32020 Steadfast Group Annual ReportSteadfast Group Limited Annual Report 2020 Vision: Continually grow shareholder value through our leading general insurance distribution model and related businesses domestically and internationally. Mission: Deliver value to our broker network by being a market leader and an innovator in insurance broking. Together: Our corporate values resonate across all facets of our business. Contents
02
03
04
06
08
10
18
20
23
35
134
135
2020 financial highlights
Message from the Chairman
Message from the Managing Director
& CEO
Message from the Chief
Financial Officer
How we create value model
Our business
Board of Directors
Senior Management Team
CSR and ESG
Financial Report
Glossary of Terms
Corporate Directory
Steadfast Group Annual Report 2020 01
ContentsAnnual General MeetingThe 2020 AGM of Steadfast Group Limited will be held as a Virtual AGM on Wednesday 28 October 2020, due to the uncertainty of COVID-19. Steadfast will provide further details with the Notice of 2020 Annual General Meeting to be released in September 2020. 2020 financial highlights
Steadfast Network GWP ($bn)
9
8.38.3
6.16.1
5.35.3
55
4.44.4
4.54.5
4.14.1
8
7
6
5
4
3
2
1
0
Underlying NPAT ($m)
108.7
108.7
88.788.7
7474
66.466.4
60.460.4
42.142.1
32.532.5
120
100
80
60
40
20
0
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY14
FY15
FY16
FY17
FY18
FY19
FY20
Steadfast Underwriting Agencies GWP ($m)
1,600
1,327
1,327
1,173
1,173
914914
745745
777777
1,400
1,200
1,000
800
600
400
200
146146
0
385385
Underlying EPS (NPAT) (cents per share)
12.712.7
11.211.2
9.579.57
8.878.87
8.098.09
7.247.24
6.246.24
14
12
10
8
6
4
2
0
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY14
FY15
FY16
FY17
FY18
FY19
FY20
223.5
223.5
193.4
193.4
164164
Underlying EBITA ($m)
250
143.3
143.3
129.6
129.6
90.590.5
62.362.3
200
150
100
50
0
DPS (cents per share)
9.69.6
8.58.5
7.57.5
77
66
55
4.54.5
12
10
8
6
4
2
0
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY14
FY15
FY16
FY17
FY18
FY19
FY20
458
Steadfast Network Brokers
02 Steadfast Group Annual Report 2020
$638m
Steadfast Client Trading Platform GWP
Message from the Chairman
The past few months have been extremely difficult for
a large number of businesses, households and
employees. Fortunately, Steadfast Group is in the
business of providing security, where available, for its
clients by working with insurers to obtain insurance
of their assets, businesses, and their employees.
We have seen a drop in volumes for some clients whose
businesses have been materially impacted by the
necessary decisions taken by governments to protect
the health of the community as a result of COVID-19.
Our broad client base, network and focus on service
has enabled us to report a FY20 underlying result in line
with our pre-COVID-19 guidance, with Steadfast Group
producing a 15.5% increase in underlying earnings
before interest, tax and amortisation (EBITA) and a
22.6% increase in underlying net profit after tax (NPAT).
Pleasingly, we reported underlying earnings per share
of 12.7 cents, an uplift of 13.4%.
As previously advised to our shareholders in late August
last year, the 2019 AGM and FY20 half year release,
Steadfast Group expected to report a statutory net loss
from the requirement to expense the cost of the
acquisition of IBNA and acquiring the rights to the PSF
Rebate from a number of the Steadfast Network Brokers.
This cost of $135.8 million and an impairment provision
of $40.7 million against the carrying value of Intangible
Given the foregoing, Steadfast raised c.$119 million via
a placement and Share Purchase Plan. Our total Group
gearing ratio is 21.5% (excluding premium funding) and
is within the Board-mandated Group maximum of 30%.
At the date of this report, Steadfast has unutilised facilities
of $181 million for future expansion.
Governance
Steadfast Group continues to adhere to the corporate
governance principles as set out by the ASX Corporate
Governance Council. Our governance framework and
robust risk management strategies are set out in more
detail on page 34 and I note another year in which there
were no material departures from these principles.
Assets and Goodwill of our some of our equity brokers,
Thank you
resulted in our strong underlying result being reduced to
I would like to thank all of our employees, led by our
a Statutory Net loss of $55.2 million.
Dividend
The Board has declared a fully-franked final dividend of
6.0 cents per share, up 13.2% from last year. This takes
the total dividend to 9.6 cps (fully-franked).
Capital management
We continue to be prudent with our capital as we assess
potential acquisition opportunities against disciplined
highly experienced Managing Director & CEO Robert Kelly,
for their amazing efforts and adaptability to deliver such
excellent results for our shareholders, in particular over
the past four months of major disruption.
Our performance would not have been possible without
the strong contribution from Steadfast brokers, Steadfast
Underwriting Agencies and complementary businesses
and the loyalty of our clients.
criteria. We made a total investment of $191.6m during
I would also like to extend my gratitude to my fellow
FY20, including the acquisition of IBNA Limited (IBNA),
Board Directors who continue to be focused on strong
adding approximately $1.3 billion of annual GWP. We also
governance and driving shareholder value.
completed the Steadfast PSF Rebate offer with a 74%
acceptance rate from our network and numerous changes
in our equity holdings and new bolt-ons.
Frank O’Halloran, AM
Chairman
Steadfast Group Annual Report 2020 03
Message from the Managing Director & CEO
I am pleased to report that FY20 continues our
We now have 458 brokerages in the network, with 393 in
year on year record growth since our August 2013
Australia and internationally 49 in New Zealand and 16 in
IPO, despite the uncertainty of the commercial and
Singapore. Steadfast Group has equity holdings in 57 of the
economic impact to business and the population at
458 brokerages in the Steadfast Network.
large that the COVID-19 has imposed. Our underlying
earnings before interest, tax and amortisation (EBITA)
of $223.5 million and underlying net profit after tax
(NPAT) of $108.7 million are driven by successful
organic and acquisition growth in the Group's
Insurance Broking and Underwriting Agencies.
Steadfast Network and Insurance Broking
In FY20 we grew Steadfast Network gross written
premium (GWP) by 34.8% to $8.3 billion.
Acquisitions made a solid contribution of 16.6% to
underlying EBITA growth. Of particular note was our
acquisition of IBNA, an outstanding Australian general
insurance broker network adding 78 brokers to our
network. We welcome these brokerage members to our
network and are pleased with their successful integration
Strategically we also continue to hold a 40% interest
in unisonSteadfast a network of 236 brokerages across
130 countries.
Steadfast Underwriting Agencies
Steadfast Underwriting Agencies continue to outperform
with excellent organic growth, and generated over
$1.3 billion of GWP, a 13.1% uplift over FY19.
We currently have 25 specialist agencies offering over 100
niche products.
Our insurTech
Our market-leading technology is now utilised by 150 of
our network brokers. $638 million of GWP was transacted
on the Steadfast Client Trading Platform (SCTP) in FY20 as
brokers take advantage of the efficiency and full market
into our systems and philosophy.
access the platform facilitates.
04 Steadfast Group Annual Report 2020
I am proud of
the way our people
have adapted to the
new circumstances,
allowing Steadfast to
maintain our broker
service levels and
support our customers
as they navigate the
impacts of COVID-19.
Steadfast Group provides FY21 guidance of:
Underlying EBITA of between $235 million and
$245 million
Underlying NPAT of between $115 million and
$122 million
Underlying diluted eps (NPAT) growth of 5% to 10%
Key assumptions include:
Steadfast has spent $70m on equity broker acquisitions
post balance date and is intending to complete a final
PSF Rebate offer in FY21 to those network brokers who
did not take up the offer in FY20
Strategic partners continue to drive moderate premium
price increases
Ongoing trading conditions mirror the experience of the
fourth quarter of FY20
Thank you
I would like to thank our employees, Board members,
Steadfast Network brokers, Steadfast Underwriting
Agencies, complementary businesses and strategic
The Hayne Royal Commission findings, combined with
partners for contributing to our record performance this
the impact from the COVID-19 pandemic, means the
year. I am proud of the way our people have adapted to the
use of our technology is now more important than
new circumstances, allowing Steadfast to maintain our
ever, delivering our brokers and their clients superior
broker service levels and support our customers as they
policy coverage, non-volume based fixed brokerage
navigate the impacts of COVID-19.
remuneration and immediate facilitation of transactions.
I would also like to thank all our shareholders for their
As an industry leader in innovation, Steadfast is well
ongoing support. I look forward to working with our
positioned to continue modernising technology to
stakeholders for many years to come.
improve broker and client experience and support growth.
Steadfast remains focused on improving SCTP by adding
more product lines, new insurers and the expansion of
auto-rating capabilities to drive increased SCTP usage.
There are 144 brokers live on our INSIGHT platform. The
Steadfast team will continue to support the migration
of brokers on INSIGHT with an additional 36 brokers
committed to migrate and ongoing discussions with
another 109 brokers.
Outlook
Whilst there is uncertainty prevailing in the global
economy, the trading conditions experienced in the last
quarter provide confidence as to the resilience of our
insurance broking business. The guidance range provided
is subject to the signicant uncertainty surrounding the
impact of COVID-19 on the economy and the extent of
any government stimulus measures.
Robert Kelly
Managing Director & CEO
$8.3bn
Steadfast Network GWP
$108.7m
Underlying NPAT
Steadfast Group Annual Report 2020 05
Message from the Chief Financial Officer
activity. There is significant headroom in the corporate
debt covenants.
In July 2020, the IQumulate facilities were refinanced
for a further two years. IQumulate's premium funding
borrowings and payables and corresponding receivables
are now fully reflected on the Group balance sheet.
IQumulate borrowings are secured by IQumulate assets
and there is no recourse to Steadfast Group. Corporate
debt financiers carve out IQumulate debt from corporate
financial covenants.
Reconciliation of earnings
Page 7 shows the reconciliation of earnings between the
statutory profit and the underlying earnings.
Under Australian Accounting Standards, the consideration
paid for the IBNA acquisition and the Steadfast PSF
Rebate offer was expensed in the Group’s FY20 statutory
accounts and resulted in a statutory loss. This has
been excluded from normalised underlying earnings of
Steadfast Group’s FY20 financial results reflecting the true
underlying position of the business.
Thank you
Significant time and effort has gone into the collation of
the financial data for the Group, to provide stakeholders
with quality and reliable performance data. Thank you to
all who have produced these materials, particularly under
the challenging environment of COVID-19.
FY20 was another record year for Steadfast Group
where we delivered strong underlying earnings and
maintained our strong working capital position and
conservative gearing.
Earnings per share and dividend growth
Organic (+1.3%) and strong acquisition (+14.2%)
underlying EBITA growth drove underlying diluted EPS
(NPAT) of 12.7 cents per share (+13.4%) allowing the Board
to declare a total dividend of 9.6 cents per share (+12.9%).
The total 2020 dividend represents a payout ratio of 76%,
in-line with our target range of 65% - 85% of underlying
net profit after tax, adjusting for non-trading items.
These results were achieved despite the uncertainty our
economy experienced as a fallout of the government
restrictions being implemented in March 2020 to manage
Stephen Humphrys
Chief Financial Officer
the rapid spread of COVID-19.
Being a working capital and capital expenditure-light
business, earnings were translated into cash flow
throughout the year. There was no evidence of cash flow
deterioration during the year despite COVID-19, with
100% of underlying NPATA converting into cash. This cash
has been utilised to fund our continuing technology
investment, further acquisitions and pay increased
dividends to shareholders.
Balance sheet
Steadfast Group’s balance sheet remains well positioned,
with a corporate gearing ratio of 21.5%. In January 2020
we increased our corporate debt facilities from
$385 million to $460 million and extended the term of
these facilities. As at 30 June, the Group has $181 million
of unutilised capacity available to fund future corporate
06 Steadfast Group Annual Report 2020
Steadfast Group has
maintained our strong
working capital
position during the
challenging COVID-19
environment.
Year ended 30 June, $million
2020
2019
Underlying earnings per share (NPAT)
and dividend growth (cents per share)
Reconciliation of earnings:
Statutory comprehensive income
after tax
IBNA acquistion expense
PSF Rebate expense
Impairments
Change in value and sale
of investments
Net gain on deferred
consideration estimates
Other non-trading items
Underlying NPAT - including JLG
mark-to-market adjustment
JLG mark-to-market revaluation
Underlying NPAT - excluding JLG
mark-to-market adjustment
-55.2
103.8
72.7
63.1
40.7
–
–
–
-2.0
-14.6
-5.4
-2.0
111.9
-3.2
0.1
-0.1
89.2
-0.5
108.7
88.7
Underlying NPAT growth
22.6%
19.0%
Amortisation
Underlying NPATA1
Underlying NPATA growth
Underlying Revenue
Underlying EBITA
Underlying NPAT
Underlying NPATA
Underlying EPS (NPAT)
Underlying EPS (NPATA)
26.9
135.6
19.3%
826.3
223.5
108.7
135.6
12.70
15.84
24.9
114.1
17.3%
688.4
193.4
88.7
113.6
11.20
14.35
1 FN: For further information refer to Note 4 to the accounts.
12.712.7
11.211.2
9.69.6
8.58.5
9.69.6
8.98.9
7.57.5
7.07.0
8.18.1
6.06.0
7.27.2
6.26.2
5.05.0
4.54.5
14
12
10
8
6
4
2
0
FY14
FY15
FY16
FY17
FY18
FY19
FY20
u Underlying earnings per share (NPAT)
u Dividend per share
Underlying net profit after tax ($m)
108.7
108.7
88.788.7
7474
66.466.4
60.460.4
42.142.1
32.532.5
120
100
80
60
40
20
0
FY14
FY15
FY16
FY17
FY18
FY19
FY20
u Underlying net profit after tax ($m)
underlying EBITA growth FY20
15.5%
22.6%
19.3%
underlying NPAT growth FY20
underlying NPATA growth FY20
Steadfast Group
continues to deliver
sustainable earnings
growth since IPO.
Steadfast Group Annual Report 2020 07
How we create value model
We aim to create long term value for all of our stakeholders.
Our business activities and business value drivers and resulting value
creation outputs enable us to meet our strategic objectives and business.
08 Steadfast Group Annual Report 2020
Our Operating EnvironmentOur Business ActivitiesOur Business Value DriversValue Creation OutcomeOur business value drivers ensure our business activities maximise value created for stakeholders.The risks and opportunities in our operating environment impact our ability to create value. We ensure we understand these factors and how they affect our business ensuring we are best placed to manage risks whilst capitalising on opportunities to deliver long term value to our stakeholders.Market disruption:Changing technology & increasing data collectionSector consolidation:SME brokers increasingly needing support of an aligned network & equity investmentRegulatory change and increasing stakeholder scrutinyCapacity risk:Strategic partners seeking enhanced returns via selective risk appetite and increasing premiums, with increasing natural disastersHighly competitive landscape for human capital:Attracting and retaining customer centric talent whilst offering increasingly flexible work arrangementsIncreasing cybersecurity riskSteadfast is the largest general insurance broker network and the largest group of underwriting agencies in Australasia. We have three business units focused on the intermediated general insurance market, being Steadfast Broker Network (in which we have an equity interest in 57 brokers), Steadfast Underwriting agencies and the complementary businesses division.Policies & Customers: Protect businesses & consumers as a key component of risk mitigation against numerous perils and disastersBroker Services: Provides brokers market-leading policy wordings for customers, global leading technology that continues to be refined and rolled out, providing efficient processes to administer risk management data transfer, training, service offering458 Network Insurance Brokerages: Advising clients on risk management solutions, especially SME solutions and personal lines25 Specialty Underwriting Agencies: Providing risk management products to the market8 Complementary businesses: Leading Technology, premium funding solutions, other specialty advisory lines supporting the broker network and underwriting agenciesWe use a range of resources and relationships to create sustainable value.People:Employees with high calibre key competen-cies and ethical behaviours in order to drive business performance Product & Advice:Steadfast suite of support servicesTechnology & data capabilities:Our leading technology provides clarity around alternative insurance solutionsOperational scale:The size and scale of our broker network and underwriting agencies and their underlying customersFinance: Access to debt & equity to execute our strategy and invest for sustainable earnings growthCommunity & relationships:Localised relationships with local communities Corporate Governance:Proactively managing risk within strongcorporate governance framework to create sustainable longer-term growthShareholder Value:Deliver healthy return on invested capital over the long term and to improve profits to pay increasing dividends and drive capital value increases.Customer Value:Better outcomes for clients• SCTP as a contestable digital marketplace generating improved pricing competition and coverage• Market leading policy wordings• Instant policy issue, maintenance & renewal, all on a market contestable basis• Efficiency of delivery for clientsEmployee Value:Investment in our people to increase employee engagement through cultural, behavioural and skills based developmental initiatives to drive business growth• 71% employee engagement score• 1,400 hours of trainingCommunity Value:Connecting and investing in our community to support our business and industry• $403,000 invested in the charitable causes• 1,313 charity hours by staff volunteering• $55m income tax paid to the Australian Government Steadfast Group Annual Report 2020 09
Our Operating EnvironmentOur Business ActivitiesOur Business Value DriversValue Creation OutcomeOur business value drivers ensure our business activities maximise value created for stakeholders.The risks and opportunities in our operating environment impact our ability to create value. We ensure we understand these factors and how they affect our business ensuring we are best placed to manage risks whilst capitalising on opportunities to deliver long term value to our stakeholders.Market disruption:Changing technology & increasing data collectionSector consolidation:SME brokers increasingly needing support of an aligned network & equity investmentRegulatory change and increasing stakeholder scrutinyCapacity risk:Strategic partners seeking enhanced returns via selective risk appetite and increasing premiums, with increasing natural disastersHighly competitive landscape for human capital:Attracting and retaining customer centric talent whilst offering increasingly flexible work arrangementsIncreasing cybersecurity riskSteadfast is the largest general insurance broker network and the largest group of underwriting agencies in Australasia. We have three business units focused on the intermediated general insurance market, being Steadfast Broker Network (in which we have an equity interest in 57 brokers), Steadfast Underwriting agencies and the complementary businesses division.Policies & Customers: Protect businesses & consumers as a key component of risk mitigation against numerous perils and disastersBroker Services: Provides brokers market-leading policy wordings for customers, global leading technology that continues to be refined and rolled out, providing efficient processes to administer risk management data transfer, training, service offering458 Network Insurance Brokerages: Advising clients on risk management solutions, especially SME solutions and personal lines25 Specialty Underwriting Agencies: Providing risk management products to the market8 Complementary businesses: Leading Technology, premium funding solutions, other specialty advisory lines supporting the broker network and underwriting agenciesWe use a range of resources and relationships to create sustainable value.People:Employees with high calibre key competen-cies and ethical behaviours in order to drive business performance Product & Advice:Steadfast suite of support servicesTechnology & data capabilities:Our leading technology provides clarity around alternative insurance solutionsOperational scale:The size and scale of our broker network and underwriting agencies and their underlying customersFinance: Access to debt & equity to execute our strategy and invest for sustainable earnings growthCommunity & relationships:Localised relationships with local communities Corporate Governance:Proactively managing risk within strongcorporate governance framework to create sustainable longer-term growthShareholder Value:Deliver healthy return on invested capital over the long term and to improve profits to pay increasing dividends and drive capital value increases.Customer Value:Better outcomes for clients• SCTP as a contestable digital marketplace generating improved pricing competition and coverage• Market leading policy wordings• Instant policy issue, maintenance & renewal, all on a market contestable basis• Efficiency of delivery for clientsEmployee Value:Investment in our people to increase employee engagement through cultural, behavioural and skills based developmental initiatives to drive business growth• 71% employee engagement score• 1,400 hours of trainingCommunity Value:Connecting and investing in our community to support our business and industry• $403,000 invested in the charitable causes• 1,313 charity hours by staff volunteering• $55m income tax paid to the Australian Government 10 Steadfast Group Annual Report 2020
is the largest general insurance broker network and the largest underwriting agency group in Australasia.Steadfast GroupSteadfast GroupSteadfast Group was established in 1996 and is the largest general insurance broker network and the largest underwriting agency group in Australasia, with growing operations in Asia and Europe. We have grown the Steadfast Network to 458 brokerages (of which Steadfast Group has equity in 57), built a portfolio of 25 underwriting agencies and we have a 40% interest in the unisonSteadfast network of 236 brokerages. Our business model is designed to allow us to achieve sustainable growth via our Network brokerages and the equity positions we hold within the Network. Our Steadfast Underwriting Agencies offer cover for the entire market and are also supported by the Steadfast Network. Our businessSteadfast Group has three business streams focused on servicing general insurance clients.236 brokers in the unisonSteadfast Network Steadfast Group has equity holdings in all 25 underwriting agenciesMixture of wholly owned, part-owned and joint venture businessesSteadfast Group has equity holdings in 57 brokerages458 general insurance brokerages with over 1,880 offices25 underwriting agencies8 businesses supporting the Steadfast Network and Steadfast Underwriting Agencies3. Complementary businesses2. Steadfast Underwriting AgenciesSteadfast Group (listed on the ASX)1. Steadfast Broker Network Steadfast Group Fee & Commission diversification
u Strata
u Business Pack
u Machinery & Plant
u Commercial Motor
u Retail Home & Motor
u Other
u Commercial Property & ISR
u Liability
u Trade Credit
u Construction
u Professional Risks
u Rural & Farm
u Statutory Covers
24%
13%
12%
9%
7%
7%
6%
6%
5%
4%
4%
2%
1%
Steadfast Group Annual Report 2020 11
Steadfast Group is a stable and resilient business with our underlying EBITA mix being well diversified by business unit and product line.Resilient business model 12 Steadfast Group Annual Report 2020
1. Steadfast Broker NetworkWorldwide office network (excluding unisonSteadfast)AsiaUK141Steadfast Network GWP ($bn)1Key benefits to brokers include: 458brokers in the Steadfast Network160+exclusive products and servicesMarket-leading policy wordingsExclusive access to Steadfast proprietary technologyTools and support New Zealand32110WANTSAQLDNSWVICACTTAS353274881891222500As the largest general insurance broker network in Australasia, brokerages receive superior market access and exclusive products and services backed by the scale and expertise of the Group. This allows them to focus on servicing their clients’ insurance and risk management needs.0123456FY19FY18FY17FY16FY15FY144.14.44.55.05.36.11 Excludes unisonSteadfast$bnFY208.3112 Our clients
Steadfast Group is primarily focused on the small-to-
medium enterprise (SME) market. The SME market is
advice-driven, which means that client relationships are
key to Steadfast Network brokers, and the Underwriting
Agencies who provide niche advice and products
for brokers.
