing several issues raised by the 2 R
Slide 8: 1H19 financial summary
1H19 financial summary © 2019 Steadfast Group Limited │8
Slide 9: Group financial performance
Group financial performance Strong underlying earnings growth Six months to 31 December Underlying Underlying Year-on-year Cash flow summary $ million 1H191 1H18 growth % $ million 1H19 Revenue2 ($m) 320.9 261.8 22.6% Operating cash flow 62.4 EBITA2 ($m) 86.5 71.3 21.3% 124% conversion of NPATA into
Slide 10: Drivers of 21.3% growth in underlying EBITA
Drivers of 21.3% growth in underlying EBITA1 Organic and acquisition growth Organic growth: $9.5m (+13.3%) Acquisition growth: $5.7m (+8.0%) $1.7m ($3.9m) 90 $7.9m 2.4% $86.5m (5.4%) $0.8m $8.7m 80 11.0% 1.1% $71.3m 70 12.2% 60 1H18 EBITA Organic growth Bolt-ons Acquisitions Hubbing RBUA closure 1H1
Slide 11: Equity brokers financial performance
7 % 48% Equity brokers financial performance 45 % Organic and acquisition growth Share of 1H19 underlying EBITA Equity brokers – consolidated & equity accounted (assuming 100% ownership) Six months to 31 December Underlying Underlying Year-on-year Organic Growth from acquisitions $ million 1H19 1H18
Slide 12: Steadfast Underwriting Agencies financial performance
Steadfast Underwriting Agencies financial performance 45% 48% Strong organic growth driven by price and volume Share of 1H19 underlying EBITA Steadfast Underwriting Agencies – consolidated & equity accounted (assuming 100% ownership) Six months to 31 December Underlying Underlying Year-on-year Organ
Slide 13: Statutory balance sheet
Statutory balance sheet Strong balance sheet with capacity for future growth $ million 31 Dec 18 30 Jun 181 Cash and cash equivalents 115 77 Corporate debt facilities, Available at Cash held on trust 393 311 $ million Maturity Total 31 Dec 2018 Trade & other receivables1 149 156 Facility A Aug 2020
Slide 14: Interim FY19 dividend
Interim FY19 dividend Interim dividend up 14% ▪ Interim FY19 dividend of 3.2 cps (fully franked), up from 10.0 2.8 cps in 1H18 (+14.3%) 9.0 ▪ FY19 target dividend payout ratio of 65% to 85% of underlying NPAT 8.0 ▪ Dividend Reinvestment Plan (DRP) to apply to interim 7.0 FY19 dividend; no discount ▪
Slide 15: FY19 guidance
FY19 guidance © 2019 Steadfast Group Limited │ 15
Slide 16: FY19 guidance confirmed
FY19 guidance FY19 guidance confirmed 2 ▪ FY19 guidance range1: Underlying EBITA ($m) ▪ Underlying EBITA of $190 million - $200 million 200 $190m-$200m 180 ▪ Underlying NPAT of $85 million - $90 million 160 140 ▪ Strong 1H19 earnings support our FY19 guidance 120 (as upgraded in October 2018) 100 80
Slide 17: Appendices
1H19 results - analyst pack Appendices ▪ Steadfast Group (slide 18) ▪ Steadfast Network (slide 24) ▪ Steadfast Underwriting Agencies (slide 31) ▪ Key initiatives (slide 33) ▪ Our insurTech (slide 34) ▪ International footprint (slide 41) ▪ 1H19 detailed financials (slide 43) © 2019 Steadfast Group Li
Slide 18: Steadfast Group
Steadfast Group © 2019 Steadfast Group Limited │ 18
Slide 19: Our market
Our market $18 billion of intermediated general insurance GWP written in FY18 Australian market – gross written premium1 $18bn Intermediated market Non-intermediated Steadfast Network brokers in FY18 Private $4.9bn Health $24bn $88bn General Australian $39bn insurance market Life $25bn Non-intermedi
Slide 20: Broker and underwriting agency model
Broker and underwriting agency model Advice based offering primarily focused on SME market Client Premium Steadfast is focused on the SME market Advice Fee Premium Niche insurance products General insurance broker The Steadfast Network is a collection of 388 brokers who pool Underwriting agency thei
Slide 21: Three business units focused on intermediated general insurance market
Steadfast Group Three business units focused on intermediated general insurance market Steadfast Group (listed on ASX) Steadfast Network Steadfast Underwriting Agencies Complementary Businesses 388 general insurance brokers 26 underwriting agencies 7 businesses supporting the Steadfast Network and S
Slide 22: Size and scale
Steadfast Group Size and scale Largest general insurance broker network in Australasia Largest group of underwriting agencies in Australasia Annual GWP1 388 Annual GWP1 26 $5.6 billion Steadfast Network brokers $1.0 billion Underwriting agencies Steadfast Network collects Marketing & Administration
Slide 23: Our track record since listing on the ASX
Steadfast Group Our track record since listing on the ASX 1 Steadfast Network GWP ($bn) Steadfast Underwriting Agencies GWP ($m) Underlying EBITA ($m) 6 1,000 160 5 800 4 120 600 3 80 400 2 200 40 1 0 0 0 FY13 FY14 FY15 FY16 FY17 FY18 1H19 FY14 FY15 FY16 FY17 FY18 1H19 FY13 FY14 FY15 FY16 FY17 FY18
