Steadfast Group Limited · ASX:SDF
Steadfast — FY2019 Earnings Presentation
56 slides from Steadfast's earnings presentation, Aug 21, 2019
Slide 1: Steadfast Group FY19 results - Analyst pack
Steadfast Group FY19 results - Analyst pack 21 August 2019
Slide 2: Table of Contents
Table of Contents 03 FY19 highlights FY19 results - analyst pack 08 FY19 financial summary 17 FY20 guidance & details of equity raising 20 Appendices 2
Slide 3: FY19 highlights
FY19 highlights 3
Slide 4: Steadfast Group
Steadfast Group Increase in underlying earnings driven by organic and acquisition growth Underlying earnings1 Organic growth ▪ EBITA2 +17.8% to $193.3m ▪ Underlying EBITA organic growth $17.9m, +10.9% ▪ NPAT +19.0% to $89.2m ▪ Driven by equity brokers and continued strong performance by the underwri
Slide 5: Steadfast Network and equity brokers
Steadfast Network and equity brokers GWP growth from continued moderate price increases from strategic partners Financial highlights Operational highlights ▪ Steadfast Network GWP +16% to $6.1 billion ▪ Growth in Steadfast Network brokers +21 to 398 (excluding IBNA) ➢ Driven by price and volume incr
Slide 6: Steadfast Underwriting Agencies
Steadfast Underwriting Agencies Record GWP and underlying EBITA growth Financial highlights Operational highlights ▪ Steadfast Underwriting Agencies GWP +28% to $1.173 billion ▪ 26 agencies offering over 100 niche products ➢ Primarily driven by price and volume uplift, with some acquisition ▪ Strong
Slide 7: Our insurTech
Our insurTech Steadfast Client Trading Platform and INSIGHT Steadfast Client Trading Platform (SCTP) $440m ▪ 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 GWP transa
Slide 8: FY19 financial summary
FY19 financial summary 8
Slide 9: 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 10: 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 2.6% (2.5%) $17.0m $0.9m 180 0.5% 6.8% 170 $164.1m 160 10.4% 150 140 130 120 110 100 90 80 70 60 FY18 EBITA Organic growt
Slide 11: 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 12: 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 13: 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 14: 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 15: 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 16: 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 17: FY20 guidance & details of equity raising
FY20 guidance & details of equity raising 17
Slide 18: FY20 guidance
FY20 guidance Continued growth in earnings Outlook and assumptions ▪ Strategic partners continuing to drive moderate premium price increases; ▪ Increased contribution from insurTech; Guidance2,3 ▪ Ongoing technology investment; Underlying EBITA $215 million – $225 million ▪ Minimum 80% acceptance of
Slide 19: Details of equity raising
Details of equity raising Fully underwritten placement to raise approximately $100 million Potential use of funds Consideration for possible PSF Rebate Acquisition1 $8 million Costs of transactions $3 million Available for committed expenditure, future acquisitions and general corporate purposes $89
Slide 20: Appendices
Appendices Steadfast Group (slide 21) Steadfast Network (slide 27) Steadfast Underwriting Agencies (slide 34) Key initiatives (slide 36) ▪ Our insurTech (slide 37) ▪ International footprint (slide 43) FY19 detailed financials (slide 45) 20
Slide 21: Steadfast Group
Steadfast Group 21
Slide 22: Our track record since listing on the ASX
Steadfast Group Our track record since listing on the ASX Steadfast Network GWP ($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 23: Our market
Our market $22 billion of intermediated general insurance GWP written in CY18 Australian market – gross written premium1 $22bn Intermediated market Steadfast Group is focused on the intermediated Non-intermediated Steadfast Network brokers general insurance market FY19 Private $5.7bn Health $24bn 84
Slide 24: Broker and underwriting agency model
Broker and underwriting agency model Advice based offering primarily focused on SME market Client Steadfast is focused on the SME market Premium Advice Fee Premium Niche insurance products General insurance broker The Steadfast Network is a collection of 398 brokerages who Underwriting agency pool t