These relationships ensure that the SME market is more
stable than the sometimes fickle corporate market.
Diversified product offering and client base
Steadfast Network brokers and Underwriting Agencies
offer a diverse range of general insurance products to their
clients across Australasia. This diversity of product and
client base supports sustainable sales growth.
Diversified by client base
Diversified by product line
Diversified by geography
u Micro (Policy size <$650)
u Small Enterprise (Policy size $650 -
$5,000)
u Small Enterprise (Policy size $5,000 -
4%
35%
34%
$50,000)
u Medium Enterprise (Policy size $50,000 -
12%
$250,000)
u Corporate (Policy size >$250,000)
u Retail
3%
12%
u Business pack
u Commerical motor
u Retail
u Commercial property & ISR
u Liability
u Professional risks
u Statutory covers
u Strata
u Rural & Farm
u Construction & engineering
u Other
u VIC
u NSW
u QLD
u WA
u NZ
u SA
u TAS
u ACT
20%
14%
12%
10%
9%
8%
7%
7%
4%
4%
5%
38%
23%
14%
11%
6%
4%
3%
1%
Steadfast Group Annual Report 2020 13
14 Steadfast Group Annual Report 2020
2. Steadfast Underwriting AgenciesThe agencies extend our intermediated general insurance distribution by offering brokers, inside and outside of the Steadfast Network, specialised products and capacity in niche markets.Steadfast Group has an equity stake in all 25 agencies.Steadfast Underwriting Agencies is the largest underwriting agency group in Australasia.Steadfast Underwriting Agencies GWP ($m)$m020040060080010001200FY19FY18FY17FY16FY15FY141453857457779141,173FY20 Steadfast Group Annual Report 2020 15
3. Complementary businessesReReinsurance BrokersLifeOur insurTechSteadfast Technologies provides exclusive, market-leading technology to support broker and underwriting agency operations and facilitate interactions with our insurer partners to support client outcomes.This technology positions us as a global leader in insurance technology (insurTech) and facilitates our strong market position.Steadfast Client Trading Platform (SCTP): a digitally contestable marketplace giving brokers access to domestic, commercial and strata policies offered by all insurers who connect to the platform, allowing comparisons of policies and prices on a single screen. Insight: back office system for brokers offering a single view of their business. UnderwriterCentral: underwriting agency management system which manages the entire policy lifecycle.Eight complementary businesses support the operations of the Steadfast Network and Steadfast Underwriting Agencies and provide an EBITA contribution to the Group.ClientBack office systemSteadfast Client Trading PlatformContestable digital marketplaceInsurer partnersSteadfast Network BrokersSteadfast Underwriting Agencies 16 Steadfast Group Annual Report 2020
1H FY21 2H FY21 2H FY21 Contestable digital marketplace generating improved pricing competition and coverage and alignment of client and broker interests through fixed commission rates. Market-leading policy wordings. Instant policy issue, maintenance and renewal, all on a market contestable basis. Supported by Steadfast claims triage.SCTP benefits for clients:SCTP benefits for brokers: Automated access to Steadfast Network for all policies placed on the platform. Significantly reduced technology and distribution costs. Data analytics and market insights, live at all times . Updated policy wordings, based on prior claims scenarios.SCTP benefits for insurers: Automated market access to leading insurers. Bespoke market-leading policies. Fixed commission, same for all insurers. In-depth data analytics. Stimulates advisory discussions with clients on their insurance programs with the major market players.Insurer and underwriting agency partners on the SCTPOur insurTech continuedBusiness pack Professional risksLiabilityCommercial property & ISRCommercial motorDomestic home,motor & landlordsStrata 2H FY21 2H FY21Steadfast remains focused on improving SCTP by adding more product lines, new insurers and the expansion of auto-rating capabilities, driving increased SCTP usage and superior outcomes for clients. SCTP 2H FY21Key: indicates insurers joining SCTP product lines Steadfast Group Annual Report 2020 17
Life $25bnPrivate health $25bnNon-intermediatedIntermediated ($25bn)Non-intermediated (direct) ($26bn)$101bnAustralianinsurancemarketSteadfast Network brokers CY19 GWP $7.7bn$25bnintermediatedmarketGeneral $51bnAustralian intermediated general insurance market1Key market The intermediated general insurance market consists of insurance brokers and underwriting agencies. Australia is Steadfast Group’s largest market, with intermediated gross written premium of $25 billion generated in 2019, of which our Network and agencies have a 31% share.We are a key distribution channel for our insurer partners as the Steadfast Network has a large and diverse client base across Australia.Over our 24 year history, Steadfast Group has developed strong relationships with carefully selected insurers, underwriting agencies, premium funding and strategic partners that support the Steadfast Network.Major insurer partners Our partnersPremium funding partnersStrategic partner1 APRA Quarterly General Insurance Performance Statistics (March 2020), Steadfast Group and APRA Intermediated General Insurance Performance Statistics (December 2019)Key: indicates insurers joining SCTP product lines Board of Directors
18 Steadfast Group Annual Report 2020
Frank O'Halloran, AM
Non-Executive Chairman (independent)
Frank had over 35 years’ experience at QBE where he was Group
CEO from 1998 until 2012. He also worked with Coopers & Lybrand
for 13 years where he started his career as a Chartered Accountant.
Frank was President of the Insurance Council of Australia from 1999 to
2000 and was inducted into the International Insurance Hall of Fame
in 2010. Frank received his AM for services to the insurance industry
and philanthropy.
Robert Kelly
Managing Director & CEO
Robert co-founded Steadfast and has over 45 years’ experience in the
insurance industry. He is ranked the second most influential person in
insurance by Insurance News, and was awarded the ACORD Rainmaker
Award in 2014. Robert is a Qualified Practising Insurance Broker, a
Fellow of NIBA, a Senior Associate of ANZIIF, a Certified Insurance
Professional and a Graduate member of the Australian Institute of
Company Directors. Robert is also a Director of ASX-listed Johns Lyng
Group Limited and not-for-profit organisation KidsXpress.
David Liddy, AM
Deputy Chairman & Non-Executive Director (independent)
David has over 45 years’ experience in banking, including postings
in London and Hong Kong. He was Managing Director of Bank of
Queensland from 2001 to 2011. David is a Director of Emerchants
Limited. He is a Senior Fellow of the Financial Services Institute of
Australasia and a Fellow of the Australian Institute of Company Directors.
David received his AM for services to the banking and finance sectors
and the community of Queensland.
Gai McGrath
Non-Executive Director (independent)
Gai has over 34 years’ experience in the financial services and legal
industries. Including 12 years with Westpac Group as General Manager
of Westpac’s retail banking business in Australia from 2012 to 2015 and in
New Zealand from 2010 to 2012. Gai is a Director of Genworth Mortgage
Insurance Australia Limited (and also chairs the Risk Committee), IMB
Bank (chairs the People & Culture Committee and Financial Planning
Committee), Toyota Finance Australia Limited, HBF Health Limited and
Humanitix Limited (Chair). Gai holds a BA, LLB (Hons), LLM (Distinction)
and is a Graduate of the Australian Institute of Company Directors.
Anne O’Driscoll
Non-Executive Director (independent)
Anne has over 35 years’ of business experience. A Chartered Accountant
since 1984, she was CFO of Genworth Australia from 2009 to
2012 following more than 13 years with IAG. Anne is chairman of
FINEOS Corporation Holdings Plc and a Director of Infomedia Limited,
Commonwealth Insurance Limited and MDA National Insurance Pty Ltd.
She is also a Fellow of ANZIIF and a Graduate of the Australian Institute
of Company Directors.
Philip Purcell
Non-Executive Director (independent)
Philip has over 45 years’ experience in the insurance and legal
industries. He has been a partner at Dunhill Madden Butler,
PricewaterhouseCoopers Legal and Ebsworth & Ebsworth, and has held
two Board positions with GE in Australia. Philip consults to clients who
are engaged in commercial transactions or mediation of commercial
disputes. Philip holds an LLB and BA.
Greg Rynenberg
Non-Executive Director (independent)
Greg has over 40 years’ of experience in the insurance broking industry,
with 36 years spent running his own business, East West Group. East
West Group is a Steadfast Network Broker not owned by Steadfast.
Greg is a Qualified Practising Insurance Broker, a Fellow of NIBA and an
Associate of ANZIIF. He holds an Advanced Diploma in Financial Services
(General Insurance Broking) and was named NIBA Queensland Broker
for 2014.
Steadfast Group Annual Report 2020 19
Senior Management Team
Robert Kelly
Managing Director & CEO
Stephen Humphrys
Chief Financial Officer
Samantha Hollman
Chief Operating Officer
Robert co-founded Steadfast and has over 45
years’ experience in the insurance industry.
He is ranked the second most influential
person in insurance by Insurance News,
and was awarded the ACORD Rainmaker
Award in 2014. Robert is a Qualified Practising
Insurance Broker, a Fellow of NIBA, a
Senior Associate of ANZIIF, a Certified
Insurance Professional, Graduate member of
the Australian Institute of Company Directors
and sits on the ACORD Board in New
York. Robert is also a Director of ASX-listed
Johns Lyng Group Limited and not-for-profit
organisation KidsXpress.
Stephen joined Steadfast in 2013 and has
over 30 years’ experience as a Chartered
Accountant and extensive experience in
acquisitions and integrations. As Managing
Director of Moore Stephens Sydney for 10
years and Chairman of Moore Stephens
Australasia for three, Stephen played a key
role in placing Moore Stephens into the top
10 accounting firms in Australia. Stephen
is a Fellow of Australia and New Zealand
Chartered Accountants.
Samantha has 25 years' experience in the
insurance industry including 20 years at
Steadfast. She was promoted to COO in
September 2016 to direct and manage
operational activities of the organisation
and to ensure the implementation of the
overall strategy. Samantha works closely
with the Managing Director & CEO and the
Board to implement strategic initiatives for
the Group on a national and international
level. Samantha sits on the unisonSteadfast
Supervisory Board.
Simon Lightbody
Chief Executive Officer
Steadfast Underwriting Agencies
Allan Reynolds
Executive General Manager
Asia, New Zealand & Domestic
Nick Cook
Executive General Manager
Partner & Broker Services
Simon has worked in the insurance industry
for over 25 years in both the UK (at Lloyd’s
of London) and Australia, including nine
years within his own business, Miramar
Underwriting Agency (Miramar). Steadfast
entered into the underwriting agency market
in 2005 as a 50% joint venture partner of
Miramar and acquired the remaining balance
in August 2013. Simon is a member of the
Underwriting Agencies Council.
Allan joined Steadfast in 2002, and in
April 2015 took on the Direct, New
Zealand & Singapore portfolios. With a
background in product development and
distribution, corporate strategy and portfolio
management, Allan has more than 40 years'
experience in general insurance. He holds
a Diploma of Business Studies (Insurance),
is a Certified Insurance Professional and
is a Fellow, honorary member and former
Chairman of ANZIIF.
Nick, who joined Steadfast in February
2015, had over 15 years’ experience at
Zurich Financial Services, including three
as the Head of Customer & Proposition
Development and nine years as a distribution
manager. He is a member of the NIBA Board
and an Associate ANZIIF member. He has
graduated from both the AGSM Leadership
Program and the Prosci Organizational
Change Management Program.
20 Steadfast Group Annual Report 2020
Peter Roberts
Executive General Manager
Business Solutions
John O'Herlihy
Executive General Manager -
Operations & Acquisitions
Jeff Papps
Executive General Manager -
Operations & Acquisitions
Peter joined Steadfast in 2013 and focuses
on back office outsourcing opportunities for
the Group. He was also Managing Director of
White Outsourcing until stepping down on
30 June 2016 to concentrate on his role at
Steadfast Business Solutions. Peter has over
25 years’ experience in accounting and back
office services to the financial services sector,
is a member of Australia and New Zealand
Chartered Accountants, and commenced his
career in accounting with KPMG. Peter is a
company secretary of Steadfast.
John joined Steadfast in 2012 and is joint
lead of the Operations and Acquisitions
team. Having completed his professional
accounting training with KPMG in 1996, John
has spent over 15 years working within
the insurance industry. During this time he
has held a number of senior finance and
operational roles in both North America
and Australia specialising in corporate
transactions. John is now a Fellow of the
Institute of Chartered Accountants Ireland.
Jeff joined Steadfast in 2012 and is joint
lead of the Operations and Acquisitions
team. Prior to joining Steadfast, Jeff worked
for PwC specialising in financial services.
After transferring from London to Sydney
in 1998, he focused on mergers and
acquisitions, leading domestic and cross
border transactions and listings across
Australia, Asia, Europe and North America.
Jeff is a Member of the Institute of Chartered
Accountants in England and Wales
Duncan Ramsey
General Counsel
Duncan began with Steadfast in June 2014
after 20 years at QBE. He was Group General
Counsel and Company Secretary. Duncan's
career commenced in 1986 with Freehills in
Sydney. He holds degrees in commerce and
law, and a graduate certificate in applied risk
management. Duncan is a Fellow of ANZIIF
and the Governance Institute of Australia, as
well as a graduate of the Australian Institute of
Company Directors.
Linda Ellis
Group Company Secretary
& Corporate Counsel
Martyn Thompson
Executive General Manager -
Corporate Development
Linda is Group Company Secretary &
Corporate Counsel at Steadfast Group
Limited and has been part of the Executive
team since 2013. Before joining Steadfast, she
specialised in mergers and acquisitions and
worked in Sydney and London at global law
firms. Linda is a Graduate member of the
Australian Institute of Company Directors,
holds a BEc and LLB (Hons I) from The
University of Sydney and is on the boards
of Abbotsleigh School for Girls, Mosman
Preparatory School and the advisory board
of Heads Over Heels.
Martyn recently joined Steadfast with over
35 years’ experience as an Insurance
Broker, the previous 29 years working in
senior roles for the global Broker, Willis
Towers Watson. During this tenure he was
National Client Service Director responsible
for implementing service platforms and
standards across the network including
providing risk and insurance solutions to
many ASX companies, government and
Multi-National organisations. He is a Senior
Associate ANZIIF, holds a Diploma of Financial
Services and a Graduate Certificate in
Business Administration.
Steadfast Group Annual Report 2020 21
22 Steadfast Group Annual Report 2020
As part of our culture, a commitment to doing the right thing and acting responsibly are key planks of our commitment to CSR and ESG standards. CSR and ESG
Our approach to Corporate
and Social Responsibility (CSR),
Environmental, Social and
Governance (ESG)
Steadfast’s long term sustainability is enhanced by our
CSR program and by our focus on ESG considerations.
Our Board considers that CSR and ESG are important
elements of acting in the best interests of our shareholders
as we continue to develop our long term sustainability as
a business. As part of our culture, a commitment to doing
the right thing and acting responsibly are key planks of our
commitment to CSR and ESG standards. In the process:
We engage our people. We demonstrate that we care
about them and the issues that are important to them.
Our businesses feel proud of being part of the
Steadfast Group.
Client outcomes are better when culture is ethical
and responsible.
We make a positive impact in our communities.
We have better long term sustainability and
performance in the best interests of our stakeholders.
Steadfast Group Annual Report 2020 23
CSR & ESG CSR and ESG continued
24 Steadfast Group Annual Report 2020
Our CSR Framework
We have considered how we can help make a difference to some of the world's most pressing environmental and social
challenges, through our CSR program to our business and sphere of influence. We have formulated five principles which
align with our business and culture and where we can have the most impact.
Steadfast’s CSR program is centred on these five principles:
Contribute to climate action
Promote gender equality
Our relationship with Sustainability Ambassador,
We are committed to gender equality as a sound
Tim Jarvis AM, provides Steadfast with an
business practice and because it is the right thing
opportunity to contribute on climate change and
to do. Diversity and inclusion are important in our
the transition to a lower-carbon economy.
business and we also promote gender equality
Steadfast Sustainability Ambassador: Tim Jarvis AM.
Energy efficiency.
Green energy.
Carbon offsetting.
.
through supporting initiatives outside Steadfast.
Male Champions of Change.
Diversity & inclusion.
Heads Over Heels.
Dive In festival.
Woman in Insurance.
Wear it Purple.
Support work opportunity
Encourage health and wellbeing
Insurance is a key factor in enabling
Steadfast is committed to good health and
sustainable economic growth. We provide
wellbeing outcomes for our people and much of
advice for insurance products supporting
our charity giving is directed to improving health
workers continuing their employment through
outcomes in our community.
our workers’ compensation solutions business,
accident & health solutions and life insurance
solutions. Our support for Indigenous people aims
to provide opportunities for work and growth.
Employee attraction, retention and engagement.
Health, safety & wellbeing.
Steadfast Graduate Programme.
Steadfast Foundation.
Our brokers and their clients.
Industry engagement & leadership.
Reconciliation Action Plan.
Indigenous Engagement Ambassador.
Investment in Origin Insurance.
Human rights and modern slavery.
Jobsupport employer.
Help reduce poverty
Insurance protects individuals and businesses
when disaster strikes, providing a safety net
against poverty and building financial wellbeing.
Our brokers and underwriting agencies are proud
to provide their clients with insurance solutions
and advice.
Our brokers, underwriting agencies and
their clients.
Steadfast Foundation.
Steadfast Group Annual Report 2020 25
CSR and ESG continued
Environmental
Energy efficiency
Steadfast looks for opportunities to reduce our
environmental impact and improve energy efficiency. This
year we transitioned our head office in Bathurst St, Sydney
to Light Emitting Diode (LED). While this was a significant
up-front cost, the change has allowed us to operate on
100% green energy from our head office and make cost
savings of 10.6% annually (pre-COVID-19 lockdown).
Carbon offsetting
Steadfast demonstrates our commitment to minimising
the impact we have on the environment by offsetting
the carbon emissions of the Senior Management
Team’s corporate travel. With the COVID-19 lockdown
management has spent less time travelling and has been
making use of video conferencing technology, tools we
expect to continue to utilise in the future and will see a
permanent reduction in our travel impact.
Our carbon offsets reflect Steadfast’s CSR priorities.
We direct our carbon offsetting to support local
communities in Africa with a focus on empowering
women and addressing the effects of climate change on
local communities.
Steadfast demonstrates
our commitment
to minimising the
impact we have on
the environment by
offsetting the carbon
emissions of the Senior
Management Team’s
corporate travel.
Steadfast’s Sustainability Ambassador, Tim Jarvis AM
Tim Jarvis AM is a polar explorer, environmental scientist,
author, public speaker and film maker. Tim holds Masters
degrees in environmental science and environmental law
and was conferred a Member of the Order of Australia
(AM) for services to the environment, community and
exploration in the 2010 Australian honours list. In 2013,
Tim successfully recreated Sir Ernest Shackleton's epic
crossing of the Southern Ocean and was voted
Conservationist of the Year in 2016 by the Australian
Geographic Society.
Tim uses exploration, film, content and social media to
share and generate conversation in the area of
environmental sustainability. Using his extensive
knowledge and experience, he provides Steadfast
businesses with regular commentary on the current state
and future outlook of environmental sustainability,
particularly in relation to the impact of current events. He
provides an objective analysis and broad perspective on
environmental issues and offers pragmatic insight to
progress thinking in this area.
26 Steadfast Group Annual Report 2020
Social
Our culture and values
Building a culture that supports and enables us to
achieve our purpose, vision and strategy in an ehtical
and responsible manner is a strategic priority for Steadfast.
Culture is key to ensuring that how we go about doing our
work is just as important as what gets achieved. All our
people undertake training on the standards of behaviour
that are expected and these are also encapsulated in
our corporate governance policies such as our code of
conduct. All our people have culture and values KPIs
and the Board has charged the executives with the
responsibility of setting the tone from the top in all aspects
of their interactions and work.
In prioritising the safety of our employees and broker
network, Steadfast cancelled our annual Steadfast
Convention that was to be held in March in Perth to limit
potential exposure to COVID-19.
Our brokers and their clients
We prioritise what matters to our brokers and strive to
deliver an outstanding broker service to enable Steadfast
Network brokers to thrive.
approach to how insurers can support brokers
through COVID-19.
Launching an alternative premium funding option to
support distressed clients.
Steadfast has commissioned a guide on providing
the correct Business Interruption information &
calculations to assist clients arrive at the correct figure
for their business interruption insurance in a post
COVID-19 environment.
Working with the ACCC to ensure all Steadfast brokers
were opted into the ACCC Interim Authorization on
providing COVID-19 relief measure to Steadfast clients.
Our Steadfast Client Trading Platform (SCTP) provides
Steadfast brokers and their clients with choice across
leading insurers and ‘best in class’ product wordings. The
SCTP provides real time, full policy life cycle capability
accessed through the Steadfast Virtual Underwriter. This
ensures our brokers can provide clients with insurance
solutions from a range of insurers quickly and efficiently.
Steadfast performs an annual ‘Your Shout’ survey of its
brokers. In our most recent survey, our brokers indicated
that they continue to be very pleased with the products
and service offerings Steadfast provides. We strive for
This year Steadfast put in place a number of measures
continual improvement in levels of broker satisfaction.
to support our broker network in supporting their clients
through COVID-19. These measures include:
A dedicated page on our Broker Website for COVID-19
detailing measures put in place by Government,
Industry & Insurers.
Newsletters sent to the network detailing Government
measures to assist brokers & their clients.
Hosted a webinar providing update on COVID measures
put in place to assist clients. Over 1,500 brokers
participated in this forum.
Providing support through National Insurance Brokers
Association (NIBA) in developing a coordinated
Building a culture that supports and enables us
to achieve our purpose, vision and strategy in an
ethical and responsible manner is a strategic priority
for Steadfast.
Steadfast Group Annual Report 2020 27
CSR and ESG continued
Industry engagement and leadership
Diversity and Inclusion
A number of our senior executives hold leadership roles
Steadfast is committed to increasing and supporting
within the industry such as serving on the board of
diversity. This flows naturally from our values and is an
industry bodies. Our executives contribute by speaking
important part of our culture. Steadfast believes that we
and industry events and judging industry awards. Our
perform better as a business with diverse people and an
executives are recognised throughout the industry and
inclusive culture. It helps us attract, retain and motivate
receive accolades for their leadership and contribution.
the best people. We are proud of our increasing gender,
Working with the industry body, National Insurance
ethnic and age diversity and are committed to inclusion
Brokers Association, Steadfast continues to play a leading
at all levels regardless of sexual orientation, gender
role in seeking to ensure that the insurance broker
identity, age, disability, ethnicity, religious beliefs, cultural
industry stays strong, delivers excellent outcomes for
background or socio-economic background. We do not
customers and meets its legal and ethical obligations from
tolerate discrimination, harassment or vilification and staff
a regulatory perspective.
undergo training to support our commitment to inclusion.
