SteadfastGroup 1H19 results Investor presentation

Presenters:

Robert Kelly - Managing Director & CEO Stephen Humphrys - Chief FinancialOfficer

1H19 results - investor presentation

▪	1H19 highlights	3
▪	1H19 financial summary	7
▪	FY19 guidance	12

Steadfast Group

Underlying earnings driven by organic and acquisition growth

1H19 underlying earnings1

EBITA2 +21.3% to $86.5 million
NPAT +17.6% to $38.2 million
NPATA3 +16.9% to $50.3 million
EPS (NPAT) +12.0% to 4.83 cents per share
Interim dividend +14.3% to 3.2 cents per share

1H19 statutory earnings

▪ Statutory NPAT +19.8% to $40.5 million

Royal Commission

Supportive of recommendations which improve client outcomes aligns with Steadfast's ethos, offering and processes
Steadfast's market-leading policy wordings, triage and Steadfast Client Trading Platform support strong client outcomes with nonvolume based remuneration and non-variable commission terms
Industry has three years to work on issues of conflicted remuneration where they exist in general insurance

Underlying EBITA2 ($m)

**2**Excludes impact from dividend income and mark-to-market adjustments for Johns Lyng Group investment **3**Calculated on a consistent basis since IPO.

1 For statutory reconciliation refer to slides 45 and 46 of the 1H19 analyst pack.

Steadfast Network and equity brokers

GWP and underlying EBITA growth driven by price and volume

Steadfast Network highlights

$2.9 billion GWP, +12%
- Driven by price and volume increases and new brokers joining the Network
388 brokers in the Network
- 11 new brokers joined in 1H19
7% organic growth in 1H19 compared to pcp
- Driven by business pack, ISR, professional risks, motor lines and liability

Equity broker highlights (aggregate)

Underlying net revenue of $205.2 million, +16%
- Organic growth of +9% and acquisition growth of +7%
Underlying EBITA of $57.4 million, +14%
- Organic growth of +9% and acquisition growth of +5%
'Traditional' broker underlying EBITA margin1 maintained at 29.4%

Steadfast Network GWP ($bn)

Steadfast Underwriting Agencies

GWP and underlying EBITA growth

Steadfast Underwriting Agencies highlights

$558 million GWP, +24%
- Primarily driven by price and volume increases with some acquisition growth
Price rises creating significant opportunities
Strong performance also due to long-term strategy of closely aligning capacity providers and technology to products
Underlying EBITA1 of $42.6 million, +48.8% on a like-for-like basis
- Driven by strong price and volume increases

Our insurTech

Steadfast Client Trading Platform and INSIGHT

Steadfast Client Trading Platform (SCTP)

6 business lines and 13 insurer and underwriting agency partners live on SCTP
SCTP delivers strong client outcomes, addressing several issues raised by the Royal Commission
- Genuine contestable marketplace, generating improved pricing competition, coverage and marketing each time a policy is amended or renewed
- Market-leading policy wording, supported by learnings from Steadfast triage and Erato professional indemnity program
- Fixed commission rates, all underwriters pay the same for each class with no volume based guarantees
SCTP usage up 109% with over 300 brokers using the platform
- Second half weighted due to seasonality and new insurers going live
  - Allianz delayed in joining business pack due to their testing failure, expect to pilot in three months
  - Delay by supporting insurers in launching auto-rater for liability

INSIGHT (client relationship management and back office system for brokers)

90 brokers live on INSIGHT, with over 1,000 users
- Additional 1,500 users on BrokerPlus, eClipse and CBN platforms
Additional 60 brokers committed to migrate onto INSIGHT, ongoing discussions with another 100 brokers

+109%

year-on-year growth in GWP transacted through SCTP

300+ brokers have used the SCTP

SCTP activity

CGU live on business pack
Chubb to join business pack in FY20, Allianz hopeful of going live in early FY20
Auto-rating of liability in Q1 20, Berkley joining
Zurich joins commercial motor in 2019

1H19 financial summary

Group financial performance

Strong underlying earnings growth

Six monthsto 31 December$ million	Underlying1H19	Underlying1H18	Year-on-yeargrowth %
Revenue1($m)	320.9	261.8	22.6%
EBITA1($m)	86.5	71.3	21.3%
NPAT ($m)	38.2	32.5	17.6%
EPS (NPAT) (cents)	4.83	4.31	12.0%
NPATA2($m)	50.3	43.0	16.9%
EPS (NPATA) (cents)	6.35	5.71	11.2%

Underlying EBITA growth of $15.2m (+21.3%)
- Organic growth of $9.5m (+13.3%)
- Acquisition growth of $5.7m (+8.0%)
124% conversion of NPATA into cash
Unutilised debt facility of $99m available
- Total Group (corporate + subsidiary) gearing ratio of 24.1%, within board approved maximum of 30%

1Excludes impact from dividend income and mark-to-market adjustments for Johns Lyng Group investment. 2 Calculated on a consistent basis since IPO.