Slide 25: Steadfast Group
Steadfast Group Three business units focused on intermediated general insurance market Steadfast Group (listed on ASX) Steadfast Network Steadfast Underwriting Agencies Complementary Businesses 398 general insurance brokerages 26 underwriting agencies 7 businesses supporting the Steadfast Network an
Slide 26: Steadfast Group
Steadfast Group Size and scale Largest general insurance broker network in Australasia Largest group of underwriting agencies in Australasia Annual GWP1 398 Annual GWP1 26 $6.1 billion Steadfast Network brokerages $1.2 billion Underwriting agencies Steadfast Network collects professional services an
Slide 27: Steadfast Network
Steadfast Network 27
Slide 28: Steadfast Network
Steadfast Network Largest general insurance broker Network in Australasia Steadfast Network Strategy Steadfast Network (excl. IBNA) $6.1bn The Steadfast Network has 398 general Exclusive to Steadfast Network brokers ▪ Operate a network that is stronger together insurance brokerages in Australia, New
Slide 29: Steadfast Network
Steadfast Network 165 brokers have joined the Steadfast Network since IPO Number of Steadfast Network brokers, excluding IBNA 500 450 14 29 31 10 31 7 398 400 90 350 Largest general insurance broker network in 300 278 Australia with 26% market share by GWP2 250 200 August New brokers Allied NZ Insig
Slide 30: Steadfast Network
Steadfast Network Worldwide broker offices (excluding IBNA and unisonSteadfast) 1 United Kingdom 47 16 Asia Northern 381 Territory Queensland 200 117 545 Western Australia South Australia 27 New South Wales 97 478 North ACT Island 1,962 broker offices Victoria across Australia, New Zealand, 30 23 Ta
Slide 31: Steadfast Network
Steadfast Network Australia – resilient SME client base 1,2,3 GWP mix Diversified by product line Diversified by geography Diversified by insurer Corporate 4% Retail 12% Small to medium enterprises 84% Business pack 20% VIC 33% CGU 17% Commerical motor 14% NSW 21% QBE 15% ▪ 88% commercial lines, 12%
Slide 32: Steadfast Group
Steadfast Group Increasing Steadfast Group’s share of growing Network GWP ▪ The Steadfast Network is a key driver of Steadfast Group ➢ Steadfast Group earns professional service fees (PSF) from insurer partners which are used as a revenue stream to provide products and services to the Steadfast Netw
Slide 33: Investment activity
Investment activity Active investment management 2H19 1H19 2H18 1H18 2H17 1H17 2H16 1H16 Acquisitions (including bolt-ons) 2 5 4 7 2 7 8 2 Increased equity holdings 5 7 4 8 5 7 7 4 Hubbed 3 1 2 - 2 5 1 3 Equity brokers (including bolt-ons) ▪ Disciplined acquisition criteria based around cultural fit
Slide 34: Steadfast Underwriting Agencies
Steadfast Underwriting Agencies 34
Slide 35: Steadfast Underwriting Agencies
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 36: Key initiatives
Key initiatives Our insurTech (slide 37) International footprint (slide 43) 36
Slide 37: Our insurTech
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, competit
Slide 38: Our insurTech
Our insurTech Insurer and underwriting agency partners on the SCTP Commercial property Domestic home, motor Business pack Professional risks Liability Commercial motor & ISR & landlords 2019 2019 Network launch – Aug 2019 2020 Steadfast Underwriting Agency, London ‘super’ binder 2020 Pilot July 2019
Slide 39: Our insurTech
Our insurTech Size of the opportunity Potential Steadfast Network GWP that can be transacted on SCTP Steadfast Network GWP (FY19) ▪ c.80% of Steadfast Network GWP can potentially be transacted through the platform Business pack 20% ➢ Business pack Commerical motor 14% Retail 12% ➢ Commercial motor C
Slide 40: Our insurTech
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 ▪ SCTP usage continues to grow ▪ SCTP moving t
Slide 41: Our insurTech
Our insurTech Steadfast Client Trading Platform Steadfast Client Trading Platform (SCTP) Gross Written Premium ($m) 500 $440m 400 FY19 vs FY18 $250m 300 $231m GWP of $440m vs $231m 200 $140m $98m +91% growth 100 $190m $40m $59m $91m $0.5m $24m $16m $39m 0 FY15 FY16 FY17 FY18 FY19 ▪ 8 business lines
Slide 42: Our insurTech