Last year Steadfast welcomed the final report of the
Steadfast offers flexible work practices to assist our people
Hayne Royal Commission, and while it did not generally
fulfil their responsibilities outside work. We have training
raise concerns of misconduct within general insurance
programs to prepare our people, particularly those we
broking, its implications provide an opportunity for the
have identified as high potential, for senior positions and
industry, including Steadfast, to reflect on our practices.
we actively create opportunities such as appointing them
We continue to make adjustments to our practices, and
lead the way, on our journey of continual improvement
and make appropriate adjustments as best practice in
insurance broking continues to evolve.
to boards within the Steadfast Group, to assist professional
development.
Steadfast believes that
we perform better
as a business with
diverse people and an
inclusive culture.
28 Steadfast Group Annual Report 2020
Gender
We are committed to gender diversity at all levels
Non-executive directors
Key management personnel
Senior executives
u Male
u Female
67%
33%
u Male
u Female
80%
20%
u Male
u Female
65%
35%
Group wide employees
Promotions and transfers
Participant in our manager
development program
u Male
u Female
47%
53%
u Male
u Female
69%
31%
u Male
u Female
48%
52%
Ethnic & Age
Steadfast has considerable ethnic and age diversity
Head office employees
place of birth
Workforce language diversity
Age Diversity
u Born outside Australia
u Born in Australia
46%
54%
u Non-english speaking background
u English speaking background
30%
70%
u Under 30 years old
u Between 30 and 50 years old
u Over 50 years old
23%
57%
20%
Steadfast Group Annual Report 2020 29
CSR and ESG continued
Support for Aboriginal & Torres Strait Islander peoples
Reconciliation Action Plan
Steadfast launched our first Reconciliation Action Plan
(RAP), ‘Reflect’ in March 2020 as part of our broader
commitment to CSR and diversity and inclusion.
Steadfast’s RAP commitment is the beginning of our
journey to supporting reconciliation in Australia, in a
structured, relevant and respectful way. The three pillars of
reconciliation, respect, relationships and opportunities are
our guiding principles on this journey.
As part of our Reflect RAP, we have begun to raise
awareness and encourage a deeper understanding of
Aboriginal and Torres Strait Islander peoples - including
their culture, history, achievements and aspirations -
throughout Steadfast via content and workshops.
On our journey so far, we have strengthened existing
relationships and explored new ones with Aboriginal and
Torres Strait Islander communities within our business’s
sphere of influence. It is through these relationships that
we seek to have a positive impact.
We have begun to explore opportunities to assist
Aboriginal and Torres Strait Islander peoples, particularly
in employment and enterprise. Our investment in Origin
Insurance has expanded this opportunity, having been
founded, run and majority-owned by Aboriginal and
Torres Strait Islander people.
Steadfast has an entrepreneurial culture and we intend
to continue to explore opportunities to act within our
sphere of influence, and through our relationships, to
support reconciliation.
Steadfast launched our first Reconciliation Action Plan
(RAP), ‘Reflect’ in March 2020 as part of our broader
commitment to CSR and diversity and inclusion.
30 Steadfast Group Annual Report 2020
We respect the
human rights of our
employees, customers
and those of
our suppliers and
business partners.
David Liddiard OAM
Indigenous Engagement Ambassador
Human Rights and Modern Slavery
Steadfast has appointed David Liddiard OAM as our
Steadfast rejects any form of modern slavery such as
Indigenous Engagement Ambassador. For the past three
slavery, servitude, human trafficking and forced labour. We
decades, David has been committed to closing the
respect the human rights of our employees, customers
education, health and wellbeing and employment gaps
and those of our suppliers and business partners. We
between Indigenous and non-Indigenous Australians.
aim to identify and manage risks related to human rights
David is a Ngarabal from Northern NSW and a well-known
across our business and supply chain. More information is
passionate advocate of Indigenous Australians.
included in our Modern Slavery Statement 2020 which is
David’s role includes representing Steadfast’s RAP
available from our investor website.
commitments and programs, providing advice and
Steadfast is committed to complying with relevant laws,
facilitating Aboriginal and Torres Strait Islander
community expectations and ethical standards related
engagement and supporting the business interests
to human rights and modern slavery in respect of our
of Steadfast.
Indigenous Talent Program sponsorship
In supporting Indigenous children to participate in sport,
employees and business. Employees are encouraged
to report any genuine concerns about modern slavery
relating to our people, business or supply chain.
Underwriting Agencies of Australia (UAA), a Steadfast
Privacy and security
business, is a platinum partner of Central Coast Academy
Security of data and information is integral to building and
of Sport. UAA is in its sixth year of sponsoring the
maintaining trust with our brokers and strategic partners
annual Indigenous Talent Program to ‘unearth’ local
and is critical for our brokers to build relationships with
Indigenous talent from the Central Coast region and
their customers. We are committed to protecting privacy
provide scholarships to CCAS sports programs. The
and data security through implementing appropriate
scholarships provide a localised training environment
policies and procedures throughout our business,
for eligible aspiring Aboriginal and Torres Strait Islander
including in our technology platforms such as INSIGHT,
youth to access quality development opportunities and
our broker operating system. We manage and mitigate
support for a number of sports. In 2020, UAA provided 16
emerging threats, including cyber threats, by seeking
scholarships. Thousands of young Indigenous youth have
to adhere to all legislation and appropriate risk
benefitted from the program since inception.
management standards.
Steadfast Group Annual Report 2020 31
CSR and ESG continued
Employee attraction, retention and engagement
As part of our CSR commitment, in March this year
We are very proud of our culture and our approach
Steadfast conducted its annual employee engagement
to CSR, including diversity and inclusion. We know
survey which measures the emotional connection people
that these are important to our people. They are
have to the Group. This year with a participation rate of
important aspects of our employee attraction, retention
86% the group-wide engagement score was 71%. This
and engagement strategy.
We actively invest in developing our people and Steadfast
has a formal talent development strategy. We have
result continues to place Steadfast in the ‘performing’ or
‘highly engaged’ zone of the engagement spectrum and is
10% above the Australian industry norm.
a dedicated training and development manager who
Our levels of both voluntary and involuntary staff turnover
delivers a substantial number of training programs
at 8.3% and 3.3% respectively, are well below the industry
throughout the year at all levels. Steadfast’s College
average of +13% and the average current employee tenure
of Leadership offers our current and future leaders
is 3 years and 7 months with Steadfast.
the opportunity to develop while exposing them
to forward-thinking, relevant and practical leadership
methodology and application. In addition to leadership
and management training, our people participate in
annual development planning to ensure their continued
technical and non-technical development.
We continue to implement initiatives designed to engage
employees and build relationships, such as our intranet,
regular staff meetings and briefings, a formal performance
review process, participation in a number of community
events, social activities and quarterly off-site workshops.
Steadfast offers an Additional Leave Purchase Scheme
enabling our people to salary sacrifice to acquire
additional annual leave to facilitate a better balance
between professional and personal lives.
Steadfast has a Short-Term Employee Incentive Scheme
to increase market competitiveness and attract, retain and
motivate our people. The scheme has been designed to
ensure goal alignment throughout the business and also
provides our people with the opportunity to receive shares
in Steadfast. As well as salary and incentive arrangements,
Steadfast offers a wide-reaching benefits program for our
Steadfast has a volunteer day. We encourage our people
people including travel insurances and discounts on a
to volunteer, on a day of paid employment, at a charity
wide range of consumer goods and cars.
of their choice. This initiative also strengthens the link
between Steadfast and the Steadfast Foundation as we
encourage our people to volunteer for a charity supported
by the Steadfast Foundation.
We have a graduate program and a school leavers’
summer intern program. We are delighted in the quality
of people who have joined us, and stayed, through
these programs.
8.3%
Employee turnover rate
3.5
Average years of employee tenure
32 Steadfast Group Annual Report 2020
71%
Employee engagement survey result
1,313
Employee volunteer charity hours
We actively promote
the health, safety
and wellbeing of
our people.
Health, safety and wellbeing
We actively promote the health, safety and wellbeing of
our people. We have had no material work, health and
safety incidents.
Our office layouts encourage collaboration and
interaction, making it easier to exchange information and
share ideas. Desks are generally sit and stand, to promote
better health. We arrange regular visits by ergonomic
consultants to help employees set up their desks and
provide ongoing guidance on posture.
Steadfast has implemented a comprehensive health and
wellbeing program. Some of our initiatives include:
Complimentary life, total & permanent
disability insurance.
Developed COVID-19 hub on the Group’s intranet
to address frequently asked questions and provide
staff updates.
Assessed employees home workspace and provided
enhancement to employees work from home
In response to the health risks associated with the
workspace where needed.
COVID-19 pandemic, Steadfast adopted our crisis
Pandemically cleaned and sanitised Steadfast
management plan, seeing all employees working
office space.
remotely from home from Tuesday 24 March 2020. Staff
Health assessments and flu shot.
have progressively returned to the office on a part-time
Access to confidential external Employee Assistance.
basis in line with the recommendations from the federal
Programs (EAPs) for counselling to support
and state heath authorities.
mental health.
This has enabled our employees to social distance, isolate
and safely continue their employment, whilst allowing the
business to continue to effectively operate for our clients
and shareholders.
Our Board receives regular work, health and safety
Workplace health and safety training - 5% of staff have
been trained as mental health first aid officers.
A range of education and awareness of key health and
wellbeing issues including physical fitness, nutrition,
mental health and stress management.
On-site yoga and fitness classes.
(WHS) reports and has overseen improvements, including
Fresh fruit bowls.
improved reporting and analysis resulting from the
recommendations of the comprehensive WHS external
audit. Last year we engaged with businesses within our
Group to review their WHS compliance, which resulted in
increased awareness of their WHS responsibilites. We have
a work, health and safety committee to provide a forum for
our people to suggest initiatives and raise any concerns.
Steadfast supports flexible workplace initiatives to
recognise and respond to people’s different needs at
different stages of their lives and to help our people
balance personal obligations with their careers. Currently
10% of our employees have permanent flexible work
arrangement in place. This is expected to increase
considerably in the post COVID-19 new normal.
We offer paid parental leave at 12 weeks’ full pay. We
engage with our people when they are on parental leave, if
they wish, to maintain a sense of connectedness and ease
the transition back to work. Steadfast provides a parents’
room in our head office as a practical support for the
increasing number of new parents in our team and ease
their transition back to work.
Steadfast Group Annual Report 2020 33
CSR and ESG continued
Steadfast Foundation
The Steadfast Foundation is in its ninth year and the New
Zealand Steadfast Foundation is in its third year.
Steadfast created the Steadfast Foundation to facilitate
grants and charitable contributions that support charities
helping people to overcome adversity, with approximately
$403,000 donated during FY20. With the cancellation of
the annual Steadfast Convention, our major fundraising
event due to COVID-19, Steadfast donated the food
supplies associated with the convention to OzHarvest.
Between 24 March and 4 April 2020, more than 1,314
kilograms of food was donated .
Charities are often chosen based on the
recommendations of Steadfast brokers, and include
cancer research and support, mental health, children’s
causes and charities supporting domestic violence, the
homeless and disadvantaged. Some of the charities the
Steadfast Foundation supported this year include:
Governance
Assistance Dogs Australia, Children’s cancer institute,
Our governance framework
Create Foundation, Reach Foundation, Earbus Foundation
Steadfast is committed to high standards of corporate
WA, The Helmsmann Project, Youth Off The Streets,
governance so that our decisions and actions are based
Orange Sky, McGrath Foundation and the Prostate Cancer
on the principles of transparency, integrity, responsibility
Foundation of Australia.
and performance which promote long term sustainability
and ongoing success of our business. We strive to
maintain a compliant and ethical culture in our business
practices. . Further information is provided in our 2020
Corporate Governance Statement.
34 Steadfast Group Annual Report 2020
Directors’ Report
Operating and financial review
2020 Remuneration Report
Lead Auditor's Independence Declaration
Financial Statements
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
1. General Information
2. Significant accounting policies
3. Critical accounting judgements, estimates and assumptions
4. Operating segments
5. Earnings per share
6. Dividends
7. Intangible assets and goodwill
8. Borrowings
9. Notes to the Statement of Changes in Equity and Reserves
10. Business combinations
11. Subsidiaries
12. Investments in associates & joint ventures
13. Trade and other receivables
14. Financial instruments
15. Contingencies
16. Events after the reporting period
17. Share-based remuneration
18. Taxation
19. Notes to the Statement of Cash Flows
20. Leases
21. Related party transactions
22. Parent entity information
23. Remuneration of auditors
24. Acquisition of Insurance Brokers Network Australia Limited (IBNA)
25. Professional Services Fee (PSF) Rebate Offer
Director's declaration
Independent Auditor's Report
Shareholders' information
38
46
68
70
72
74
78
80
80
87
89
92
93
94
97
100
102
105
108
110
111
114
114
114
116
119
120
121
123
124
124
125
126
127
132
Steadfast Group Annual Report 2020 35
2020 Financial Report Directors’ Report
The Directors present their report together with the consolidated financial statements of Steadfast Group Limited (Steadfast or
the Company), its subsidiaries and interests in associates and joint ventures (collectively Steadfast Group or the Group) for the
financial year ended 30 June 2020 (FY20) and the auditor’s report thereon.
Directors
The Directors of the Company at any time during or since the end of the financial year are as follows. Directors were in office for
the entire period unless otherwise stated.
Name
Chairman
Frank O’Halloran, AM
Managing Director & CEO
Robert Kelly
Other Directors
David Liddy, AM (Deputy Chairman)
Gai McGrath
Anne O’Driscoll
Philip Purcell
Greg Rynenberg
Date of appointment
21 October 2012
18 April 1996
1 January 2013
1 June 2018
1 July 2013
1 February 2013
10 August 1998
Directorships of other listed companies
Directorships of other listed companies held by the Directors in the three years preceding the end of the financial year are
as follows:
Name
Company
Period of directorship
Frank O’Halloran, AM
None
Robert Kelly
Johns Lyng Group Limited
Since 16 November 2017
David Liddy, AM
EML Payments Limited
Since April 2012
Gai McGrath
Genworth Mortgage Insurance Australia Limited
Since August 2016
Investa Office Fund
October 2017 to December 2018
Anne O’Driscoll
Infomedia Limited
Since December 2014
FINEOS Corporation Holdings Plc
Since July 2019
Philip Purcell
Greg Rynenberg
None
None
Particulars of the Directors’ qualifications and experience are set out under Board of Directors on page 18.
Particulars of the Company Secretaries’ qualifications and experience are set out under Senior Management Team on page 20.
36 Steadfast Group Annual Report 2020
Directors Meetings
The number of Directors’ meetings (including meetings of committees of Directors) and number of meetings attended by each
of the Directors of the Company during the financial year were as follows:
Total number of meetings held
Board
13
Audit & Risk
Committee
4
Nomination
Committee
4
Remuneration &
Succession
Planning Committee
3
Director
Frank O’Halloran, AM
Robert Kelly
David Liddy, AM
Gai McGrath
Anne O’Driscoll
Philip Purcell
Greg Rynenberg
Eligible to
attend as a
member
Attended
as a
member
Eligible to
attend as a
member
Attended
as a
member
Eligible to
attend as a
member
Attended
as a
member
Eligible to
attend as a
member
Attended
as a
member
13
13
13
13
13
13
13
13
13
13
13
13
13
13
4
-
4
4
4
4
4
4
-
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
3
-
3
3
3
3
3
3
-
3
3
3
3
3
Particular details of the responsibilities of the members of the Board and the various committees are set out in the Corporate
Governance Statement in this report, and are also available in the corporate governance section of the Steadfast Investor website
(http://investor.steadfast.com.au/).
Prinicpal Activities
The principal activities of the Group during the financial year were the provision of services to Steadfast Network brokers, the
distribution of insurance policies via insurance brokerages and underwriting agencies, and related services.
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the Group. The Group continued to acquire insurance brokers and
underwriting agencies during the year, as well as acquiring a 100 percent interest in Insurance Brokers Network Australia (IBNA).
In addition, the Group paid cash or issued shares to 74 percent (by value) of its Network brokers in exchange for renouncing rights
to Professional Service Fee (PSF) rebates that may be declared from 1 July 2019 (also known as the PSF rebate offer).
Steadfast Group Annual Report 2020 37
Directors’ Report continued
Operating and financial review
A. Operating results for the year
The trading results for the year are summarised as follows (refer Note 4):
Statutory net profit/(loss) after income tax attributable to owners of Steadfast Group Limited
(statutory NPAT)
(55,244)
103,845
30 June 2020
$'000
30 June 2019
$'000
Adjusted for (net of tax and non-controlling interest):
Add back IBNA acquisition
Add back PSF Rebate offer
Add back impairment of investments
Less change in value and sale of investment
Less net gain on deferred consideration estimates
Less other non-trading reconciling items
Underlying net profit/(loss) after income tax attributable to owners of Steadfast Group Limited
(underlying NPAT) - including Johns Lyng Group (JLG)
Less mark-to-market adjustment from revaluation of investment in JLG (net of tax)
72,701
63,068
40,737
(2,009)
(5,439)
(1,949)
-
-
-
(14,599)
62
(110)
167,109
(14,647)
111,865
(3,168)
89,198
(508)
Underlying net profit/(loss) after income tax attributable to owners of Steadfast Group Limited
(underlying NPAT) - excluding JLG
108,697
88,690
Underlying diluted earnings per share - excluding JLG (cents per share)
Underlying diluted earnings per share - including JLG (cents per share)1
Statutory diluted earnings per share (cents per share)
12.70
13.07
(6.47)
11.20
11.27
13.12
1 The underlying earnings per share was historically reported including the mark-to-market gains from the revaluation of the investment in Johns Lyng Group (JLG).
The underlying profit attributable to the Group after income tax, before non-trading items was $108.697 million compared to
$88.690 million in 30 June 2019. The increase was mainly due to:
inclusion of IBNA network and reduced PSF rebates to members of the Steadfast network;
acquisitions of interests in further businesses;
revenue and profit growth generated by the existing businesses; and
improved margins in operating businesses derived through overall premium rate increases and efficiency gains.
This additional profit was partially offset by:
continued investment in technology; and
increased amortisation of previously capitalised software expenditure.
The Group also benefited from continued price rises by insurers on insurance premiums, partially offset by lower volumes in some
businesses. Whilst there has been significant impact to the economy resulting from the COVID-19 pandemic, the essential nature
of insurance to provide financial protection for businesses and consumers meant that the financial impact of COVID-19 on the
underlying results of Steadfast businesses to date has been minimal. Refer Section B below for the impact of impairments on the
financial position.
The underlying net profit after tax (underlying NPAT) reflects an assessment of the result for the business of the Group as
determined by the Board and management. Underlying NPAT has been calculated in accordance with ASIC’s Regulatory Guide
RG230. Underlying NPAT has not been audited by the Group’s external auditors; however the adjustments to statutory profit /
(loss) after tax have been extracted from the books and records that have been audited. Underlying NPAT is disclosed as it is useful
for investors to gain a better understanding of the Group’s financial results from normal operating activities.
38 Steadfast Group Annual Report 2020
B. Review of financial condition
I. Financial position
There was a significant increase in total assets (from $2,157.197 million to $2,755.729 million) and total liabilities (from
$1,061.945 million to $1,558.334 million) during the financial year.
With the acquisition of the remaining 50% stake in the IQumulate Premium Funding business late in the 2019 financial year,
the Group now recognises the full receivables book and associated funding for this business in the Consolidated Statement of
Financial Position. This has meant a significant increase in assets (over $500 million) and a corresponding significant increase in
liabilities in the current financial year. The impact on net assets is minimal.
The increase in the Group’s equity from $1,095.252 million at 30 June 2019 to $1,197.395 million at 30 June 2020 largely reflects
the $119.068 million capital raised in August and September 2019, the capital issued for the IBNA acquisition (scrip for scrip offer),
and scrip issued to Steadfast brokers who chose the scrip option when participating in the PSF rebate offer. These increases were
substantially offset by the statutory loss noted above (including the accounting impact of the acquisition of IBNA and PSF rebate
offer) and dividends paid.
With the uncertainties surrounding the COVID-19 pandemic, the carrying value of assets was reviewed against a number of
potential prudent scenarios, and an impairment of $40.737 million was recognised.
The Group applied AASB 16 Leases from 1 July 2019. The implementation of AASB 16 resulted in the $46.594 million increase
in lease liability, $39.586 million increase in right-of-use assets, $1.969 million increase in deferred tax assets and $3.562 million
impact in retained earnings.
II. Cash from operations
The net inflows of $221.652 million include net inflows from operating activities of $205.962 million and a net inflow of
$15.690 million to broking accounts.
Included in the net $205.962 million cash inflows from operating activities was $55.195 million of premium funding instalments in
late June 2020 that were applied to borrowings in July 2020. When taking this into account, together with $12.235 million of lease
liability payments, the adjusted cash inflows from operating activities was $138.532 million. Consistent with prior years, Steadfast
collected the underlying net profit after tax and before amortisation of $135.556 million in cash during the year, which funded the
dividend payment and other corporate activities.
III. Capital management
As at 30 June 2020, the Company had a total of 863.205 million ordinary shares on issue, increasing from the 793.036 million
ordinary shares on issue at 30 June 2019 with the increase due to new equity raised to fund acquisitions (including the acquisition
of IBNA) and the PSF rebate offer during the year. The Company continues to acquire shares on market to provide for potential
share issues to employees including Key Management Personnel (KMP) under equity based incentive programmes.
The Board leverages the Group’s equity, adopting a maximum 30.0% total gearing ratio excluding premium funding borrowings.
As at 30 June 2020, the Group’s total gearing ratio was 21.5% (2019: 23.9%). Refer Note 9C.
The Group refinanced the multibank syndicated facility during the period. The new facility has a combination of 3 year, 5 year
and 7 year tranches with the total facility increased by $75.000 million to $460.000 million. As at balance date, the Group had the
ability to borrow a further $181.069 million from this facility.
The Group also completed the re-negotiation of the IQumulate facilities in July 2020 with a new maturity date of July 2022.
The facility for the IQumulate premium funding business is a separate additional facility secured against the receivables funded
for clients. The IQumulate facility has recourse only to that business and the Group and its financiers consider the gearing
ratio calculations for the Group are most appropriately referenced to the total liabilities of the Group excluding premium
funding borrowings.