Slide 24: Steadfast Network
Steadfast Network © 2019 Steadfast Group Limited │ 24
Slide 25: Largest general insurance broker Network in Australasia
Steadfast Network Largest general insurance broker Network in Australasia Steadfast Network Strategy Steadfast Network $5.6bn The Steadfast Network has 388 general Exclusive to Steadfast Network brokers ▪ Operate a network that is stronger insurance brokers in Australia, New Zealand together and the
Slide 26: 155 brokers have joined the Steadfast Network since IPO
Steadfast Network 155 brokers have joined the Steadfast Network since IPO Number of Steadfast Network brokers 450 13 29 31 10 400 31 6 388 80 350 Largest general insurance broker 300 network in Australia 278 with 28% market share by GWP2 250 200 August New Brokers Allied NZ Insight Singapore Hubbing
Slide 27: Worldwide broker offices
Steadfast Network Worldwide broker offices (excluding unisonSteadfast) 1 United Kingdom 46 16 Asia Northern 363 Territory Queensland 194 114 521 Western Australia South Australia 25 New South Wales 102 North ACT 461 Island Victoria 35 23 Tasmania South Island 1,900 broker offices across Australia, N
Slide 28: Australia – resilient SME customer base
Steadfast Network Australia – resilient SME customer base 1,2,3 GWP mix Diversified by product line Diversified by geography Diversified by insurer Corporate Other retail 4% 1% Retail – home/motor 11% Small to medium enterprises 84% Business pack 21% VIC 31% CGU 18% ▪ 88% commercial lines, 12% retai
Slide 29: Increasing Steadfast Group's share of growing Network GWP
Steadfast Network Increasing Steadfast Group’s share of growing Network GWP ▪ The Steadfast Network is a key driver of Steadfast Group ▪ Steadfast Group earns marketing and administration (M&A) fees from insurer partners which are used as a revenue stream to provide products and services to the Stea
Slide 30: Active investment management
Investment activity Active investment management 1H19 2H18 1H18 2H17 1H17 2H16 1H16 Acquisitions (including bolt-ons) 5 4 7 2 7 8 2 Increased equity holdings 7 4 8 5 7 7 4 Hubbed 1 2 - 2 5 1 3 Equity brokers (including bolt-ons) ▪ Disciplined acquisition criteria based around cultural fit, strategic
Slide 31: Steadfast Underwriting Agencies
Steadfast Underwriting Agencies © 2019 Steadfast Group Limited │ 31
Slide 32: 26 agencies, over 100 niche products
Steadfast Underwriting Agencies 26 agencies, over niche 100 products Complete farm package Caravans, cabins and trailers Commercial and residential strata Accident and health Base essentials strata Residential and commercial strata Home and contents for Specialised and exotic motorcar Emerging risks
Slide 33: Key initiatives
Key initiatives ▪ Our insurTech (slide 34) ▪ International footprint (slide 41) © 2019 Steadfast Group Limited │ 33
Slide 34: Steadfast Client Trading Platform benefits for clients, brokers and insurers
Our insurTech Steadfast Client Trading Platform (SCTP) - benefits for clients, brokers and insurers ▪ Market-leading technology – exclusive to Steadfast Network brokers, clients and participating insurers ▪ Benefits for clients: ▪ Genuine contestable marketplace generating improved pricing competiti
Slide 35: Insurer and underwriting agency partners on the SCTP
Our insurTech Insurer and underwriting agency partners on the SCTP Commercial Commercial Business pack Professional risks Liability Steadfast Direct property & ISR motor 2019 FY20 FY20 Mid-2019 Steadfast Underwriting Agency, Late 2019 London ‘super’ binder Steadfast Underwriting Agency, London ‘supe
Slide 36: Size of the opportunity
Our insurTech Size of the opportunity Potential Steadfast Network GWP that can be transacted on SCTP Steadfast Network GWP (1H19) ▪ c.80% of Steadfast Network GWP can potentially be transacted Business pack 21% Commerical motor 14% through the platform Retail home & motor 12% ▪ Business pack Commerc
Slide 37: Five year target
Our insurTech Five year target Steadfast Client Trading Platform (SCTP) GWP transacted through SCTP ($bn) 3 ▪ 6 business lines and 13 insurer and underwriting agency partners live on SCTP 2 ▪ Including Steadfast Direct (retail home, motor and landlords cover) ▪ Five year target: $2.3 billion of GWP
Slide 38: SCTP implementation and EBITA contribution
Our insurTech SCTP implementation and EBITA contribution Investment FY16 FY17 FY18 FY19 Implementation FY17 FY18 FY19 FY20 FY21 EBITA contribution FY18 FY19 FY20 FY21 beyond FY18 FY19 FY20 FY21 & beyond First revenue from SCTP Insurers live on 6 current lines ▪ SCTP usage continues to grow ▪ SCTP mo
Slide 39: Steadfast Client Trading Platform