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 which provides Steadfast Network brokers with access to eng
Slide 43: International footprint
International footprint Steadfast Network model replication 1. New Zealand ▪ 48 brokers in the Network ▪ Steadfast Underwriting Agencies building market presence utilising ▪ NZ$446m of gross written premium Network distribution in FY19 ▪ Strong buy-in from insurer partners ▪ SCTP introduced 2. Asia
Slide 44: International footprint
International footprint unisonSteadfast ▪ Steadfast Group holds a 40% equity stake in unisonSteadfast ➢ One of the world’s largest global general insurance broker networks, offering multi-jurisdictional coverage 600+ Referrals between the Steadfast Network and unisonSteadfast ➢ Supervisory board con
Slide 45: FY19 detailed financials
FY19 detailed financials 45
Slide 46: FY19 detailed financials
FY19 detailed financials Statutory profit and loss statement 12 months ended 30 June $ million FY19 FY18 Revenue Professional services fees 87.4 70.6 Revenue from controlled entities 473.9 381.8 Share of profits of associates and joint ventures 14.9 14.5 Other revenue 2.2 1.2 Total revenue 578.4 468
Slide 47: FY19 detailed financials
FY19 detailed financials Statutory vs underlying reconciliation 12 months ended 30 June $ million FY19 FY18 Underlying revenue1 688.3 567.0 Underlying NPAT 89.2 75.0 Underlying EPS (NPAT) 11.27 9.71 Reconciliation of earnings Statutory NPAT 103.8 75.9 Change in value and sale of investments (14.6) (
Slide 48: FY19 detailed financials
FY19 detailed financials Statutory vs underlying reconciliation Revenue reconciliation ($m) 800 $144.8m $0.1m ($14.9m) $14.3m ($5.3m) ($14.9m) $702.6m 700 $688.3m 600 $578.4m 500 400 300 200 100 FY19 Add: Commissions paid Add back: net loss Less: net gain from Less: Less: statutory share of FY19 Und
Slide 49: FY19 detailed financials
FY19 detailed financials Underlying revenue and EBITA (aggregate view) 12 months ended 30 June Underlying Underlying Year-on-year $ million FY19 FY18 growth % Gross written premiums Brokers1 1,787.1 1,676.3 6.6% Underwriting agencies2 1,161.8 884.1 31.4% Total GWP 2,948.9 2,560.4 15.2% Underlying Un
Slide 50: FY19 detailed financials
FY19 detailed financials Statement of income (underlying IFRS view) 12 months ended 30 June Underlying Underlying Year-on-year Organic Acquisitions & $ million FY19 FY18 growth % growth %2 hubbing growth %3 Fees and commissions¹ 583.4 492.4 18.5% 8.9% 9.6% Professional Services and other fees 48.3 4
Slide 51: FY19 detailed financials
FY19 detailed financials Statement of income (underlying IFRS view) 12 months ended 30 June Underlying Underlying Underlying Underlying Underlying $ million 2H19 1H19 2H18 1H18 2H17 Fees and commissions¹ 305.3 278.1 266.6 225.8 212.9 Professional Services and other fees 23.5 24.8 19.8 20.8 16.9 Inte
Slide 52: FY19 detailed financials
FY19 detailed financials Statutory cash flow statement $ million FY19 FY18 $55m free cash flow in FY19 Cash flows from operating activities $117.7m Cash from operations ($62.6m) Dividends paid Net cash from operating activities before customer 117.7 96.1 trust accounts movement $55.1m Free cash flow
Slide 53: Australian General Insurance Statistics
Australian General Insurance Statistics1 Premiums and claims by class of business Houseowners/householders Domestic motor vehicle CTP motor vehicle Premiums and Claims by class of Business Year End Year End Year End Year End Year End Year End Mar 2018 Mar 2019 Mar 2018 Mar 2019 Mar 2018 Mar 2019 Gro
Slide 54: Australian General Insurance Statistics
Australian General Insurance Statistics1 Premiums and claims by class of business Commercial motor vehicle Fire and ISR Public and product liability Professional indemnity Premiums and Claims by class of Business Year End Year End Year End Year End Year End Year End Year End Year End Mar 2018 Mar 20
Slide 55: Important notice
Important notice This presentation has been prepared by Steadfast Group Limited (“Steadfast”). This presentation contains information in summary form which is current as at 21 August 2019. This presentation is not a recommendation or advice in relation to Steadfast or any product or service offered
Slide 56: Steadfast
<$> Steadfast THE STRENGTH YOU NEED