Steadfast Group Annual Report 2020 39
Directors’ Report continued
Strategy and prospects
Steadfast’s business strategy is to maintain its position as the largest intermediated insurance distribution network in Australasia
by continuing to grow shareholder value through continued expansion of the Steadfast insurance distribution model and
related businesses.
Steadfast is a stable and resilient business. Steadfast aims to create value for all stakeholders including shareholders, customers,
employees and our community. The Group's strategic plan is a framework for decision making and planning for the Group's
development of the strategic objectives include:
Drive growth organically and through acquisition
Maintain and develop a premier service offering to Steadfast Network brokers
Maintain, build and enhance our strategic relationships
Continue to develop and rollout our market leading technology platforms
Continue to enhance organisational capability and sustainability
A. Steadfast Group
FY20 Highlights
Underlying earnings per share growth of 13.4%
Dividend per share growth of 12.9%
Despite the challenging economic conditions Australia is facing from the COVID-19 pandemic, impacting businesses, employees
and households, Steadfast Group grew underlying FY20 EBITA by 15.5% to $223.5 million. This result was driven by both organic
growth +1.3% and acquisition growth +14.2%.
As an industry leader, Steadfast continued to actively review the industry and the implications of the Hayne Royal Commission.
This included engagement with industry peers and industry bodies on conflicted remuneration issue. The Group has revised its
broker remuneration structure to provide an appropriate outcome for all stakeholders. Steadfast implemented the first stage of
the new remuneration fee structure with the completion of the Steadfast PSF Rebate offer in November 2019, seeing a 74% take
up from the broker network.
Medium-term
Steadfast has a strong corporate governance foundation, including risk management and sustainability. This positions the
business well to continue to improve operational efficiency through developing a culture of excellence and talent pipeline,
seeking opportunities to reduce operating costs and improving underlying margins.
In response to the conflicted remuneration recommendations by the Hayne Royal Commission, from July 2020, Steadfast will
implement the new professional services fee structure with the Group's strategic partners and finalise the PSF Rebate offer for the
remaining 26% of the broker network yet to take up the cash offer.
B. Steadfast Brokers Network
FY20 Highlights
$8.3 billion Network GWP, up 34.8% on FY19
Increase of 83 Network brokers to 458 members
Steadfast has equity stake in 57 brokers
Underlying EBITA up 23.9%
During FY20, growth in the Steadfast Broker Network was driven by the completion of the IBNA acquisition, adding 78
new brokers generating annual GWP of $1.25 billion and the Steadfast PSF Rebate offer. Further acquisition growth came
from investing into the Steadfast Network brokers. Organic growth of 7.3% was primarily a result of price increases in
insurance premiums.
As part of Steadfast’s objective to maintain and build our premium services to the broker network, and in response to the unfolding
COVID-19 pandemic, Steadfast put in place a number of measures to assist the broker network in supporting their clients through
the challenges created by COVID-19 and the bushfire and hailstorm catastrophes experienced in Australia over the year including :
resourcing a dedicated page on the Broker Website for COVID-19 detailing measures put in place by Government, Industry
& Insurers;
providing support through National Insurance Brokers Association (NIBA) in developing a coordinated approach to how
insurers can support brokers through COVID-19;
launching an alternative premium funding option to support distressed clients; and
commissioned a guide on providing the correct Business Interruption information and calculations to assist clients arrive at the
correct figure for their business interruption insurance in a post COVID-19 environment.
40 Steadfast Group Annual Report 2020
Medium-term
Being a nimble and service focused business means Steadfast is continuously developing improvements and expanding its
products and services to attract more brokers to the network and provide better solutions for the benefit of the network’s clients.
By investing in these improvements, Steadfast can maintain, build and enhance relationships with its stakeholders.
Steadfast is well positioned to respond to the current market conditions and will proceed with caution to implement management
buy-ins, hubbing and co-owner opportunities when our strict cultural, risk and financial acquisition guidelines are met. Steadfast
has an equity holding in 12% of the broker network by number, which provides potential future acquisition growth for the Group.
C. Steadfast Underwriting Agencies
FY20 Highlights
$1.3 billion GWP, up 13% on FY19
Steadfast has equity stakes in 25 agencies
Underlying EBITA up 14.7%
The FY20 growth in Steadfast Underwriting Agencies is predominately organic growth and primarily driven by price and volume
uplift. Most agencies experienced significant uplift during FY20, with property lines remaining strong again this year. The division’s
excellent performance was also due to the long-term strategy of closely aligning capacity providers, technology and strong
service ethic to the agencies' niche product offerings.
By enhancing the partnerships between underwriting agencies and strategic partners and working effectively together, Steadfast
Underwriting Agencies expanded the product range with strategic partners.
Pressure on remuneration for London ‘super’ binders was offset by increased volume generated from the addition of four new
products added to the Steadfast Client Trading Platform (SCTP).
Medium-term
Steadfast Underwriting Agencies is well positioned to maintain organic growth through retaining our clients, as we aim to exceed
customer service expectations, and the continuation of moderate price increases coming from strategic partners.
Steadfast Underwriting Agencies focus remains on seeking new opportunities with strategic partners to expand the product
range, as insurers are repositioning their approach to distribution.
D. Steadfast Complementary Businesses
FY20 Highlights
$638 million GWP written through Steadfast Client Trading Platform (SCTP), up 45%
142 brokers live on INSIGHT, up 30 from FY19
The technology team continued the migration of Network brokers onto the Group's proprietary broking management system
(INSIGHT) and continued enhancing the offering by SCTP – increasing the number of strategic partners and product lines
offered. Steadfast also rolled out auto-rating for the liability and PI insurers and continues to invest in further enhancements to
the platform.
During FY20 Steadfast launched Steadfast Risk Services, the eighth complementary business established to support the Steadfast
broker network.
Medium-term
As an industry leader in innovation, Steadfast is well positioned to continue modernising technology to improve broker and client
experience and support growth. Steadfast remains focused on improving SCTP by adding more product lines, new insurers and
the expansion of auto-rating capabilities, driving increased SCTP usage and alternative outcomes for clients.
The Steadfast team will continue to support the migration of brokers on to the INSIGHT platform with an additional 36 brokers
committed to migrate and ongoing discussions with another 109 brokers. Steadfast is planning further technology investment
to migrate the significantly larger network (post IBNA acquisition) onto INSIGHT. Focus will also remain on the development of
enhancements to the security and efficiency of INSIGHT, seeking to continue to provide our brokers and their clients with a
market leading secure and efficient platform .
Principal risks and uncertainties
The principal risks and uncertainties outlined in this section reflect the risks that could materially affect Steadfast, or its ability
to meet its strategic objectives, either directly or by triggering a succession of events that in aggregate become material to
the Group.
This section describes what Steadfast considers to be some of the key risks associated with Steadfast’s business and the industry in
which it operates. The risks listed in this section should not be considered to be an exhaustive list of every possible risk associated
with Steadfast Group Limited.
With respect to COVID-19, the Group is monitoring the potential short and medium-term impacts, including on the operating
environment, workforce, products and services, as well as the resilience of the Australian and global economies to support
recovery. Any longer-term impacts will also be considered and addressed, as appropriate.
Steadfast Group Annual Report 2020 41
Directors’ Report continued
Risk
Description
Managing the risk
We consider and manage strategic risks through our annual
strategic planning process led by management and overseen
by the Board. The Board monitors management’s progress in
implementing key strategic initiatives and any change in our
key strategic risks is managed in accordance with our Risk
Management framework.
We operate a Three-Lines-of-Defence approach to operational
risk management, with each Line of Defence having defined
roles, responsibilities and escalation paths to support effective
design and implementation of controls to manage the risks. We
also have ongoing review mechanisms to ensure our approach
to operational risk continues to meet organisational needs and
regulatory requirements.
We work with management of businesses in which Steadfast
is invested to optimise sustainable results. We also manage
our liquidity and funding positions and ensure appropriate
contingency arrangements are maintained. We maintain a
strong liquidity position to preserve financial flexibility.
Key features of how we manage compliance risk as part of our
operational risk framework include:
embedding key obligations into our operations.
identifying changes in regulations and the business
environment, so as to enable us to proactively assess
emerging compliance obligations.
implementing robust reporting and certification processes.
identifying, reporting and managing incidents/breaches in a
timely manner.
an ongoing internal audit program that includes a review
of compliance.
the Whistleblower Protection Policy, allowing employees
and contractors to make confidential, anonymous
submissions regarding concerns relating to accounting,
internal control, compliance, audit and other matters.
We have ongoing review mechanisms to ensure our Risk
Management framework continues to address changes in
regulatory requirements.
We are managing the recommendations of the Hayne Royal
Commission as follows:
changing the structure of remuneration received from
strategic partners and ceasing rebates of this to
Network members.
working with key industry groups to proactively engage with
the Government and regulators on the benefits to clients of
the current operating model for our industry.
along with other broker representative organisations,
monitoring and consulting on regulatory changes
with regulators.
continuing to implement Steadfast Client Trading Platform, a
contestable marketplace with consistent commission rates.
providing a range of services to advise and assist the entities
within the Group with regulatory change.
Strategic risk
Operational risk
The risk associated with the pursuit
of the Group’s strategic objectives
including the risk that the Group fails to
execute its chosen strategy effectively
or in a timely manner.
The risk of loss resulting from
inadequate or failed internal processes,
people and/or systems, or from
external events.
Financial risk
The risk that the Group fails to achieve
its financial objectives as set out within
the Business Plan.
Compliance risk
The risk of failure to act in
accordance with laws, regulations,
industry standards and codes, internal
policies and procedures and principles
of good governance as applicable to
the Group’s businesses.
Regulatory risk
(including the Hayne
Royal Commission
recommendations)
The risk of failing to identify or
appropriately respond to changes to
the regulatory environment or of
damaging the Group’s standing with
its regulators as a result of the Group
not meeting regulatory expectations.
The Hayne Royal Commission
recommended that the Government
in consultation with ASIC review the
effectiveness of measures that have
been implemented by Government,
regulators and financial services
entities to improve quality of
financial advice. This review is to
be undertaken by December 2022.
Amongst other things, the review
will consider whether the general
insurance exemption from the ban on
conflicted remuneration (specifically
commissions) remains justified. These
changes may impact Steadfast Group's
remuneration structure.
42 Steadfast Group Annual Report 2020
Risk
Description
Managing the risk
Technology &
Cyber security
The risk relating to failure of critical
technology assets, infrastructure and
services and the risk of loss from
theft or unauthorised access to
systems including the compromise of
an IT asset’s confidentiality, integrity
or availability.
Reputation risk
The risk of loss that directly or indirectly
impacts earnings or value that is
caused by adverse perceptions of the
Group held by brokers, customers,
shareholders, employees, regulators
and the broader community.
Acquisition risk
The risk of loss from insufficient
funding to capitalise on opportunities,
deficiencies in due diligence
by Steadfast, potential unknown
or contingent liabilities arising
from acquisitions.
We have a technology and information security roadmap
underpinned by an ongoing improvement program designed
to support a robust technology infrastructure, cybersecurity
and overall performance of our technology. Processes are in
place based on industry practice as appropriate, to maintain
system availability and support ongoing business operations.
We have dedicated technology teams focussing on migration,
implementation, continued development and support. We
have a range of activities to continuously test and assess
the resilience and sustainability of our platforms. We have
appropriate business continuity, disaster recovery and crisis
management plans in place. Lastly, we have cyber insurance.
We manage reputation risk by maintaining a positive and
dynamic culture that emphasises the need to act with
integrity at all times and enables us to build strong and
trusted relationships with brokers, customers, shareholders,
employees, regulators and the broader community.
We have established decision-making frameworks and policies
to ensure our business decisions are guided by sound
social and environmental standards that take into account
reputation risk.
We also have an active internal audit program to review each of
the businesses we have invested in.
We manage acquisition risk through:
ongoing monitoring of available capital and resources by an
experienced management team that assesses opportunities
and risks.
our due diligence process that involves selecting acquisitions
that are a good cultural fit and expected to transition
well. We also have earn-out / deferred consideration
arrangements in place underpinned by tight acquisition and
shareholders’ agreements.
ongoing monitoring of operations, profit and profit
margins, including regular reporting and reviews of our
underlying businesses.
Impairment risk
Investments that are subject to a
permanent decrease in value, with the
subsequent impairment resulting in an
expense for the Group.
Steadfast works with management of businesses in which
Steadfast is invested to optimise sustainable results. We have a
mergers and acquisitions team that monitors our investments
on an ongoing basis.
An annual impairment review is undertaken.
Dividends
Details of dividends paid or declared by the Company are set out in Note 6 to the financial statements.
During the financial year ended 30 June 2020, a final dividend for 2019 of 5.3 cents per share and an interim dividend for 2020
of 3.6 cents per share were declared and paid, both fully franked.
Events after the reporting period
On 25 August 2020 the Board declared a final dividend for 2020 of 6.0 cents per share, 100% franked. The dividend will be paid
on 25 September 2020.
The IQumulate borrowing facilities were refinanced in July 2020 to July 2022.
The Group has invested circa $70 million since balance date into broking businesses.
At the date of approving these financial statements, the Directors are of the view the effects of COVID-19 do not change
the significant estimates, judgements and assumptions in the preparation of the financial statements (refer Note 3), however
COVID-19 and its associated economic impacts remain uncertain. The Directors and management continue to closely monitor
developments with a focus on potential financial and operational impacts and note that the situation is continuing to evolve.
For further details of events that have occurred after the reporting period, refer to Note 16.
Steadfast Group Annual Report 2020 43
Directors’ Report continued
Likely developments
The Group’s ongoing business strategy is to grow shareholder value through maintaining and growing its market position in the
provision of insurance and related services, with a core focus on general insurance intermediation. Please refer to the Strategy
and Prospects section of the Directors’ report.
The Group continues to work closely with the management team of each acquired business, and allow each business to operate
in a manner consistent with the Group’s co-ownership model. In most cases, this model involves ongoing equity participation of
key management personnel in the business acquired.
The Board has provided the following FY21 guidance which, in addition to ongoing risks, is subject to the significant uncertainty
surrounding the impact of the COVID-19 pandemic on the global economy and extent of any government stimulus measures.
Underlying EBITA of $235.000 million to $245.000 million
Underlying NPAT of $115.000 million to $122.000 million
Underlying diluted EPS (NPAT) growth of 5% to 10%
Key assumptions used in the FY21 guidance include:
Investment of circa $70 million post balance date in broker acquisitions
Completion of the final PSF Rebate offer to those Network brokers who did not take up the offer in FY20
Strategic insurer partners continue to drive moderate premium price increases
Ongoing trading conditions mirror the experience of the fourth quarter of FY20
Environmental Regulation
The Group’s operations are not subject to any particular significant environmental regulations under a law of the Commonwealth
or under State or Territory legislation.
Indemnification and insurance of officers
In accordance with its Constitution, and where permitted under relevant legislation or regulation, the Company indemnifies the
Directors and Officers against all liabilities to another person that may arise from their position as Directors or Officers of the
Company and its subsidiaries, except if, in the Board’s reasonable opinion, the liability arises out of conduct which is fraudulent,
criminal, dishonest or a wilful default of the Directors’ or Officers’ duties.
In accordance with the provisions of the Corporations Act 2001, the Company has insured the Directors and Officers against
liabilities incurred in their role as Directors and Officers of the Company. The terms of the insurance policy, including the
premium, are subject to confidentiality clauses and therefore the Company is prohibited from disclosing the nature of the
liabilities covered and the premium paid.
Non-audit services
During the financial year, KPMG, the Group’s auditor, performed certain other services in addition to their statutory duties.
The Board has considered the non-audit services provided by the auditor and is satisfied that the provision of those non-audit
services is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for
the following reasons:
all non-audit services engagements were subject to the corporate governance procedures adopted by the Group, and have
been reviewed by the Audit & Risk Committee to ensure they do not affect the integrity and objectivity of the auditor; and
the non-audit services provided do not undermine the general principles relating to auditor independence as set out in APES
110 Code of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting
in a management or decision-making capacity for the Group, acting as an advocate for the Group or jointly sharing risks
and rewards.
Details of the amounts paid to the auditor of the Group, KPMG, and its network firms, for audit and non-audit services provided
during the financial year are provided in Note 23 to the financial statements.
Lead Auditor's Independence Declaration
The lead auditor’s independence declaration is set out on page 68 and forms part of the Directors’ Report for the year ended
30 June 2020.
44 Steadfast Group Annual Report 2020
Steadfast Group Annual Report 2020 45
Steadfast Group is committed to ensuring its Remuneration Framework rewards decision making by Executives that is aligned with the long-term interests of shareholders. 2020 Remuneration Report
Dear Shareholders
On behalf of Steadfast Group Board, I am pleased to present the Remuneration Report for the year ended 30 June 2020.
The purpose of this report is to outline Steadfast Group’s approach to remuneration for Executives and Non-Executive Directors,
and in particular, the links between Steadfast Group’s Remuneration Framework and business strategy, performance and reward.
There is no doubt that many organisations have and continue to feel the impacts of COVID-19 on their businesses. While we have
not been immune to the challenges presented during this unprecedented period, the Steadfast Group has continued to perform
strongly and achieved full year underlying results at the upper end of market expectations.
The Group reported underlying earnings before interest, tax and amortisation (EBITA) of $223.5 million and underlying net profit
after tax (NPAT) of $108.7 million. This represents an 15.5% increase in underlying EBITA and a 22.6% increase in underlying NPAT
over the prior year; and is at the top end of Steadfast Group’s guidance range which was upgraded in October 2019.
While COVID-19 has presented many companies with wide ranging impacts with a range of performance management and
reward related issues, the Board of Steadfast has considered the impact on our workforce, shareholders and the broader
community to ensure that we balance multiple stakeholder interests in our decision making. Steadfast Group is committed to
ensuring its Remuneration Framework rewards decision making by Executives that is aligned with the long-term interests of
shareholders. This is achieved through allowing Steadfast Group’s people to be rewarded financially in the form of both short and
long-term remuneration as shareholder value is created. The objectives of Steadfast Group’s remuneration framework are to:
maintain market competitive remuneration that enables the Group to attract and retain key talent;
align remuneration to the Group’s strategic and business objectives and the creation of shareholder value;
be fair, transparent and easily understood by all stakeholders; and
be acceptable to shareholders and meet community expectations.
The Board continually reviews Steadfast Group’s existing remuneration arrangements to ensure that our framework is fit-for-
purpose and continues to support our core business objectives. In particular, the Board focuses on ensuring the remuneration
framework supports sustainable long-term value creation for Steadfast Group shareholders while also retaining and attracting
Executives in a dynamic business environment. In making any adjustments, our remuneration principles of simplicity, fair and
transparent, shareholder aligned and competitive are followed.
We believe our remuneration structure has clearly demonstrated it is fit for purpose, delivering Group results in the best interests
of our shareholders. I am pleased to report that the Group’s underlying EPS growth assessed for incentive purposes was 10.5%
for the financial year. The Total Shareholder Return (TSR) since listing has been 234%.
At the commencement of the 2020 financial year your Board enlisted the assistance of a remuneration consultancy firm Egan
Associates to undertake a salary benchmarking exercise to compare our Key Executive Remuneration structures with that of the
competitive market place. As a result of that review, salary package adjustments were made to our Executive Team’s salaries
consistent with our philosophy of positioning our Executives’ salaries at or around the 75th percentile. These are detailed in the
Remuneration Report. The Board, with the concurrence of the executives, have agreed not to increase FY21 fixed pay for the
executives and the Board except for an allocation of $25,000 of base pay to the Deputy Chairman from 1 July 2020. There is
no change for the LTI for the forthcoming FY21 year, however the minimum EPS growth hurdles for STI have increased from 5%
to 7.5%, with an ability for executives to gain additional STI should EPS growth be between 10% and 12.5% (refer section 3.1.1). In
summary, the Board has sought to ensure our Key Management Personnel (KMP) think and act like owners of Steadfast Group,
and so rather than pay out cash rewards for STI and LTI, the majority of our rewards are made in equity.
We welcome any feedback you may have on our remuneration framework as we continue to ensure it is meeting the needs and
expectations of our shareholders, employees and other stakeholders.
On behalf of the Board, we recommend this report to you.
David Liddy AM
Chairman, Remuneration & Succession Planning Committee and Deputy Chairman
46 Steadfast Group Annual Report 2020
48
48
48
48
52
53
53
54
55
57
57
58
60
61
61
62
62
63
63
63
64
64
64
65
66
67
1. Introduction
1.1. Key management personnel
2. Remuneration outcomes for 2020
2.1. Link between Steadfast’s performance and remuneration
2.2. Maximum potential and actual STI and LTI outcomes
2.3. Targeted maximum potential and actual remuneration mix for FY20
2.4. STI and LTI vesting information
3. Remuneration explained
3.1. Remuneration framework
3.2. Fixed remuneration for FY20
3.3. Short-term incentives for FY20
3.4. Long-term incentives for FY20
3.5. Keeping executives’ and shareholders’ interest aligned
4. Remuneration in detail
4.1. Statutory remuneration disclosure
4.2. Conditional rights
4.3. Executive service agreements
5. Non-executive director remuneration
5.1. Fee structure and policy
5.2. Minimum shareholding requirement
5.3. Remuneration details for Non-Executive Directors
6. Additional information
6.1. Remuneration governance
6.2. Valuation of conditional rights
6.3. Shareholdings
6.4. Related party transactions
Steadfast Group Annual Report 2020 47
2020 Remuneration Report 1. Introduction
The Remuneration Report outlines Steadfast’s remuneration philosophy, framework and outcomes for the financial year ended
30 June 2020 (FY20) for all key management personnel (KMP), including all Non-Executive Directors and the Executive Team
made up of the Managing Director & Chief Executive Officer (MD & CEO) and certain direct reports. KMP are those persons having
authority and responsibility for planning, directing and controlling the activities of the entity, directly and indirectly.