Our insurTech Steadfast Client Trading Platform Steadfast Client Trading Platform (SCTP) Gross Written Premium ($m) 250 $231m 200 $140m 1H19 vs 1H18 150 GWP of $190m vs $91m 100 $98m $190m $59m +109% growth 50 $40m $91m $24m $39m $0.5m $16m 0 FY15 FY16 FY17 FY18 1H19 ▪ 6 business lines live on the S
Slide 40: Steadfast Technologies - powering the Steadfast Client Trading Platform
Our insurTech Steadfast Technologies - powering the Steadfast Client Trading Platform The Steadfast Virtual Underwriter is a digital marketplace INSIGHT is a broking platform with a powerful search UnderwriterCentral is a cloud-based agency management which provides Steadfast Network brokers with ac
Slide 41: International footprint: Steadfast Network model replication
International footprint Steadfast Network model replication 1. New Zealand ▪ 43 brokers in the Network ▪ Steadfast Underwriting Agencies building market presence utilising ▪ NZ$221m of gross written premium Network distribution in 1H19 ▪ Strong buy-in from insurer partners 2. Asia ▪ Target Singapore
Slide 42: International footprint: unisonSteadfast
International footprint unisonSteadfast ▪ 40% equity stake in unisonSteadfast ▪ One of the world’s largest global general insurance broker networks, offering multi-jurisdictional coverage ▪ Supervisory board contains two Steadfast Group representatives ▪ Medium to long-term strategy Recent developme
Slide 43: 1H19 detailed financials
1H19 detailed financials © 2019 Steadfast Group Limited │ 43
Slide 44: Statutory profit and loss statement
1H19 detailed financials Statutory profit and loss statement Six months ended 31 December $ million 1H19 1H18 Revenue M&A and other professional services fees 38.7 33.1 Revenue from controlled entities 215.5 176.5 Share of profits of associates and joint ventures 7.5 6.5 Other revenue 1.3 0.8 Total
Slide 45: Statutory vs underlying reconciliation
1H19 detailed financials Statutory vs underlying reconciliation Six months ended 31 December $ million 1H19 1H18 Underlying revenue1 320.9 261.8 Underlying NPAT 38.2 32.5 Underlying EPS (NPAT) 4.83 4.31 Reconciliation of earnings Statutory NPAT 40.5 33.8 Change in value and sale of investments (2.4)
Slide 46: Statutory vs underlying reconciliation
1H19 detailed financials Statutory vs underlying reconciliation Revenue reconciliation ($m) $69.6m ($2.9m) ($1.3m) ($7.5m) $7.3m $328.2m $320.9m 300 $263.0m 200 100 1H19 Add: commissions paid (grossed Less: net gain from change in Less: Less: statutory share of profits 1H19 underlying revenue - Add:
Slide 47: Underlying revenue and EBITA (aggregate view)
1H19 detailed financials Underlying revenue and EBITA (aggregate view) Six months ended 31 December Underlying Underlying Year-on-year $ million 1H19 1H18 growth % Gross written premiums Brokers1 841.8 681.8 23.5% Underwriting agencies2 546.3 418.4 30.6% Total GWP 1,388.2 1,100.2 26.2% Underlying Un
Slide 48: Statement of income (underlying IFRS view)
1H19 detailed financials Statement of income (underlying IFRS view) Six months ended 31 December Underlying Underlying Year-on-year Organic Acquisitions & $ million 1H19 1H18 growth % growth %2 hubbing growth %3 Fees and commissions¹ 278.1 225.8 23.2% 10.5% 12.7% M&A and other fees 24.8 20.8 19.1% 1
Slide 49: Statement of income (underlying IFRS view)
1H19 detailed financials Statement of income (underlying IFRS view) Six months ended 31 December Underlying Underlying Underlying Underlying Underlying $ million 1H19 2H18 1H18 2H17 1H17 Fees and commissions¹ 278.1 266.6 225.8 212.9 203.1 M&A and other fees 24.8 19.8 20.8 16.9 18.4 Interest income 4
Slide 50: Statutory cash flow statement
1H19 detailed financials Statutory cash flow statement $ million 1H19 1H18 Cash flows from operating activities Net cash from operating activities before customer trust accounts movement 62.4 51.4 Net movement in customer trust accounts 13.2 8.8 Net cash from operating activities 75.6 60.2 $25.1m fr
Slide 51: Australian General Insurance Statistics
Australian General Insurance Statistics1 Premiums and claims by class of business Houseowners/householders Domestic motor vehicle CTP motor vehicle Premiums and Claims by Class of Business Year End Year End Year End Year End Year End Year End Sept 2017 Sept 2018 Sept 2017 Sept 2018 Sept 2017 Sept 20
Slide 52: Australian General Insurance Statistics
Australian General Insurance Statistics1 Premiums and claims by class of business Commercial motor vehicle Fire and ISR Public and product liability Professional indemnity Premiums and Claims by Class of Business Year End Year End Year End Year End Year End Year End Year End Year End Sept 2017 Sept
Slide 53: 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 20 February 2019. This presentation is not a recommendation or advice in relation to Steadfast or any product or service offere