Equity brokers financial performance

Organic and acquisition growth

Equity brokers – consolidated & equity accounted (assuming 100% ownership)

Six monthsto 31 December$ million	Underlying1H19	Underlying1H18	Year-on-yeargrowth %	Organicgrowth %	Growth from acquisitions& hubbing1 %
Netrevenue2	205.2	177.4	15.7%	9.0%	6.7%
EBITA	57.4	50.2	14.4%	8.9%	5.5%
Netrevenue ('traditional' brokers only)2	147.6	130.9	12.8%	6.3%	6.5%
EBITA ('traditional' brokers only)	43.3	38.3	13.1%	5.5%	7.6%

EBITA of $57.4m (+14.4%) from all equity brokers
- Driven by both organic and acquisition growth
- Growth in net fees & commissions driven by hardening market and volume growth
EBITA from 'traditional' brokers of $43.3m (+13.1%) (excludes AR networks and wholesale, life insurance and trade credit brokers)
- Margin3 maintained at 29.4%

EBITA growth: 1H18 – 1H19

1 Acquisition growth includes the net effect of acquisitions, divestments, and increased equity stakes. 2 Net of third party payments. 3 EBITA margin = EBITA / Net revenue.

Steadfast Underwriting Agencies financial performance

Strong organic growth driven by price and volume

Share of 1H19 underlying EBITA

45%

Steadfast Underwriting Agencies – consolidated & equity accounted (assuming 100% ownership)

Six monthsto 31 December$ million	Underlying1H19	Underlying1H18	Year-on-yeargrowth %	Organicgrowth %	Growth from acquisitions& hubbing1 %
revenue2Net	92.0	74.5	23.5%	17.6%	5.9%
EBITA	42.9	33.1	29.4%	25.3%	4.1%
Net revenue2 (excl. profit shares, RBUA)	92.5	70.1	31.9%	19.3%	12.6%
EBITA (excl. profit shares, RBUA)	43.3	29.2	48.1%	30.3%	17.8%
Net revenue2 (excl. profit shares, RBUA,investment in 'greenfield' agencies)	88.0	67.3	30.8%	17.7%	13.1%
EBITA (excl. profit shares, RBUA, investment in'greenfield' agencies)	42.6	28.6	48.8%	30.5%	18.3%

Net revenue growth driven by strong price and volume increases
- Insurers continuing to increase premium prices providing opportunities for agencies
Strong performance led to underlying EBITA growth of 48.8%
- Excludes profit shares, RBUA agency closed in Feb 2018 and investments in 'greenfield' agencies

EBITA growth: 1H18 – 1H19

1 Acquisition growth includes the net effect of acquisitions, divestments, and increased equity stakes. 2 Net of third party payments.

Interim FY19 dividend

Interim dividend up 14%

Interim FY19 dividend of 3.2 cps (fully franked), up from 2.8 cps in 1H18 (+14.3%)
- FY19 target dividend payout ratio of 65% to 85% of underlying NPAT
Dividend Reinvestment Plan (DRP) to apply to interim FY19 dividend; no discount
- DRP shares will be acquired on market
Key dates for interim FY19 dividend:
- Ex date: 25 February 2019
- Dividend record date: 26 February 2019
- DRP record date: 27 February 2019
- Payment date: 21 March 2019

FY19 guidance

FY19 guidance FY19 guidance confirmed

FY19 guidance range1 :
- Underlying EBITA of $190 million $200 million
- Underlying NPAT of $85 million $90 million
Strong 1H19 earnings support our FY19 guidance (as upgraded in October 2018)
Guidance also subject to:
- Insurers continuing to drive moderate premium price increases
- Increasing contribution from SCTP
- Ongoing technology investment

Underlying EBITA ($m)2

Underlying NPAT ($m)2

1 Refer to the key risks on pages 37 – 39 of the Steadfast Group 2018 Annual Report. 2 FY13 and FY14 are pro-forma; FY15-FY19F are underlying. **3**Excludes impact from dividend income and mark-to-market adjustments for Johns Lyng Group investment

Questions

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 offered by Steadfast or its subsidiaries and associates. It is not intended to be relied upon as advice to investors or potential investors, and does not contain all information relevant or necessary for an investment decision or that would be required in a prospectus or product disclosure statement prepared in accordance with the requirements of the Corporations Act 2001 (Cth). It should be read in conjunction with Steadfast's other continuous and periodic disclosure announcements filed with the Australian Securities Exchange, ASX Limited, and in particular the Steadfast Group 2018 Annual Report. These disclosures are also available on Steadfast Group's website at investor.steadfast.com.au.

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