1.1. Key management personnel
The current KMP of the Group for the entire financial year unless otherwise stated, are as follows:
Name
Role
Date of appointment
Non-Executive Directors1
Frank O’Halloran, AM2
Chairman, Non-Executive Director
David Liddy, AM3
Deputy Chairman, Non-Executive Director
Gai McGrath
Non-Executive Director
Anne O’Driscoll 4
Non-Executive Director
Philip Purcell
Non-Executive Director
Greg Rynenberg
Non-Executive Director
Executive Director
21 October 2012
1 January 2013
1 June 2018
1 July 2013
1 February 2013
10 August 1998
Robert Kelly
Managing Director & CEO
18 April 1996
Other key management
Stephen Humphrys
Chief Financial Officer
Samantha Hollman
Chief Operating Officer
Simon Lightbody
CEO, Steadfast Underwriting Agencies
2 January 2013
4 January 2000
1 January 2015
Allan Reynolds
Executive General Manager – Direct, New Zealand & Asia
5 December 2002
Linda Ellis
Group Company Secretary & Corporate Counsel
3 June 2013
1 All Non-Executive Directors listed in the table above are independent directors.
2 Frank O’Halloran is Chairman of the Nomination Committee.
3 David Liddy is Chairman of the Remuneration & Succession Planning Committee.
4 Anne O’Driscoll is Chairman of the Audit & Risk Committee.
2. Remuneration outcomes for 2020
The following table outlines the returns the Group delivered to its shareholders.
2.1. Link between Steadfast’s performance and remuneration
Earnings per share (EPS) is used as a core financial measure for determining incentives payable to the Executive Team for
FY20, and together with achievement against annual individual key performance objectives, remains the financial performance
measure for short-term incentives (STI). The EPS used in determining STI and the long-term incentive plan (LTI) for FY20 excludes
non-trading income and expenses approved by the Board. This is consistent with prior year calculations.
In addition to EPS growth, the Board has adopted Total Shareholder Return (TSR) as a second financial performance measure
for LTI awarded in August 2016 and beyond. This was a result of the Board’s ongoing review of remuneration strategy to further
strengthen the alignment between shareholder returns and executive remuneration. There were no changes in FY20.
TSR is calculated as the change in share price plus dividends declared and any capital returns measured over the financial year
together with a future three-year vesting period.
48 Steadfast Group Annual Report 2020
Historical data pertaining to the key financial metrics involved in calculating STI and LTI are shown in the table below.
Reported net profit attributable to owners of
the Company
73,480
66,792
75,854
103,845
(55,244)
2016
$'000
2017
$'000
2018
$'000
2019
$'000
2020
$'000
The reconciliation on the reported EPS to the underlying EPS used for STI and LTI is as follows:
Reported net profit attributable to owners of
the Company
Less: non-trading income
Add: non-trading expenses
Less: non-trading tax effect
Less: non-controlling interests in non-trading
items (net of tax)
Less: share of EBITA from associates and
joint ventures
Underlying net profit attributable to owners of
the Company
Less: treated as trading expense for
executive incentives
Underlying net profit attributable for purposes of
executive incentives
Adjusted diluted EPS (cents per share) for
executive incentives
Growth from prior financial year (%)
Growth required for minimum STI (%)
Growth required for maximum STI (%)1
UBS weighted EPS growth for industrial
companies (%)2
UBS weighted EPS growth for finance sector (%)2
Opening share price ($)
Closing share price ($)
Change in share price (cents per share)
Dividends declared per share (cents per share)
TSR for the year (cents per share)
2016
$'000
2017
$'000
2018
$'000
2019
$'000
2020
$'000
73,480
(27,173)
18,572
(4,551)
119
-
66,792
(8,449)
7,866
884
75,854
103,845
(55,244)
(4,193)
3,026
(255)
(15,018)
(18,043)
-
90
190,938
(10,926)
(554)
530
281
5,140
(147)
-
-
-
60,447
66,392
74,962
89,198
111,865
-
-
-
-
(5,400)
60,447
66,392
74,962
89,198
106,465
8.09
11.8%
5.0%
12.5%
(3.0%)
(4.6%)
1.62
1.98
36.0
6.0
42.0
8.87
9.6%
5.0%
10.0%
6.4%
3.0%
1.98
2.66
68.0
7.0
75.0
9.71
9.5%
5.0%
10.0%
6.8%
(1.8%)
2.66
2.81
15.0
7.5
22.5
8.5%
55,195
11.27
16.1%
5.0%
10.0%
(5.6%)
(7.9%)
2.81
3.51
70.0
8.5
78.5
27.9%
62,649
12.45
10.5%
5.0%
10.0%
(12.9%)
(26.6%)
3.51
3.36
(15.0)
9.6
(5.4)
(1.5%)
73,106
TSR for the year (%)
Dividends paid
25.9%
40,297
37.9%
46,485
1 Figures represent growth required for maximum STI granted in August 2016, 2017, 2018, 2019 and 2020.
2 Data sourced from Australian Equity Strategy report published by UBS in July 2020. Figures shown for 2019 above are actual (figures in 2019 Annual Report were
estimates). Figures shown for 2020 are estimates.
Steadfast Group Annual Report 2020 49
Underlying diluted EPS (cents per share)
The graph below shows the base, minimum, maximum and actual diluted EPS (cents per share) used for determining STI and
LTI for the financial years ended 30 June 2013 to 30 June 2020. The diluted EPS for the prior financial year is the base used for
calculating growth for the following financial year.
No STI is payable if the growth in diluted EPS is less than 5%. The maximum STI is awarded if the diluted EPS growth is 15% or higher
for the awards granted in August 2014 and 2015; 12.5% or higher for awards granted in August 2016; 10% or higher for awards
granted in August 2017 and beyond.
The diluted EPS growth accounts for 75% weighting on LTI awards granted in August 2016 and beyond (previously: 100%), which
is not payable unless at least 5% straight line growth is achieved over a future three-year vesting period for the LTI awards in August
2017 and beyond (previously: 5% compound growth).
The diluted EPS growth assessed for executive incentives in FY20 was 10.5%, which was ahead of initial expectations due to
actions taken by management during the year, including:
outperformance by a number of our businesses particularly underwriting agencies with strong market share growth;
strategic acquisitions; and
continued growth of the Steadfast Network.
Diluted EPS (for awards granted in August of the financials year)
12.45
12.45
11.27
11.27
9.719.71
8.878.87
8.098.09
7.247.24
6.226.22
5.225.22
14
12
10
8
6
4
2
0
FY13¹
FY14
FY15
FY16
FY17
FY18
FY19
FY20²
u Base EPS
u Min 5% EPS growth
u Growth to ahieve max EPS
u Actual EPS
1 FY13 data is based on pro-forma financial information as if the Group operations, which listed in August 2013, had operated as the Group for FY13.
2 FY20 diluted EPS excluding Johns Lyng mark-to-market adjustment was 12.07 cents per share. This will be the base EPS for assessing FY21 incentives as for future
periods, the underlying profit will exclude mark-to-market adjustments.
50 Steadfast Group Annual Report 2020
Total Shareholder Return (TSR)
The graph below shows the Company’s TSR in FY20 as well as the cumulative TSR since FY18, compared against the median TSR
of the top 200 ASX companies excluding those in the mining industry (peer group).
TSR accounts for 25% weighting on LTI award granted in August 2016 and beyond (previously: nil weighting), which is not payable
unless at least at or above 50th percentile (August 2016 grants: at average) of the peer group is achieved over the reporting year
and the future three-year vesting period.
Steadfast Group Annual Report 2020 51
50.0%40.0%30.0%20.0%10.0%0.0%(10.0%)(20.0%)50th percentile(3.6%)11.6%75th percentile33.6%9.6%26.3%TSR = 35.9%TSR = 26.0%6.4%75th percentile25.7%50th percentile(8.5%)50th percentile(11.7%)75th percentile2.3%2.8%19.6%(4.3%)Share price component Dividend component Peer Group TSR (50th percentile)Peer Group TSR (75th percentile)FY20 TSRFY19 - FY20 TSRFY18 - FY20 TSRTSR = (1.5%) 2.2. Maximum potential and actual STI and LTI outcomes
All participants of the STI and LTI schemes have to achieve at least 60% of their annual key performance objectives to be eligible
for any incentive payments.
The MD & CEO’s performance against his annual key performance indicators (KPIs) set at the beginning of FY20 is set out below:
FY20 performance measures
Weighting %
Achieved % Comments
Achieve underlying NPATA of at least $130m
Achieve Gross Written Premium (GWP) of $850m
on Steadfast Client Trading Platform (SCTP)
Achieve organic GWP growth of 5% to 10%
Achieve traditional broker margin of 31% or higher
Score highly on Steadfast culture 360-degree
assessment from staff and Board
Continue development of senior executives and
CEOs of top 10 businesses through education,
leadership programs and increased delegation
Continue to enhance Risk Management and
Internal Audit
Successful integration of IBNA
15
10
10
15
15
15
10
10
15 Achieved $135.6m
5 Partially achieved – up 45.5% on FY19
10 Achieved 6.3%
15 Achieved 31.4% for traditional brokers
12 Rated highly on most core values
8 Progress slow but improving
Strong risk management in place with no
major failures during this year
8
10 Highly successful integration
100
83
The above scorecard shows more than 60% of KPIs were achieved.
The table below provides details of maximum potential STI and LTI, and actual STI and LTI awarded to KMP.
Maximum
STI
potential
(% of fixed
pay)
Actual STI
outcome(a)
(% of fixed
pay)
STI – cash
outcome
(60% of
outcome)
$
STI – deferred
equity award
outcome(b)
(40% of
outcome)
$
Maximum
LTI
potential
(% of fixed
pay)
Actual LTI
outcome(a)
(% of fixed
pay)
LTI –
deferred
equity
award
outcome(b)
$
Fixed pay
$
Robert Kelly
1,100,000
150.00%
150.00%
990,000
660,000
100.00%
100.00% 1,100,000
Stephen Humphrys
600,000
100.00%
100.00%
360,000
240,000
100.00%
100.00% 600,000
Samantha Hollman
500,000
100.00%
100.00%
300,000
200,000
75.00%
75.00%
375,000
Simon Lightbody
500,000
100.00%
100.00%
300,000
200,000
75.00%
75.00%
375,000
Allan Reynolds
460,000
75.00%
75.00%
207,000
138,000
75.00%
75.00%
345,000
Linda Ellis
375,000
50.00%
50.00%
112,500
75,000
50.00%
50.00%
187,500
Tables notes
a. All participants of the FY20 STI and LTI schemes have exceeded the 60% non-financial performance hurdle and therefore
are eligible.
b. The number of conditional rights to be granted to the KMPs has been determined by the dollar value of the deferred equity
award (DEA) outcome divided by the weighted average share price over the five trading days prior to the date of this report. The
LTI award outcome is subject to meeting future financial performance hurdles detailed in Section 3.4.
52 Steadfast Group Annual Report 2020
2.3. Targeted maximum potential and actual remuneration mix for FY20
Robert Kelly Targeted Maximum
Robert Kelly Actual
29%29%
29%29%
25%25%
25%25%
20%20%
20%20%
22%22%
22%22%
22%22%
22%22%
17%17%
17%17%
13%13%
13%13%
15%15%
15%15%
15%15%
15%15%
18%18%
18%18%
12%12%
12%12%
29%29%
29%29%
33%33%
33%33%
27%27%
27%27%
27%27%
27%27%
30%30%
30%30%
15%15%
15%15%
10%10%
10%10%
25%25%
25%25%
34%34%
34%34%
36%36%
36%36%
36%36%
36%36%
40%40%
40%40%
50%50%
50%50%
0
20
40
60
80
100
Stephen Humphreys Targeted Maximum
Stephen Humphreys Actual
Samantha Hollman Targeted Maximum
Samantha Hollman Actual
Simon Lightbody Targeted Maximum
Simon Lightbody Actual
Allan Reynolds Targeted Maximum
Allan Reynolds Actual
Linda Ellis Targeted Maximum
Linda Ellis Actual
u Fixed remuneration
u At risk – STI cash
u At risk – STI deferred
u At risk – LTI
2.4. STI and LTI vesting information
Summary of vesting conditions of deferred equity awards in the STI and LTI plans are as detailed below:
STI
LTI
Vesting conditions
Tenure of employment
No material adverse change to the FY20
reported results over the retention period of
three years
Refer Section 3.3 for more details including
award conditions
Awarded in August 2019
Tenure of employment
Achieve at least 60% of the annual key
performance objectives
75% based on average diluted EPS increasing
by a straight line 5% to 10% per annum over
a three-year vesting period; vesting made on a
50-100% straight line basis.
25% based on minimum TSR measured against
50th to 75th percentile of the peer group
Refer Section 3.4 for more details including
award conditions
Steadfast Group Annual Report 2020 53
The vesting schedule for DEAs of conditional rights to convert to Steadfast ordinary shares that were on foot during the financial
year or granted since is set out below, subject at all time to the vesting conditions being met (refer Section 6.2 for the vesting date
of the STI and LTI conditional rights):
August 2019
August 2020
August 2021
August 2022
August 2023
DEA awarded
August 2014
August 2015
August 2016
August 2017
August 2018
August 2019
August 2020
STI
LTI
STI
LTI
STI
LTI
STI
LTI
STI
LTI
STI
LTI
STI
LTI
Vesting occurs three years after grant date
Vesting occurs five years after grant date
Vesting occurs in three equal tranches after one, two, and three years from grant date
Details of the Steadfast ordinary shares transferred to the relevant Executive Team members (at nil cost to them) for the DEAs that
vested during the current financial year are set out in Section 6.3.
3. Remuneration explained
The Group’s remuneration structure aligns with ASX Corporate Governance Principles & Practice (3rd edition).
The Group aims to reward Executives with a level of remuneration commensurate with their responsibilities and position within
the Group and their ability to influence shareholder value creation. The incentive schemes are designed to encourage participants
to strive to ensure Steadfast outperforms the market on an ongoing basis (refer table 2.1 for EPS growth comparison against the
finance sector and broader market).
The remuneration framework links rewards with the strategic goals and performance of the individual and the Group and provides
a market competitive mix of both fixed and variable rewards. To retain and attract high calibre employees, the Group has adopted
an approach to position fixed remuneration and total remuneration around the 75th percentile. Key Performance Indicators (KPIs)
together with weightings are established for each individual and are aligned to the Group’s strategic objectives.
The key elements of the executive remuneration are:
fixed remuneration consisting of cash salary, superannuation and non-monetary benefits (Section 3.2);
an annual incentive referred to as short-term incentive (STI) plan (Section 3.3); and
a long-term incentive referred to as long-term incentive (LTI) plan (Section 3.4).
Refer to Section 2.3 for targeted maximum remuneration mix.
54 Steadfast Group Annual Report 2020
3.1. Remuneration framework
The objective of the Group’s Executive remuneration framework is to ensure reward for performance is competitive and
appropriate for the results delivered. The framework aligns Executive reward with achievement of strategic objectives and the
creation of sustainable long-term value for shareholders and conforms to market practice for delivery of remuneration. The
incentive schemes are designed to incentivise performance that is better than market.
The Board embodies the following principles in its remuneration framework:
a performance based reward structure;
competitive and reasonable rewards to attract and retain high calibre executives;
strong links between executive rewards and shareholder value;
a significant proportion of executive remuneration is at risk, and is linked to achievement of pre-determined individual KPIs and
financial performance targets; and
transparent reward structures.
3.1.1. Target remuneration mix
The Board believes that the fundamental driver for executive remuneration should be long-term financial performance that
generates value for Steadfast shareholders. The at risk (or variable) remuneration components of the Executive Team are set by
referencing regulation and current market practices. To ensure the Executive Team remain focused on long-term outcomes
without encouraging excessive risk-taking, the following conditions apply:
financial performance hurdles:
the diluted EPS growth has been chosen to meet and align with shareholders’ objectives. This measure was chosen by
the Board after considering alternatives such as return on capital employed (ROCE), or return on equity (ROE). The Board
considers that EPS is, on balance, the best driver of executive behaviour that achieves superior performance outcomes for
Steadfast and its shareholders. It is also a relatively simple and transparent measure that is easily reconciled to reported net
profit (see Section 2.1). As funding mix can impact EPS, it is noted that the Board has approved a maximum total Group
gearing ratio of 30.0% excluding premium funding borrowings. The total Group gearing ratio at year-end was 21.5%;
TSR was first introduced as the second financial performance hurdle for LTI awarded in August 2016. This measure was
added by the Board as a result of their ongoing review of the remuneration framework, current market practice and market
feedback. The Board considers TSR is an effective way to incentivise and measure long-term shareholder value creation;
non-financial performance hurdle – each member of the Executive Team is set annual performance objectives known as KPIs
with weightings aligned to the Group’s strategic objectives, and must achieve at least 60% of those objectives to be eligible for
any STI and LTI;
40% of the STI is granted as deferred equity awards (DEA) and is intended to be satisfied by the issue or transfer of ordinary
shares in the capital of the Company over a three-year period from the grant date – being one-third at the end of years one,
two and three;
subject to meeting the individual and Group financial objectives, vesting of the LTI occurs after three years from the grant date
and is satisfied by the issue or transfer of ordinary shares in the capital of the Company; and
the Board retains the discretion to adjust any unpaid or unvested performance related remuneration (such as STI – Cash, STI
– DEA and LTI) downwards if it is appropriate to do so. This discretion applies to all the STI and LTI awards on applicable dates
for vesting of share-based payment awards.
The Board has set the total remuneration of the Managing Director & CEO at a level to correspond to the 75th percentile of CEO
remuneration of a comparator group of companies. The 75th percentile was chosen in light of the considerable experience of
the Managing Director & CEO and his very strong performance in the role, including the very strong financial performance of
Steadfast since its initial public offering (IPO) in August 2013 as demonstrated by the Company achieving:
a 16.0% diluted EPS growth in FY20;
a 133.0% diluted EPS growth for the period since the IPO; and
a TSR of 234% for the period since the IPO, inclusive of FY20 final dividend of 6.0 cents per share payable in September 2020.
As part of the ongoing review of remuneration, the STI and LTI plans are continuously refined to ensure incentives are aligned
with the Group’s remuneration philosophy, market competitiveness and market feedback on the incentive schemes. The Board
has determined that no material changes to STI or LTI terms will be made for the financial year ended 30 June 2020. The Board
has chosen to change the STI terms for the financial year ending 30 June 2021.
The FY21 key terms for the STI and LTI plans are as follows:
Steadfast Group Annual Report 2020 55
Remuneration
changes
Financial year ended 30 June 2020
Financial year ended 30 June 2021
STI
STI awarded as follows:
STI will be awarded as follows:
Diluted EPS growth
Award outcome
Diluted EPS growth
Award outcome
Below 5%
5% to 10%
10%
10% to 12.5%
12.5% or higher
0%
50% to maximum award
on a straight line basis
Below 7.5%
7.5% to 10%
0%
50% to maximum award
on a straight line basis
Maximum STI awarded
10%
Maximum award
N/A
N/A
10% to 12.5%
12.5% or higher
Outperformance award
on a straight line basis
Maximum
outperformance award
The maximum outperformance amount will be
calculated as a percentage of fixed pay. The
percentage applicable to each KMP is as follows:
KMP
Robert Kelly
Stephen Humphrys
Samantha Hollman
Simon Lightbody
Allan Reynolds
Linda Ellis
Outperformance award
50%
25%
25%
25%
25%
12.5%
LTI
75% based on average diluted EPS increasing by a
straight line 5% to 10% per annum over a future
three-year vesting period1. The vesting schedule is
outlined below:
75% based on average diluted EPS increasing by a
straight line 5% to 10% per annum over a future
three-year vesting period1. The vesting schedule is
outlined below:
Straight line diluted
EPS growth
Vesting outcome
Straight line diluted
EPS growth
Vesting outcome
Below 5%
At 5%
5% to 10%
0%
50%
Straight line between 50%
to 100%
Below 5%
At 5%
5% to 10%
0%
50%
Straight line between 50%
to 100%
10% or higher
100%
10% or higher
100%
25% based on Total Shareholder Return (TSR)2
measured against Top 200 ASX companies excluding
those in the mining industry (peer group).
25% based on Total Shareholder Return (TSR)2
measured against Top 200 ASX companies excluding
those in the mining industry (peer group).
TSR
Vesting outcome
TSR
Vesting outcome
Equal to or less than 50th
percentile of peer group
0%
Equal to or less than 50th
percentile of peer group
0%
Greater than 50th but less
than 75th percentile of
peer group
Straight line between 50%
to 100%
Greater than 50th but less
than 75th percentile of
peer group
Straight line between 50%
to 100%
Equal to or exceeding 75th
percentile of peer group
100%
Equal to or exceeding 75th
percentile of peer group
100%
1 The vesting period from FY21 onwards will exclude any mark-to-market adjustment in Johns Lyng Group and any other listed investments.
2 TSR is calculated as the change in share price plus dividends declared and any capital returns measured over the financial year together with a future three-year
vesting period.
56 Steadfast Group Annual Report 2020
All STIs awarded in August 2020 and prior are based on diluted EPS growth inclusive of any mark-to-market adjustment in Johns
Lyng Group and any other listed investments.
All LTIs granted in August 2017 (vesting August 2020), August 2018 (vesting August 2021) and August 2019 (vesting August 2022)
were awarded and will be vested using diluted EPS growth inclusive of any mark-to-market adjustment in Johns Lyng Group and
other listed investments. However, for LTIs granted in August 2020 (vesting August 2023), they will be awarded and vested based
on diluted EPS growth exclusive of any mark-to-market adjustment in Johns Lyng Group and other listed investments.
3.2. Fixed remuneration for FY20
The table below outlines the key details of Executives’ fixed remuneration.
Component
Details
Description
Cash salary, superannuation, and non-monetary benefits.
Purpose and link to strategy Helps to attract and retain high calibre executives.
Reflects individual role, experience and performance.
Operation
Reviewed annually by the Remuneration & Succession Planning Committee and fixed for
12 months (unless there is a significant role change), with any changes effective from 1 July each
financial year. Decision influenced by:
role, experience and performance;
reference to comparative remuneration in the market; and
total organisational salary budgets.
The Executive Team is provided with cash salary, superannuation, and other non-monetary
benefits such as car parking, income protection and life insurances.
Potential reward
Fixed remuneration targeted at 29%-50% of total remuneration.
3.3. Short-term incentives for FY20
The table below outlines the key details of the STI plan. STI awards in FY20 are summarised in Section 2.2 of the
Remuneration Report.
Component
Details
Purpose and link to strategy Recognises the contributions and achievements of the Executive Team and helps to attract and
retain talent.
Operation
STI Plan consisting of cash and deferred equity award.
Potential reward
STI awards are performance based, at risk reward arrangements with Board discretion.
The combined total of at risk remuneration (STI and LTI combined) is targeted at 50%-71% of
total remuneration.
Performance metrics
STI – Cash award (60% of total STI); Deferred equity award (40% of total STI)
Continuous employment for the vesting period for deferred equity awards split one-third over
one, two and three years;
vesting is subjected to future performance hurdles below; and
no negative material deterioration in reported results in the subsequent year.
Performance measures
Non-financial measures:
Personal objectives (KPIs) as agreed with the Board. At least 60% of the objectives must be
achieved by the members of the Executive Team to be eligible for any STI. The MD & CEO
achieved a substantial majority of his FY20 non-financial objectives with weightings (refer
Section 2.2).
Financial measures relating to awards issued during FY20 (awarded in August 19):
No STI is payable unless at least 5% EPS growth is achieved against the base underlying EPS.
Maximum STI can be awarded if the EPS growth is 10.0% or higher.
Steadfast Group Annual Report 2020 57
Component
Details
Potential maximum STI
MD & CEO can earn up to 150% of his annual fixed remuneration.
Approval of the STI
The other Executives within the Executive Team can earn 50% to 100% of their annual
fixed remuneration.
The MD & CEO’s STI is recommended by the Remuneration & Succession Planning Committee
based on the Group’s financial and his non-financial performance outcomes and approved by
the Board.
The STI of other members of the Executive Team is recommended by the MD & CEO to the
Remuneration & Succession Planning Committee, based on the Group’s financial and their
non-financial performance outcomes. It is recommended by the Remuneration & Succession
Planning Committee and approved by the Board.
Rationale for choosing
performance measures
The non-financial measures are chosen to ensure each member of the Executive Team delivers
outcomes that support the success of Steadfast.
The financial measure of EPS growth is chosen to ensure long-term shareholder value
is increased.
Forms of STI reward elements 60% is paid as cash, normally in September following the end of financial year.
40% is granted as deferred equity award (DEA) of conditional rights to Steadfast ordinary shares
and vesting over a three-year tenure hurdle from the grant date. The conditional rights will vest
in three equal tranches after one, two and three years from the grant date.
Key terms of DEA
DEA is normally granted on the date the audited financial results are announced.
These rights are granted to the participants at no cost, to the dollar value of their DEA.
The number of conditional rights granted is calculated based on the weighted average share
price over the five trading days before the grant date.
The participants in the STI Plan become eligible to receive one Steadfast ordinary share per
conditional right, subject to their continuing employment with the Group over the vesting period
post grant date, and no material adverse change to the reported results. The Remuneration &
Succession Planning Committee noted there had not been any negative material deterioration
in EPS from prior year adjustments in the subsequent year.
These rights will accrue notional dividends and may accrue, subject to Board discretion, any
bonus element inherent in any rights issue, which will be paid as additional shares upon vesting.
The Board retains the discretion to adjust any unpaid or unvested performance related
remuneration (such as STI – Cash, STI – deferred portion) downwards if it is appropriate
to do so.
The conditional rights will be forfeited if the Executive resigns before the vesting date.
When an Executive ceases employment in special circumstances, such as genuine retirement,
redundancy or ill health, any unvested rights may be paid in cash and/or Steadfast ordinary
shares, subject to Board discretion.
Forfeiture conditions
3.4. Long-term incentives for FY20
The table below outlines the key details of the LTI plan. LTI awards in FY20 are summarised in Section 2.2 of the
Remuneration Report.
Component
Details
Purpose and link to strategy Provides opportunity for the Executive Team to acquire equity in the Company as a reward for
increasing EPS and TSR over the longer term and helps to attract and retain talent.
Operation
LTI Plan consisting of DEA.
Potential reward
LTI awards are discretionary, performance based, at risk reward arrangements.
The combined total of at risk remuneration (LTI and STI combined) is targeted at 50%-71% of
total remuneration.
58 Steadfast Group Annual Report 2020
Component
Details
Performance metrics
LTI – Deferred equity award (100%)
Continuous employment and performance rating to be met for the three-year vesting period;
vesting is subjected to future performance hurdles below; and
no negative material deterioration in reported results in the subsequent year.
Future performance hurdle Non-financial measures:
Personal objectives (KPIs) as agreed with the Board. At least 60% of the objectives must be
achieved by the members of the Executive Team to be eligible to any LTI. The MD & CEO
achieved a substantial majority of his FY20 non-financial objectives with weightings (refer
Section 2.2).
Financial measures relating to awards issued during FY20 (awarded in August 2019):
75% is based on average diluted EPS growth, which is not payable unless at least 5% straight
line growth is achieved over a future three-year vesting period. The vesting schedule is
outlined below:
Average diluted EPS growth
Vesting outcome
Below 5%
At 5%
5% to 10%
10% or higher
and
0%
50%
Straight line between 50% to 100%
100%
25% is based on TSR measured against the top 200 ASX companies excluding those in the
mining industry (peer group), which is not payable unless TSR exceeds the median of the peer
group. TSR is calculated as the change in share price plus dividends declared and any capital
returns measured over the financial year together with a future three-year vesting period. The
vesting schedule is outlined below:
TSR
Equal to or less than 50th percentile of
peer group
Vesting outcome
0%
Greater than 50th but less than 75th percentile of
peer group
Straight line between 50% to 100%
Equal to or exceeding 75th percentile of
peer group
100%
Potential maximum LTI
The MD & CEO and CFO can earn up to 100% of his annual fixed remuneration.
The other Executives within the Executive Team can earn 50% to 75% of their annual
fixed remuneration.
Approval of the LTI
Forms of LTI reward
The Board approves the LTI based on the financial and non-financial performance outcome as
recommended by the Remuneration & Succession Planning Committee.
DEA of conditional rights to Steadfast ordinary shares and vesting after a three-year tenure hurdle
and meeting future performance hurdles from the grant date.
Rationale for choosing
performance measures
The financial measures of EPS growth and TSR are chosen to ensure long-term shareholders
value is increased.
The non-financial measures are chosen to ensure each member of the Executive Team delivers
outcomes that support the success of Steadfast.
Steadfast Group Annual Report 2020 59
Component
Details
Key terms of DEA
DEA is normally granted on the date the audited financial results are announced.
These rights are granted to the participants (at no cost), to the dollar value of a percentage of
their fixed remuneration in accordance with the LTI Plan.
The number of conditional rights granted is calculated based on the weighted average share
price over the five trading days before the grant date.
The participants in the LTI Plan become eligible to receive one Steadfast ordinary share per
conditional right, subject to their continuing employment with the Group for the three-year
period from the grant date and meeting performance hurdles, subject to Board discretion.
These rights will not accrue notional dividends and may accrue, subject to Board discretion, any
bonus element inherent in any rights issue, which will be paid as additional shares upon vesting.
Forfeiture conditions
The Board retains the discretion to adjust any unpaid or unvested LTI downwards if it is
appropriate to do so.
The conditional rights will be forfeited if the Executive resigns before the vesting date.
When an Executive ceases employment in special circumstances, such as genuine retirement,
redundancy or ill health, any unvested rights may be paid in cash and/or Steadfast shares subject
to Board discretion.
3.5. Keeping executives’ and shareholders’ interest aligned
Component
Details
Shareholding requirements
The Executive Team have acquired Steadfast’s ordinary shares through the following means:
shares allocated to three Executives either directly or through loans, which have since been
repaid by the Executives;
allotment of ordinary shares to Mr Lightbody as part consideration for the acquisition by
Steadfast, as part of the IPO in August 2013, of Miramar, an underwriting agency business then
partly owned by Mr Lightbody;
subscription for ordinary shares as part of the Company’s IPO and subsequent rights issues;
participation in the Company’s Dividend Reinvestment Plan;
conditional rights converting into ordinary shares;
potential vesting of DEAs granted through the STI and LTI Plans in the financial years from
1 July 2014 onwards (refer Sections 3.3 and 3.4 for further details of the STI and LTI Plans); and
purchase of shares on market within trading windows.
Section 6.3 provides movements of Steadfast’s ordinary shares held by the Executive Team during the current financial year.
60 Steadfast Group Annual Report 2020
4. Remuneration in detail
4.1. Statutory remuneration disclosure
The table below provides remuneration details for the Executive Team (including the MD & CEO and his direct reports).
No KMP was newly appointed to the Executive Team during either financial year.
Short-term employment benefits
Post- employ-
ment benefits
Other long-
term employ-
ment benefits
Subtotal
(excluding
share-based
payments)
Share-based
payments
Total
(1)
(2)
(3)
(4)
(5)
(6)
Cash salary
and leave
accruals
$
Cash short-
term
incentive
$
Non-
monetary
benefits
$
Super-
annuation
$
Long service
leave accruals
$
$
$
$
Key Management Personnel (including Managing Director & CEO)
Robert Kelly, Managing Director & CEO
2020
2019
1,141,291
990,000
982,116
913,500
19,410
19,270
Stephen Humphrys, Chief Financial Officer
2020
2019
634,425
360,000
36,488
569,625
334,200
37,095
Samantha Hollman, Chief Operating Officer
2020
2019
500,662
300,000
32,364
444,672
278,100
29,880
Simon Lightbody, CEO - Steadfast Underwriting Agencies
2020
2019
494,791
300,000
25,883
462,054
287,400
25,707
21,003
20,531
21,003
20,531
21,003
20,531
21,003
20,531
34,464
2,206,168
1,760,000
3,966,168
23,505
1,958,922
1,624,000
3,582,922
14,347
1,066,263
840,000
1,906,263
10,364
971,815
640,550
1,612,365
10,494
864,523
575,000
1,439,523
8,005
781,188
417,150
1,198,338
13,737
11,140
855,414
575,000
1,430,414
734,982
431,100
1,237,932
Allan Reynolds, Executive General Manager – Direct, New Zealand & Singapore
2020
2019
447,069
207,000
14,966
420,542
129,000
21,160
21,003
20,531
Linda Ellis, Group Company Secretary & Corporate Counsel(7)
2020
2019
363,747
112,500
35,665
258,769
78,225
27,468
21,003
19,907
15,547
19,689
13,733
11,466
705,585
483,000
1,188,585
610,922
301,000
911,922
546,648
262,500
809,148
395,835
182,525
578,360
Tables notes
1. Cash salary includes amounts paid in cash plus any salary sacrifice items. Annual leave accruals are determined in accordance
with Accounting Standard, AASB 119 Employee Benefits.
2. The 2020 short-term incentive (STI) represents 60% of the total STI awarded and approved by the Board and will be paid in cash
in September 2020.
3. The Executive Team is provided with cash salary, superannuation, and other non-monetary benefits such as car parking,
income protection and life insurances.
4. Superannuation contributions are paid in line with legislative requirements.
5. Long service leave accruals are determined in accordance with AASB 119 Employee Benefits.
6. Share-based payments represent the expense amount accrued in the year for deferred equity awards (both STI and LTI). The
2020 expense is higher than prior year due to the cumulative effect of prior years’ grants plus increased probability of meeting
vesting conditions.
7. Mrs Ellis was employed on a 60% of full-time basis from 1 July 2018 to 31 December 2018, on an 80% of full-time basis from
1 January 2019 to 30 June 2019, and on a full-time basis from 1 July 2019 onwards.
Steadfast Group Annual Report 2020 61
4.2. Conditional rights
The table below provides the number of conditional rights held by members of the Executive KMP at 30 June 2019 and 30 June
2020. These are aggregate holdings of unvested DEAs from the various grants that remain on foot (see chart in section 2.4).
Balance
30 June 2019
STI granted
during FY20
LTI granted
during FY20
DRP granted
STI/LTI vested
and/or
transferred
during FY201
Balance
30 June 2020
Robert Kelly
Stephen Humphrys
Samantha Hollman
Simon Lightbody
Allan Reynolds
Linda Ellis
1,430,735
700,771
365,566
300,132
407,254
218,812
173,717
63,554
52,885
54,654
24,531
14,876
289,528
119,163
66,107
68,317
61,329
37,189
8,557
3,200
2,563
2,340
1,213
714
(706,984)
1,195,553
(365,191)
(163,397)
(106,154)
521,497
323,724
319,289
(255,975)
238,352
(132,679)
138,912
3,423,270
384,217
641,633
18,587
(1,730,380)
2,737,327
1 The third tranche of the STI DEAs granted in August 2016, the second tranche of the STI DEAs granted in August 2017, the first tranche of the STI DEAs granted in August
2018 and the LTI DEAs granted in August 2014 and August 2016 were vested in the current financial year. In accordance with the terms of the STI and LTI plans, eligible
participants of the plans received one Steadfast ordinary share per conditional right at nil cost to them upon vesting.
Refer Section 6.2 for the fair value of the conditional rights awarded in August 2019.
4.3. Executive service agreements
Steadfast has ongoing executive service agreements (Executive Agreements) with each of the members of the Executive KMP.
These Executive Agreements may be terminated by written notice from either party or by the Company making a payment in lieu
of notice.
The Executive Agreements outline the components of remuneration paid to executives and require the remuneration of
executives to be reviewed annually. The Executive Agreements do not require the Company to increase base salary, pay a
short-term incentive or offer a long-term incentive in any given year.
The table below contains the key terms of the Executive KMP’s Executive Agreements. The Executive Agreements do not provide
for any termination payments, other than payment in lieu of notice by the Company.
Name
Robert Kelly1
Stephen Humphrys
Samantha Hollman
Simon Lightbody
Allan Reynolds
Linda Ellis
Notice period from
the Company
Notice period from
the employee
12 months
6 months
6 months
6 months
6 months
6 months
12 months
6 months
6 months
6 months
6 months
6 months
Termination provisions in
relation to payment in lieu
of notice
12 months fixed remuneration
6 months fixed remuneration
6 months fixed remuneration
6 months fixed remuneration
6 months fixed remuneration
6 months fixed remuneration
1 Mr Kelly has stated his intention not to terminate his employment contract before the period immediately succeeding the AGM in October 2023.
In accordance with the requirements of Corporations Act 2001, termination provisions could include the payment of unused
annual leave and long service leave accruals where applicable.
4.3.1. Retrenchment entitlements
In the event of redundancy, Mr Kelly will be paid an amount equal to 12 months fixed remuneration.
4.3.2. Termination under other situations
In the event of gross negligence or gross misconduct, the Company may terminate the Executive Agreement immediately by
notice in writing and without payment in lieu of notice.
62 Steadfast Group Annual Report 2020
5. Non-executive director remuneration
5.1. Fee structure and policy
Non-Executive Directors’ fees are determined within an aggregate Directors’ fee pool limit, which is reviewed periodically and
recommended for approval by shareholders.
The fee structure is designed to provide the Group with the ability to attract and retain directors of the highest calibre.
The aggregate amount of remuneration sought to be approved by shareholders and the manner in which it is paid to Directors
is reviewed annually. The Board considers advice from external consultants as well as fees paid to Non-Executive Directors of
comparable companies when undertaking the review process.
Independent and non-independent Non-Executive Director remuneration consists of three elements:
Board fees;
committee fees; and
superannuation, which is paid in line with legislative requirements.
Directors do not receive retirement benefits beyond superannuation contributions and do not participate in any
incentive programs.
Directors may also be reimbursed for travel and other expenses incurred in attending to the Company’s affairs.
At the Annual General Meeting held on 17 October 2019, the shareholders approved the maximum aggregate Directors’ fee pool
of $1,100,000 per annum for each financial year effective from and including the financial year commenced on 1 July 2019.
The table below contains the annual fee structure for the Steadfast Board and committees (inclusive of superannuation).
Chairman
Members
2020
2019
2020
2019
Audit &
Risk Committee
$
Remuneration
& Succession
Planning Committee
$
Nomination
Committee
$
30,000
30,000
7,500
7,500
27,500
27,500
7,500
7,500
-
-
-
-
Board
$
275,000
275,000
135,000
135,000
No additional remuneration will be paid for the Chairman and members of the Nomination Committee nor any directorships of
subsidiaries. The Directors have determined that fees for the financial year ended 30 June 2021 will not be increased except for
an additional $25,000 per annum fixed pay to recognise the appointment of David Liddy as Deputy Chairman of the Board .
5.2. Minimum shareholding requirement
Non-Executive Directors are not required under the Company’s constitution to hold any of Steadfast’s ordinary shares.
However, contained in each Director’s letter of appointment from the Company is a term and condition that the Non-Executive
Directors must hold an amount equal to 50% of their annual remuneration in the Company’s ordinary shares by the end of their
second year in office.
Refer Section 6.3 for details of Steadfast’s ordinary shares held by the Non-Executive Directors.
Steadfast Group Annual Report 2020 63
5.3. Remuneration details for Non-Executive Directors
The table below provides remuneration details of the Non-Executive Directors on the Company’s Board.
Short-term employment benefits
Post- employment
benefits
Board fees
$
Committee fees
$
Superannuation
$
Total
$
Current Non-Executive Directors
Frank O’Halloran, AM
2020
2019
David Liddy, AM
2020
2019
Gai McGrath
2020
2019
Anne O’Driscoll
2020
2019
Philip Purcell
2020
2019
Greg Rynenberg
2020
2019
253,997
254,469
123,288
123,288
135,000
135,000
123,288
123,288
123,288
123,288
123,288
123,288
-
-
31,963
31,963
15,000
15,000
34,247
34,247
13,699
13,699
13,699
13,699
21,003
20,531
14,749
14,749
-
-
14,965
14,965
13,013
13,013
13,013
13,013
275,000
275,000
170,000
170,000
150,000
150,000
172,500
172,500
150,000
150,000
150,000
150,000
6. Additional information
6.1. Remuneration governance
This report meets the remuneration reporting requirements of the Corporations Act 2001 and Accounting Standard AASB 124
Related Party Disclosures. The term remuneration used in this report has the same meaning as compensation as prescribed in
AASB 124.
6.1.1. Role of the Remuneration & Succession Planning Committee
The Remuneration & Succession Planning Committee of the Board is responsible for reviewing and determining remuneration
arrangements for the Non-Executive Directors and the Executive Team made up of the Managing Director & CEO and his direct
reports listed in the KMP table in Section 1.1.
6.1.2. Use of remuneration consultant
The Remuneration & Succession Planning Committee directly engages and considers market remuneration data from
remuneration consultants as required. The data provided by remuneration consultants is used as a guide for remuneration
decisions with respect to the Executive Team. Remuneration consultants are engaged no less than every three years to provide
information on fixed remuneration packages and incentives to the Remuneration & Succession Planning Committee.
An external remuneration consultant, Egan Associates, was engaged during the financial year to conduct remuneration
benchmarking for the Executive Team.
64 Steadfast Group Annual Report 2020
6.2. Valuation of conditional rights
The table below details the fair value of conditional rights issued affecting remuneration of KMP in the previous, current or future
reporting periods:
Description
Recipient
Grant date
Vesting date
October 2019 STI conditional rights3
MD & CEO
17-Oct-19
21-Aug-20
October 2019 STI conditional rights3
MD & CEO
17-Oct-19
21-Aug-21
October 2019 STI conditional rights3
MD & CEO
17-Oct-19
21-Aug-22
August 2019 STI conditional rights3
Other executives
21-Aug-19
21-Aug-20
August 2019 STI conditional rights3
Other executives
21-Aug-19
21-Aug-21
August 2019 STI conditional rights3
Other executives
21-Aug-19
21-Aug-22
October 2018 STI conditional rights3
MD & CEO
18-Oct-18
24-Aug-19
October 2018 STI conditional rights3
MD & CEO
18-Oct-18
24-Aug-20
October 2018 STI conditional rights3
MD & CEO
18-Oct-18
24-Aug-21
August 2018 STI conditional rights3
Other executives
24-Aug-18
24-Aug-19
August 2018 STI conditional rights3
Other executives
24-Aug-18
24-Aug-20
August 2018 STI conditional rights3
Other executives
24-Aug-18
24-Aug-21
October 2017 STI conditional rights3
MD & CEO
26-Oct-17
23-Aug-19
October 2017 STI conditional rights3
MD & CEO
26-Oct-17
23-Aug-20
August 2017 STI conditional rights3
Other executives
23-Aug-17
23-Aug-19
August 2017 STI conditional rights3
Other executives
23-Aug-17
23-Aug-20
October 2016 STI conditional rights3
MD & CEO
27-Oct-16
24-Aug-19
August 2016 STI conditional rights3
Other executives
24-Aug-16
24-Aug-19
October 2019 LTI conditional rights
MD & CEO
17-Oct-19
21-Aug-22
August 2019 LTI conditional rights
Other executives
21-Aug-19
21-Aug-22
October 2018 LTI conditional rights
MD & CEO
18-Oct-18
24-Aug-21
August 2018 LTI conditional rights
Other executives
24-Aug-18
24-Aug-21
October 2017 LTI conditional rights
MD & CEO
26-Oct-17
23-Aug-20
August 2017 LTI conditional rights
Other executives
23-Aug-17
23-Aug-20
October 2016 LTI conditional rights
MD & CEO
27-Oct-16
24-Aug-19
August 2016 LTI conditional rights
Other executives
24-Aug-16
24-Aug-19
October 2014 LTI conditional rights
MD & CEO
29-Oct-14
25-Aug-19
August 2014 LTI conditional rights
Other executives
25-Aug-14
25-Aug-19
Volume
weighted
average share
price (VWAP)
$2
Fair value at
grant date
$1
3.5985
3.5891
3.5723
3.5539
3.5401
3.5194
2.9486
2.9403
2.9252
3.0045
2.9922
2.9737
2.7318
2.7175
2.5945
2.5771
2.1128
2.1047
3.3868
3.2975
2.7609
2.7771
2.5581
2.3879
1.9834
1.9500
1.4001
1.2908
3.5057
3.5057
3.5057
3.5057
3.5057
3.5057
3.0648
3.0648
3.0648
3.0648
3.0648
3.0648
2.8170
2.8170
2.8170
2.8170
2.1858
2.1858
3.5057
3.5057
3.0648
3.0648
2.8170
2.8170
2.1858
2.1858
1.3960
1.3960
1 The fair value at grant date is determined in accordance with Accounting Standard, AASB 2 Share-based Payment.
2 To calculate the number of conditional rights to be granted, the award value is divided by the volume weighted average share price of Steadfast shares over the five
trading days on the Australian Securities Exchange prior to Steadfast announcing its full year results.
3 The STI conditional rights granted all vest in three equal tranches after one, two and three years from the grant date.
Steadfast Group Annual Report 2020 65
6.3. Shareholdings
The table below summarises the movement in holdings of ordinary shares during the year and the balance at the end of the
financial year both in total and held nominally by related parties of Non-Executive Directors and KMPs.
Total
shares held
at 1 July
2019 Purchases
Shares
transferred
upon vesting
of DEA
Shares
allocated
via DRP
Sales/
Reductions
Total
shares held
at 30 June
2020
Shares
held
nominally
at 30 June
20201
Frank O’Halloran, AM2
1,150,539
166,314
-
Robert Kelly2
David Liddy, AM2
Gai McGrath2
Anne O’Driscoll2
Philip Purcell2
Greg Rynenberg2
Linda Ellis
Samantha Hollman
Stephen Humphrys
Simon Lightbody
Allan Reynolds
3,062,209
150,000
4,438
4,438
19,750
29,438
168,498
-
160,142
4,438
858,676
150,000
695,826
-
-
-
-
-
63,000
228,715
400,000
1,497,561
4,438
8,876
4,438
130,774
160,712
358,795
-
102,321
-
-
-
-
-
-
(425,000)
891,853
861,308
(525,000)
3,237,473
-
-
-
-
154,438
154,438
49,188
49,188
168,498
168,498
(60,142)
104,438
104,438
21,629
-
1,030,305
1,030,305
-
(130,774)
67,438
-
8,140
(160,712)
245,731
181,430
-
-
-
763,233
-
(440,000)
1,159,882
455,314
955,602
4,143
251,364
1,206
(115,000)
1,097,315
51,438
1 Shares held nominally are included in the column headed ‘Total shares held at 30 June 2020’. Total shares are held directly by the KMP and indirectly by the KMP’s
related parties, inclusive of domestic partner, dependants and entities controlled, jointly controlled or significantly influenced by the KMP.
2 For the Directors, total shares held directly and nominally also represented the relevant interest in the listed securities, being ordinary shares of the Company, as notified
by the Directors to the ASX in accordance with section 205G(1) of the Corporations Act 2001, at the date of this Directors’ Report.
66 Steadfast Group Annual Report 2020
6.4. Related party transactions
The following transactions occurred with Directors’ (Robert Kelly and Greg Rynenberg) related parties which are part of Steadfast
Network but are not part of Steadfast Group:
2020
$
2019
$
i. Sale of goods and services
Professional service fees received by Directors' related entities on normal commercial terms
8,841
20,610
ii. Payment for goods and services
Estimated Steadfast Network Broker rebate expense to Directors' related entities on the basis
as determined by the Board
7,198
51,663
iii. Other transactions
Arm's length consideration for purchase of customer relationships paid to an entity controlled
by a director
Steadfast Network Broker rebate offer expense
4,000,000
503,175
-
-
The following balances are outstanding at the reporting date in relation to transactions with
related parties:
iv. Current receivable from related parties
Trade receivables from Directors' related entities
-
80,119
Rounding
The Group is of the kind referred to in the ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191
issued by the Australian Securities & Investments Commission. In accordance with that Instrument, amounts in the Directors’
Report and financial report have been rounded to the nearest thousand dollars, unless otherwise stated.
Signed at Sydney on 25 August 2020 in accordance with a resolution of the Directors.
Frank O’Halloran, AM
Chairman
Robert Kelly
Managing Director & CEO
Steadfast Group Annual Report 2020 67
68 Steadfast Group Annual Report 2020
KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Liability limited by a scheme approved under Professional Standards Legislation. Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 To the Directors of Steadfast Group Limited I declare that, to the best of my knowledge and belief, in relation to the audit of Steadfast Group Limited for the financial year ended 30 June 2020 there have been: i. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and ii. no contraventions of any applicable code of professional conduct in relation to the audit. KPMG Scott Guse Partner Sydney 25 August 2020 Steadfast Group Annual Report 2020 69
Steadfast’s business strategy is to continue to grow shareholder value by maintaining our position as the largest intermediated insurance distribution network in Australasia. Steadfast Group Limited
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the year ended 30 June 2020
Notes
2020
$'000
2019
$'000
REVENUE
Fee and commission income
Less: brokerage commission paid
Net fee and commission income
Premium funding interest income
Share of profits of associates & joint ventures
12
Fair value gain on listed investment
Net gain from investments
Other income
EXPENSES
Employment expense
Operating, brokers’ support service and other expenses
Commission and other related expenses
Occupancy expense
Amortisation expense
Depreciation expense
Impairment expense – non-financial assets
Finance costs
Insurance Brokers Network Australia Limited (IBNA) acquisition
Professional Services Fee (PSF) rebate offer
Profit before income tax expense
Income tax (expense) / benefit
Profit / (loss) after income tax expense for the year
PROFIT / (LOSS) FOR THE YEAR IS ATTRIBUTABLE TO:
Non-controlling interests
Owners of Steadfast Group Limited
2B(I)
7
2B(I)
7, 12
2B(I)
5, 24
5, 25
18
4
752,730
681,581
(159,946)
(144,775)
592,784
536,806
61,465
20,179
4,525
9,309
8,875
153
14,916
725
14,829
11,010
697,137
578,439
(282,255)
(240,670)
(78,723)
(61,231)
(7,768)
(36,370)
(17,697)
(41,461)
(13,684)
(72,701)
(77,861)
(70,643)
(38,681)
(18,932)
(31,416)
(4,713)
-
(14,125)
-
-
(689,751)
(419,180)
7,386
159,259
(40,137)
(32,751)
(37,425)
121,834
22,493
(55,244)
(32,751)
17,989
103,845
121,834
70 Steadfast Group Annual Report 2020
Profit / (loss) after income tax expense for the year
OTHER COMPREHENSIVE INCOME
Items that may be reclassified subsequently to profit or loss
Net movement in foreign currency translation reserve
Cash flow hedge effective portion of change in fair value
Income tax (expense) / benefit on other comprehensive income
Total other comprehensive income / (loss) for the period, net of tax
Notes
2020
$'000
2019
$'000
(32,751)
121,834
(1,202)
(141)
403
(940)
2,095
60
(647)
1,508
Total comprehensive income / (loss) for the year, net of tax
(33,691)
123,342
TOTAL COMPREHENSIVE INCOME FOR THE YEAR IS ATTRIBUTABLE TO:
Non-controlling interests
Owners of Steadfast Group Limited
EARNINGS PER SHARE
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
22,493
(56,184)
(33,691)
17,989
105,353
123,342
5
5
(6.47)
(6.47)
13.16
13.12
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
notes to the financial statements.
Steadfast Group Annual Report 2020 71
Notes
2020
$'000
2019
$'000
19
19
13
13
7
7
12
2B(I), 20
14C
18
21
210,644
448,955
145,698
537,233
9,753
116,520
427,449
164,619
76,178
7,775
1,352,283
792,541
930,309
182,372
118,912
58,896
34,654
46,511
11,750
17,431
-
2,611
945,498
193,206
128,259
43,667
-
35,924
7,225
7,358
500
3,019
1,403,446
1,364,656
2,755,729
2,157,197
Steadfast Group Limited
Consolidated Statement of Financial Position
As at 30 June 2020
ASSETS
Current assets
Cash and cash equivalents
Cash held on trust
Trade and other receivables
Premium funding receivable
Other
Total current assets
Non-current assets
Goodwill
Intangible assets
Investments in associates & joint ventures
Property, plant and equipment
Right-of-use assets
External shareholder loans
Other financial assets
Deferred tax assets
Related party loans
Other
Total non-current assets
Total assets
72 Steadfast Group Annual Report 2020
LIABILITIES
Current liabilities
Payables on broking/underwriting agency operations
Premium funding borrowings
Premium funding payables
Trade and other liabilities
Corporate and subsidiaries borrowings
Bank overdrafts
Lease liabilities
Deferred consideration
Provisions
Income tax payable
Total current liabilities
Non-current liabilities
Corporate and subsidiaries borrowings
Deferred tax liabilities
Lease liabilities
Provisions
Deferred consideration
Other payables
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Share capital
Treasury shares held in trust
Foreign currency translation reserve
Share-based payments reserve
Undistributed profits reserve
Revaluation reserve
Other reserves
Retained earnings
Equity attributable to the owners of Steadfast Group Limited
Non-controlling interests
Total equity
Notes
2020
$'000
2019
$'000
8
8
8, 19
20
10
8
18
20
10
435,572
399,309
144,061
99,827
2,840
-
11,942
7,780
29,713
18,364
410,334
3,384
66,873
99,232
25,707
3,781
-
28,064
25,615
11,614
1,149,408
674,604
318,222
46,521
29,932
9,296
4,435
520
311,232
57,858
-
8,906
6,342
3,003
408,926
387,341
1,558,334
1,061,945
1,197,395
1,095,252
9
9
1,149,601
(11,209)
(41)
4,782
(1,030)
12,069
(15,558)
(18,604)
912,517
(9,890)
800
6,187
72,076
-
(4,083)
37,859
1,120,010
1,015,466
77,385
79,786
1,197,395
1,095,252
The above Consolidated Statement of Financial Position should be read in conjunction with the notes to the financial statements.
Steadfast Group Annual Report 2020 73
Steadfast Group Limited
Consolidated Statement of Changes in Equity
For the year ended 30 June 2020
Equity attributable to owners of Steadfast Group Limited
Non-controlling
interests
Total equity
2020
Balance at 1 July 2019
Share capital
$’000
Treasury shares
held in trust
$’000
912,517
(9,890)
Adjustment on initial application of AASB 16 (net of tax)1
-
-
Adjusted balance at 1 July 2019
912,517
(9,890)
Profit/(loss) after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
-
-
-
TRANSACTIONS WITH OWNERS IN THEIR CAPACITY
AS OWNERS:
Issue of share capital (Note 9)
237,084
Shares acquired and held in trust (Note 9)
Share-based payments on Executive Shares and
employee share plans
Shares allotted/ allocated (Note 9)
Transfer of other reserves to retained earnings
Non-controlling interests of acquired entities (Note 10)
Change in equity interests in subsidiaries without loss
of control
Dividends declared and paid (Note 6)
Land & buildings revaluation
Balance at 30 June 2020
-
-
-
-
-
-
-
-
Foreign
currency
translation
reserve
$’000
Share-based
payments
reserve
$’000
800
-
800
-
(841)
(841)
-
-
-
-
-
-
-
-
-
6,187
-
6,187
-
-
-
-
-
4,196
(3,966)
(1,635)
-
-
-
-
-
-
-
-
(5,052)
-
3,733
-
-
-
-
-
1,149,601
(11,209)
(41)
4,782
(15,558)
(18,604)
77,385
1,197,395
reserve
Revaluation reserve
Other reserves
Retained earnings
$'000
Un-distributed
profits
$'000
72,076
72,076
-
-
-
-
-
-
-
-
-
-
-
-
(73,106)
(1,030)
12,069
12,069
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$’000
(4,083)
(4,083)
(99)
(99)
-
-
-
-
-
-
-
-
-
-
(11,376)
(55,244)
22,493
$’000
37,859
(2,854)
35,005
(55,244)
-
-
-
-
-
-
-
-
-
1,635
$’000
79,786
(708)
79,078
22,493
-
-
-
-
-
-
-
739
(1,322)
(23,603)
$’000
1,095,252
(3,562)
1,091,690
(32,751)
(940)
(33,691)
237,084
(5,052)
4,196
(233)
-
739
(12,698)
(96,709)
12,069
1 The Group has initially applied AASB 16 at 1 July 2019. Under the transition methods chosen, comparative information is not restated. See Note 2B(I)(i). The above
consolidated statement of changes in equity should be read in conjunction with the notes to the financial statements.
74 Steadfast Group Annual Report 2020
Equity attributable to owners of Steadfast Group Limited
Treasury shares
translation
Share capital
held in trust
$’000
912,517
$’000
(9,890)
Foreign
currency
reserve
$’000
800
Share-based
payments
reserve
$’000
6,187
Adjusted balance at 1 July 2019
912,517
(9,890)
800
6,187
2020
Balance at 1 July 2019
Adjustment on initial application of AASB 16 (net of tax)1
Profit/(loss) after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
TRANSACTIONS WITH OWNERS IN THEIR CAPACITY
AS OWNERS:
Issue of share capital (Note 9)
237,084
Shares acquired and held in trust (Note 9)
Share-based payments on Executive Shares and
employee share plans
Shares allotted/ allocated (Note 9)
Transfer of other reserves to retained earnings
Non-controlling interests of acquired entities (Note 10)
Change in equity interests in subsidiaries without loss
of control
Dividends declared and paid (Note 6)
Land & buildings revaluation
Balance at 30 June 2020
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(5,052)
3,733
(841)
(841)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,196
(3,966)
(1,635)
1 The Group has initially applied AASB 16 at 1 July 2019. Under the transition methods chosen, comparative information is not restated. See Note 2B(I)(i). The above
consolidated statement of changes in equity should be read in conjunction with the notes to the financial statements.
1,149,601
(11,209)
(41)
4,782
Un-distributed
profits
reserve
$'000
72,076
-
72,076
-
-
-
-
-
-
-
-
-
-
(73,106)
-
(1,030)
Revaluation reserve
$'000
Other reserves
$’000
Retained earnings
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12,069
12,069
(4,083)
-
(4,083)
-
(99)
(99)
-
-
-
-
-
-
(11,376)
-
-
37,859
(2,854)
35,005
(55,244)
-
(55,244)
-
-
-
-
1,635
-
-
-
-
(15,558)
(18,604)
Non-controlling
interests
Total equity
$’000
79,786
(708)
79,078
22,493
-
22,493
-
-
-
-
-
739
(1,322)
(23,603)
-
77,385
$’000
1,095,252
(3,562)
1,091,690
(32,751)
(940)
(33,691)
237,084
(5,052)
4,196
(233)
-
739
(12,698)
(96,709)
12,069
1,197,395
Steadfast Group Annual Report 2020 75
Consolidated Statement of Changes in Equity continued
2019
Balance at 1 July 2018
Equity attributable to owners of Steadfast Group Limited
Share capital
$’000
Treasury shares
held in trust
$’000
Foreign
currency
translation
reserve
$’000
Share-based
payments
reserve
$’000
912,347
(7,728)
(667)
4,512
Adjustment on initial application of AASB 15 (net of tax)1
Adjustment on initial application of AASB 9 (net of tax)1
-
-
-
-
Adjusted balance at 1 July 2018
912,347
(7,728)
Profit after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
TRANSACTIONS WITH OWNERS IN THEIR CAPACITY
AS OWNERS:
Adjustment to prior year transaction costs, net of
income tax
Shares acquired and held in trust (Note 9)
Share-based payments on Executive Shares and
employee share plans
Shares allotted/ allocated (Note 9)
Transfer of other reserves to retained earnings
Non-controlling interests of acquired entities (Note 10)
Change in equity interests in subsidiaries without loss
of control
Dividends declared and paid (Note 6)
-
-
-
170
-
-
-
-
-
-
-
-
-
-
-
(3,685)
-
1,523
-
-
-
-
-
-
(667)
-
1,467
1,467
-
-
-
-
-
-
-
-
-
-
4,512
-
-
-
-
-
3,450
(1,775)
-
-
-
-
Balance at 30 June 2019
912,517
(9,890)
800
6,187
72,076
(4,083)
1 The Group has initially applied AASB 9 and AASB 15 at 1 July 2018. Under the transition methods chosen, comparative information is not restated. The above
consolidated statement of changes in equity should be read in conjunction with the notes to the financial statements.
Un-distributed
profits
reserve
$'000
89,509
Other reserves
Retained earnings
$’000
(30,793)
89,509
(30,793)
$’000
30,397
(12,330)
(1,404)
16,663
103,845
-
-
-
-
-
-
-
41
41
-
-
-
-
-
-
-
-
-
(17,433)
37,433
(20,000)
(10,764)
(62,649)
37,859
-
-
-
-
-
-
-
-
-
-
-
-
Non
controlling interests
Total equity
$’000
59,402
(2,815)
(295)
56,292
17,989
-
-
-
-
-
-
6,225
15,141
(15,861)
79,786
$’000
1,056,979
(15,145)
(1,699)
1,040,135
121,834
1,508
123,342
170
(3,685)
3,450
(252)
-
6,225
4,377
(78,510)
1,095,252
103,845
17,989
76 Steadfast Group Annual Report 2020
2019
Balance at 1 July 2018
Adjustment on initial application of AASB 15 (net of tax)1
Adjustment on initial application of AASB 9 (net of tax)1
Profit after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
TRANSACTIONS WITH OWNERS IN THEIR CAPACITY
AS OWNERS:
income tax
Adjustment to prior year transaction costs, net of
Shares acquired and held in trust (Note 9)
Share-based payments on Executive Shares and
employee share plans
Shares allotted/ allocated (Note 9)
Transfer of other reserves to retained earnings
Non-controlling interests of acquired entities (Note 10)
Change in equity interests in subsidiaries without loss
of control
Dividends declared and paid (Note 6)
Equity attributable to owners of Steadfast Group Limited
Treasury shares
translation
Share capital
held in trust
$’000
912,347
$’000
(7,728)
Foreign
currency
reserve
$’000
(667)
Share-based
payments
reserve
$’000
4,512
-
-
-
-
-
-
-
-
-
-
-
-
170
-
-
-
-
-
-
-
-
-
-
-
(3,685)
1,523
1,467
1,467
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,450
(1,775)
Balance at 30 June 2019
912,517
(9,890)
800
6,187
1 The Group has initially applied AASB 9 and AASB 15 at 1 July 2018. Under the transition methods chosen, comparative information is not restated. The above
consolidated statement of changes in equity should be read in conjunction with the notes to the financial statements.
Un-distributed
profits
reserve
$'000
Other reserves
$’000
Retained earnings
$’000
Adjusted balance at 1 July 2018
912,347
(7,728)
(667)
4,512
89,509
(30,793)
89,509
(30,793)
-
-
-
-
-
-
-
-
-
-
-
(17,433)
-
-
-
72,076
-
41
41
-
-
-
-
37,433
-
(10,764)
-
(4,083)
30,397
(12,330)
(1,404)
16,663
103,845
-
103,845
-
-
-
-
(20,000)
-
-
(62,649)
37,859
Non
controlling interests
Total equity
$’000
59,402
(2,815)
(295)
56,292
17,989
-
17,989
-
-
-
-
-
6,225
15,141
(15,861)
79,786
$’000
1,056,979
(15,145)
(1,699)
1,040,135
121,834
1,508
123,342
170
(3,685)
3,450
(252)
-
6,225
4,377
(78,510)
1,095,252
Steadfast Group Annual Report 2020 77
Steadfast Group Limited
Consolidated Statement of Cash Flows
For the year ended 30 June 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees, and Network Broker rebates
Net cash inflow from premium funding borrowings
Net cash outflow to premium funding customers
Dividends received from associates and joint ventures
Interest received
Interest and other finance costs paid
Income taxes paid
Net cash from operating activities before customer trust accounts movement
Net movement in customer trust accounts (net cash receipts/payments on behalf
of customers)
Net cash from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for acquisitions of subsidiaries and business assets
Cash acquired from acquisitions of subsidiaries and business assets
Payments for PSF rebate offer
Payments for investments in associates and joint ventures
Payments for step-up investment in subsidiaries on hubbing arrangements
Dividends received from listed investment
19
25
Notes
2020
$'000
2019
$'000
738,335
516,126
(494,028)
(366,965)
395,559
(374,154)
18,712
5,512
(16,006)
(67,968)
205,962
15,690
221,652
(12,262)
7,641
(43,062)
(1,125)
(27,169)
240
-
-
14,256
8,099
(12,789)
(41,077)
117,650
43,698
161,348
(85,292)
91,210
-
(12,396)
(11,364)
-
Payments for deferred consideration of subsidiaries, associates and business assets
10
(23,284)
(17,389)
Proceeds from disposal of investment in subsidiaries, net of cash disposed
Proceeds from part disposal of investment in subsidiaries on hubbing arrangements
Proceeds from disposal of investment in associates
Payments for property, plant and equipment
Payments for intangible assets
Net cash used in investing activities
187
15,258
2,775
(3,470)
(20,417)
(104,688)
1,950
3,709
314
(6,384)
(12,118)
(47,760)
78 Steadfast Group Annual Report 2020
Notes
2020
$'000
2019
$'000
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Payments for transaction costs on issue of shares
Dividends paid to owners of Steadfast, net of Dividend Reinvestment Plan
6, 9
8
8
Dividends paid to non-controlling interests
Proceeds from borrowings
Repayment of borrowings
Payments for purchase of treasury shares
Repayment of related party loans
Payments for related party loans
Repayment of non-related party loans
Payments for non-related party loans
Payment of lease liabilities
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effect of movements in exchange rates on cash held
127,164
(3,784)
(68,036)
(23,603)
133,009
(147,166)
(5,052)
200
(195)
3,325
(852)
(12,235)
2,775
119,739
540,188
(328)
-
-
(62,649)
(15,861)
138,374
(23,411)
(3,685)
5,194
(500)
2,553
(1,505)
-
38,510
152,098
387,602
488
Cash and cash equivalents at the end of the financial year
19
659,599
540,188
The above Consolidated Statement of Cash Flows should be read in conjunction with the notes to the financial statements.
Steadfast Group Annual Report 2020 79
Steadfast Group Limited
Notes to the Financial Statements
For the year ended 30 June 2020
Note 1. General Information
This general purpose financial report is for the year ended 30 June 2020 and comprises the consolidated financial statements for
Steadfast Group Limited (Steadfast or the Company) and its subsidiaries and the Group’s interests in associates and joint ventures
(Steadfast Group or the Group). These financial statements are presented in Australian dollars, which is Steadfast’s functional and
presentation currency.
The Company is a for-profit listed public company limited by shares, incorporated and domiciled in Australia. Its registered office
and principal place of business is Level 4, 99 Bathurst Street, Sydney NSW 2000.
A description of the nature of the Group's operations and its principal activities is included in the Directors' Report, which is not
part of the financial report.
This general purpose financial report was authorised for issue by the Board on 25 August 2020.
Note 2. Significant accounting policies
A. Statement of Compliance
This financial report has been prepared in accordance with the Corporations Act 2001, Australian Accounting Standards and other
authoritative pronouncements of the Australian Accounting Standards Board, as appropriate for for-profit oriented entities and
the Australian Securities Exchange (ASX) Listing Rules.
International Financial Reporting Standards (IFRS) refer to the overall framework of standards and pronouncements approved by
the International Accounting Standards Board. IFRS forms the basis of the Australian Accounting Standards. This financial report
of the Group complies with IFRS.
B. Basis of preparation of the financial report
The significant accounting policies adopted in the preparation of this financial report are set out below. These accounting policies
have been applied consistently by all entities in the Group and are the same as those applied for the previous reporting period
unless otherwise noted. These financial statements have been prepared under the historical cost convention, modified, where
applicable, by the measurement at fair value of certain non-current assets, financial assets and financial liabilities.
I. New and amended standards adopted by the Group
The Group has adopted the following revised or amending Australian Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board that are mandatory for the year ended 30 June 2020. The effect of the adoption of these
standards on the financial position of the Group is disclosed below:
Title
Description
AASB 16
Leases
AASB 2017-4
Amendments to Australian Accounting Standards – Uncertainty over Income Tax Treatments
AASB 2017-7
Amendments to Australian Accounting Standards – Long-term Interests in Associates and
Joint Ventures
Note
(i)
(ii)
(ii)
Table notes
(i) AASB 16 Leases replaces AASB 117 Leases and related interpretations. The Group applied AASB 16 effective 1 July 2019.
Lessee accounting
AASB 16 introduces a single accounting model for lessees, requiring the Group to recognise substantially all of its current
operating lease commitments in the statement of financial position as right-of-use assets and lease liabilities. AASB 16 determines
that a lease exists if a contract conveys the right to control the use of the identified asset for a period of time in exchange
for consideration.
In assessing whether a contract conveys a lease, the Group assessed whether the Group has:
the right to obtain substantially all of the economic benefits from use of the identified asset; and
the right to direct the use of the identified asset.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date.
80 Steadfast Group Annual Report 2020
The lease liability is measured at amortised cost using the effective interest method. The present value of future lease payments
is discounted using the rate implicit in the lease, or if the rate cannot be readily determined, the Group’s incremental borrowing
rate. Generally, the Group uses its incremental borrowing rate as the discount rate. Under the amortised cost effective interest
method, each period a lease payment is made, the lease liability is partially reduced and interest expense on the lease liability
is recognised in the statement of profit or loss and other comprehensive income under ‘finance costs’. The interest expense
recognised on the lease is relatively higher in the earlier years of the lease than at the end of the lease term. As the right-of-use
asset is depreciated on a straight-line basis, the value of the lease liability and right-of-use asset diverge over the life of the lease.
Depreciation expense on the right-of-use asset is recognised in the statement of profit or loss and other comprehensive income
under ‘depreciation expense’.
Application of practical expedients
The Group adopted paragraph C8(b)(i) modified retrospective approach on transition with practical expedients as permitted by
the new standard. The modified retrospective approach does not require comparative financial information to be restated. Thus
the comparative period balances have not been restated and are assessed under AASB 117 as set out in Note 20.
The Group elected to apply the following practical expedients as permitted by AASB 16:
Short-term and low value leases are not recognised on the statement of financial position but are expensed on a straight
line basis.
The lease assessment under AASB 117 is ‘grandfathered’ and applied on implementation of AASB 16.
Application of a single discount rate across the Group for similar classes of underlying assets.
Reliance on historical impairment assessments in determining whether leases are onerous. The Group has recognised nil
impairment loss on the application of AASB 16.
The following table summarises the impact of transition to AASB 16 on 1 July 2019:
Consolidated statement of financial position
Impact of adopting AASB 16 at
1 July 2019
$'000
Non-current assets
Right-of-use assets
Increase in deferred tax assets
Current Liabilities
Lease liabilities - current
Non-current Liabilities
Lease liabilities - non-current
Decrease in other liabilities1
Equity
Decrease in opening retained earnings
Decrease in non-controlling interests
39,586
1,969
41,555
(11,092)
(11,092)
(35,502)
1,477
(34,025)
2,854
708
3,562
1 Under AASB 117, some entities recognised lease incentives as liabilities on the statement of financial position, and recognised the associated income on a straight line
basis over the life of the lease. Such lease incentives have been deducted against the right-of-use asset on initial implementation of AASB 16.
The following tables summarise the impacts of adopting AASB 16 on the Group’s statement of financial position and statement
of profit or loss and other comprehensive income as at 30 June 2020.
Steadfast Group Annual Report 2020 81
Notes to the Financial Statements continued
Impact on the consolidated statement of financial position
As reported
$'000
Adjustments
$'000
Amounts without
adoption of AASB 16
$'000
1,352,283
(29,090)
34,654
118,912
1,232,449
1,356,925
2,709,208
-
11,942
1,137,466
1,149,408
29,932
332,473
362,405
1,511,813
1,197,395
-
(18,604)
77,385
(41)
1,138,655
1,197,395
-
(2,264)
(34,654)
(32)
-
(36,950)
(36,950)
-
(11,942)
1,477
(10,465)
(29,932)
-
(29,932)
(40,397)
3,447
-
2,740
683
24
-
3,447
1,352,283
(31,354)
-
118,880
1,232,449
1,319,975
2,672,258
-
-
1,138,943
1,138,943
-
332,473
332,473
1,471,416
1,200,842
-
(15,864)
78,068
(17)
1,138,655
1,200,842
As at 30 June 2020
ASSETS
Total current assets
Deferred tax assets/ (liabilities)
Right-of-use assets
Investments in associates & joint ventures
Other
Total non-current assets
Total assets
LIABILITIES
Lease liabilities - current
Other current liabilities
Total current liabilities
Lease liabilities - non-current
Other non-current liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Retained earnings
Non-controlling interests
Foreign currency translation reserve
Others
Total equity
82 Steadfast Group Annual Report 2020
Impact on the consolidated statement of profit or loss and other comprehensive income
As at June 2020
Share of profits of associates & joint ventures
Other income
Total revenue
Depreciation expense on right-of-use assets
Interest expense - Lease liabilities
Others
Income tax expense
Loss after income tax expense for the period
Other comprehensive income for the period
Total comprehensive income for the period
Loss for the period is attributable to:
Non-controlling interests
Owners of Steadfast Group Limited
Total comprehensive income for the period is
attributable to:
Non-controlling interests
Owners of Steadfast Group Limited
As reported
$'000
Adjustments
$'000
Amounts without
adoption of AASB 16
$'000
9,309
(291,564)
(282,255)
(12,104)
(2,472)
295,629
-
(1,202)
22,493
21,291
-
-
22,493
22,493
-
-
(6)
(6)
(32)
(295)
(327)
12,104
2,472
(14,470)
82
(139)
-
(139)
-
(25)
(114)
(139)
-
(25)
(114)
(139)
9,277
(291,859)
(282,582)
-
-
281,159
82
(1,341)
22,493
21,152
-
(25)
22,379
22,354
-
(25)
(120)
(146)
(ii) These changes have not had a significant financial impact on the Group.
II. Rounding
The Group is of the kind referred to in the ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191
issued by the Australian Securities and Investments Commission. In accordance with that Instrument, amounts in this financial
report have been rounded to the nearest thousand dollars, unless otherwise stated.
C. Principles of Consolidation
I. Business combinations
The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The
consideration transferred in the acquisition is measured at fair value, as are the identifiable net assets acquired. The excess of
the consideration transferred over the fair value of identifiable net assets acquired and non-controlling interests is recorded as
goodwill. If the consideration transferred is less than the fair value of identifiable net assets acquired and non-controlling interests,
the difference is recognised directly in the consolidated statement of profit or loss and other comprehensive income. Costs of
acquisition are expensed as incurred, except if they relate to the issue of debt or equity securities.
II. Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The
financial statements of subsidiaries are included in the consolidated financial statements of the Group from the date on which
control commences until the date on which control ceases.
III. Non-controlling interests
Non-controlling interests (NCI) are measured at their proportionate share of the acquired subsidiaries’ identifiable net assets at
the date of acquisition. For operations and businesses being put into a business hub, NCI represent the fair value at the hubbing
date. Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
Steadfast Group Annual Report 2020 83
Notes to the Financial Statements continued
IV. Loss of control
When the Group ceases control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related NCI
and other components of equity. Any resulting gain or loss is recognised in the consolidated statement of profit or loss and other
comprehensive income. Any interest retained in the former subsidiary is measured at fair value when control is lost.
V. Interests in equity-accounted investees
The Group’s interests in equity-accounted investees comprise interests in associates and joint ventures. Associates are those
entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies.
Joint ventures are arrangements in which the Group has joint control, whereby the Group has rights to the net assets of the
arrangement, rather than rights to its assets and obligations for its liabilities.
Interests in associates and joint ventures are accounted for using the equity method. They are initially recognised at cost, which
includes transaction costs. Subsequent to initial recognition, the Group’s share of the profit or loss of associates and the joint
ventures is included in the Group’s consolidated statement of profit or loss and other comprehensive income.
VI. Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are
eliminated in full.
D. Revenue recognition
Revenue is recognised as the Group provides services. Revenue is recognised to the extent that there is no future performance
obligation. Where there is a future performance obligation, a portion is deferred over the expected service period.
Revenue is measured based on the consideration to which the Group expects to be entitled in a contract. The Group's revenue
does not have a significant financing component so the transaction (invoice) price is considered to be the amortised cost.
The Group’s revenue is disaggregated by major products and services which is consistent with the revenue information by
reportable segment as disclosed in note 4.
The Group recognises revenue on contract assets when the service is provided, which is generally at the point in time when the
invoice is raised resulting in a recognition of a receivable. In general, it is possible that there is a short time lag between invoice
date and policy inception date. Following a detailed review, it was determined that revenue is generally recognised in the same
month that work is undertaken, and any revenue earned but not invoiced would be immaterial.
I. Fee and commission income
The Group retains a portion of the policy premiums as fee and commission income. Premiums are typically collected on an
annual basis, at or near invoice date (which could be up to 90 days from contract inception). In some cases, customers are offered
to pay in instalments or are directed to a premium credit provider.
Commission, brokerage and fees are recognised when the related service has been provided and it is probable that the Group
will be compensated for services rendered, and the amount of consideration for such services can be reliably measured. This is
deemed to be the invoice date. An allowance is made for anticipated lapses and cancellations. Where there is a future obligation
to provide claims handling services, a portion of the commission income is deferred over the expected service period.
Fees on premium funding loans are recognised as revenue as performance obligations are satisfied. A portion of the fee is
recognised upfront for the performance of loan origination services while the remaining portion relating to servicing activities is
recognised on a monthly basis over the life of the loans.
The Company negotiated with strategic partners, such as insurers, premium funders and underwriting agencies, to receive
professional services fees based on services provided.
The Group utilises the practical expedient in AASB 15 to recognise the incremental costs of obtaining a contract as an expense
when incurred if the amortisation period of the asset that the entity would have recognised is one year or less.
II. Premium funding income
Premium funding interest income is brought to account using the effective interest method. The effective interest method
calculates the amortised cost of a financial instrument and allocates the interest income or expense over the relevant period. The
effective interest rate is that rate that exactly discounts estimated future cash payments or receipts through the expected life of
the financial instrument, or, when appropriate, a shorter period, to the net carrying amount of the financial asset or liability.
III. Claims experience benefit
The Group may receive a claims experience benefit payment or payments in respect of certain types of insurance purchased by
the Group for the benefit of the Network. Revenue is recognised for a claims experience benefit for a particular policy year when
it is likely that a claims experience benefit is receivable and the amount can be reliably measured.
Factors taken into account in recognising a claims experience benefit include the number of years that have passed since the end
of a policy year and whether various claims have been closed or can be reliably measured.
IV. Other revenue
Other revenue is recognised when the right to receive payment is established.
84 Steadfast Group Annual Report 2020
E. Taxation
The Company (the head entity) and its wholly-owned Australian subsidiaries have formed an income tax consolidated group
under the tax consolidation regime. Consequently, these entities are taxed as a single entity and the deferred tax assets and
liabilities of these entities are offset in the consolidated financial statements.
In addition, certain controlled subsidiaries and their wholly-owned Australian subsidiaries have formed income tax consolidated
groups under the tax consolidation regime. These entities are also taxed as a single entity and the deferred tax assets and liabilities
of these tax consolidated groups are offset in the consolidated financial statements.
F. Cash and cash equivalents
Cash and cash equivalents includes cash at bank, deposits held at call with financial institutions, and other short-term, highly liquid
investments with original maturities of three months or less that are readily convertible to known amounts of cash. This includes
cash held by the subsidiaries for business operations/operating expenses purposes.
Cash held on trust relates to cash held for insurance premiums received from policyholders, which will ultimately be paid to
underwriters. Cash held on trust cannot be used to meet business operations/operating expenses other than payments to
underwriters and/or refunds to policyholders.
G. Trade and other receivables
Trade and other receivables includes fee and commission receivable net of the associated expected credit loss (ECL) provision,
as well as other receivables. Refer to Note 3(F) for additional information on the calculation of the ECL provision.
H. Premium funding receivable
Premium funding receivable represents the amount due from clients in the Group’s premium funding businesses net of the
associated expected credit loss (ECL) provision. Funds are collected on a monthly instalment basis and generally within twelve
months of the loan issuance date. Refer to Note 3(F) for additional information on the calculation of the ECL provision.
I. Property, plant and equipment
Items of plant and equipment are measured at cost, less accumulated depreciation and any accumulated impairment losses. The
carrying value of plant and equipment is periodically reviewed for impairment when events or changes in circumstances indicate
that the carrying value may not be recoverable.
Any gain or loss on disposal of an item of plant and equipment is recognised in the consolidated statement of profit or loss and
other comprehensive income.
J. Intangible assets
Identifiable intangible assets acquired separately or in a business combination (mainly customer relationships and capitalised
software) are initially measured at cost. The cost of an intangible asset acquired in a business combination is its fair value as at the
date of acquisition. The useful lives of these intangible assets are assessed on acquisition.
Internally developed software costs are capitalised once the project is assessed to be feasible. The costs capitalised include
licensing and direct labour costs. The useful lives of capitalised software assets are assessed when the projects are completed
and available for use.
Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and provision for impairment.
Intangible assets with finite lives are amortised over their useful lives, currently estimated to be up to 10 years, and their useful lives
are reviewed annually.
K. Premium funding borrowings
The Group’s premium funding borrowings are loans from third party financial institutions to finance the premium funding
businesses. These loans have recourse to the assets of the premium funding businesses only and are not cross-collateralised with
the other borrowings in the Group. Premium funding borrowings are classified as current liabilities as premium funding loans are
typically repaid over 10 monthly instalments.
L. Payables on broking/underwriting agency operations
These amounts represent insurance premiums payable to insurance companies for broking/underwriting agency operations on
amounts received from customers (policyholders) prior to the end of the financial period.
Steadfast Group Annual Report 2020 85
Notes to the Financial Statements continued
M. Hedge Accounting
Hedge accounting is applied when the Group designates certain derivatives to be part of a hedging relationship, and they meet
the criteria for hedge accounting.
The Group uses cash flow hedges to mitigate the risk of variability of future cash flows attributable to interest rate fluctuations
associated with the corporate debt facility. For cash flow hedges, the portion of the gain or loss on the hedge instrument that is
effective is recognised directly in equity, while the ineffective portion is recognised in profit or loss. Amounts deferred in equity
are transferred to profit or loss in the same period the hedged item is recognised in the profit or loss.
N. Change in accounting policy – valuation of land and buildings
Effective 1 July 2019, the Group changed its accounting policy on the valuation of the Group’s land & buildings. In the comparative
period, the Group recognised land & buildings at cost less accumulated depreciation. The Group has applied the change in
accounting policy prospectively and from 1 July 2019 recognises land & buildings at fair value, being Board valuation based on an
independent appraisal. In future periods, the Group will obtain regular independent appraisals to ensure that the carrying amount
of land & buildings reported does not differ materially from its fair value.
Any surplus arising on the revaluation of land & buildings will be accumulated in equity under ‘revaluation reserve’. Any deficit
on revaluation will be recognised in the statement of profit or loss and other comprehensive income except to the extent that it
reverses a previous revaluation surplus on the same asset, in which case the deficit is recognised as a reduction in the revaluation
reserve within equity.
Given the historic growth and ongoing volatility in the Australian property market, the change in accounting policy from ‘at cost’
to fair value will provide more relevant and reliable information on the value of the Group’s land and buildings.
O. Australian Accounting Standards issued and not yet effective
The Group has not early adopted and applied any new, revised or amending Australian Accounting Standards and Interpretations
that are not yet mandatory for the year ended 30 June 2020.
The Group intends to adopt new, revised or amending Australian Accounting Standards and Interpretations in the operating
year commencing 1 July after the effective date of these standards and interpretations as set out in the table below.
Additional disclosures as a result of adopting these new accounting standards will be provided in accordance with the
disclosure requirements. The Group does not expect any adverse impact to financial covenants as a result of applying the new
accounting standards.
Title
Description
Effective date
Operating year
Note
AASB 17
Insurance Contracts
1 January 2023
30 June 2024
AASB 2014-10 Amendments to Australian Accounting Standards – Sale or
1 January 2022
30 June 2023
Contribution of Assets between an Investor and its Associate or
Joint Venture
AASB 2018-6 Amendments to Australian Accounting Standards – Definition of
1 January 2020
30 June 2021
a Business
AASB 2018-7 Amendments to Australian Accounting Standards – Definition
1 January 2020
30 June 2021
(i)
(ii)
(ii)
(ii)
of Material
Table notes
i. AASB 17 Insurance Contracts was issued in July 2017 as a replacement for AASB 4 Insurance Contracts and will be applicable
to general, life and health insurance businesses. The new accounting standard introduces a new general model for measuring
and accounting for insurance contracts. It requires insurance contracts to be measured on building blocks of discounted,
probability-weighted cash flows, a risk adjustment and a contractual service margin representing the unearned profit of
the contract.
The Group is in the business of providing services to the Steadfast Network brokers, distributing insurance policies via insurance
brokerages and underwriting agencies, and providing related services. The Group issues insurance contracts or reinsurance
contracts on behalf of licensed insurers as an intermediary and as such does not expect any material financial impact from
AASB 17.
ii. At the date of reporting, the impact of the Australian Accounting Standards issued and not yet effective had not been
determined. The Group does not expect the implementation of the amendments to have a material impact on the Group.
86 Steadfast Group Annual Report 2020
Note 3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect
the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to
assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on
historical experience and on various other factors, including expectations of future events management believes to be reasonable
under the circumstances. The resulting accounting judgements and estimates may differ from the related actual results. The
judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities (refer to the respective notes) during the year ended 30 June 2020 are discussed below.
The Group has considered the impact of COVID-19 when preparing the consolidated financial statements and related note
disclosures, including the impact on the Group's forecast cash flows and liquidity. While the effects of COVID-19 do not change
the significant estimates, judgements and assumptions considered by management in the preparation of the consolidated
financial statements, they have increased the level of estimation uncertainty and the application of further judgement within these
identified areas.
A. Goodwill
Goodwill is not amortised but assessed for impairment annually or more frequently when there is evidence of impairment.
The recoverable amount of goodwill is estimated using the higher of fair value or the value in use of the relevant Cash Generating
Unit (CGU) deducting the carrying amount of the identifiable net assets of the CGU. Key assumptions used in the calculation of
recoverable amounts are the discount rates, terminal value growth rates and inputs to revenue and expense growth assumptions.
B. Intangible assets
The carrying amounts of intangible assets with finite lives are reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated on the same basis as
goodwill above.
An impairment loss is recognised if the carrying amount of the intangible asset exceeds its recoverable amount.
C. Equity-accounted investments
Equity-accounted investments are carried at the lower of the equity-accounted amount and the recoverable amount.
The carrying amounts of equity-accounted investments are reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated on the same basis as
goodwill above.
An impairment loss is recognised if the carrying amount of the equity-accounted investment exceeds its recoverable amount.
D. Fair value of assets acquired
The Group measures the net assets acquired in a business combination at their fair value at the date of acquisition. If new
information obtained within one year from the acquisition date about facts and circumstances that existed at the acquisition date
identifies adjustments to the fair value, then the amounts recognised as at the acquisition date will be retrospectively revised.
Fair value is estimated with reference to the market transactions for similar assets or discounted cash flow analysis.
E. Fair value of financial assets and liabilities
The Group’s financial assets and liabilities are measured at fair value at the end of each reporting period. The following table
gives information about how the fair value of financial assets and liabilities is determined, including the valuation technique and
inputs used. For the Group’s financial assets and liabilities not measured at fair value, their carrying amount provides a reasonable
approximation of their fair values.
Financial
instrument
Deferred
consideration
Fair value
hierarchy
Level 3
Investment in
listed shares (other
financial assets)
Level 1
Valuation technique
Significant
unobservable inputs
Relationship of unobservable
inputs to fair value
The fair value is calculated
based on a contracted
multiple, typically of
forecast EBITA or fees
and commissions
The fair value is calculated
based on number of shares
multiplied by quoted price on
ASX at balance date
Forecast EBITA or fees
and commissions
The estimated fair value
would increase/decrease if
the forecast EBITA or
fees and commissions were
higher/lower
Not applicable
Not applicable
Steadfast Group Annual Report 2020 87
Notes to the Financial Statements continued
F. Expected credit loss provision
The expected credit loss provision is estimated based on the analysis of aged receivables, as the Group assumes that the credit risk
on fee and commission receivable increases significantly if it is more than 90 days past due, as well as based on assumptions made
on forward-looking information. For the premium funding businesses, the expected credit loss provision is based on historical
analysis of credit losses for loans in arrears.
The Group has assessed the credit impact of COVID-19 on the Group’s fee and commission receivables. As at the date of
reporting, COVID-19 has not had a material impact on the Group’s ability to collect outstanding debts, therefore, there has been
no significant movement in the Group’s provision for expected credit losses compared to the comparative reporting period in
relation to COVID-19.
G. Climate Change
Climate change, together with increased urbanisation, is a global risk that is a material risk for the insurance industry including
insurers’ operations, customers and the whole economy. Climate change may increase the frequency and severity of acute
weather-related events such as floods, bushfires and storms, as well as changes such as rising sea levels, increased heat waves
and droughts.
The principal activities of the Group are the provision of services to Steadfast Network brokers, the distribution of insurance
policies via insurance brokerages and underwriting agencies, and related services. Whilst the potential risks and related
opportunities from climate change are considered as part of the Group's asset impairment review methodology and processes,
based on what is currently known, it is not expected that climate risks will have a significant impact on the Group's principal
activities, particularly from an asset impairment standpoint.
88 Steadfast Group Annual Report 2020
Note 4. Operating segments
The Group’s corporate structure includes equity investments in insurance intermediary entities (insurance broking and
underwriting agencies), premium funders and complementary businesses. Discrete financial information about each of these
entities is reported to management on a regular basis and, accordingly, management considers each entity to be a discrete
business operation.
Historically, the Group has disclosed all equity investments in a single operating segment, being the general insurance
intermediary sector, given their similarity in economic characteristics. Prior to acquiring the remaining 50% interest in IQumulate
Premium Funding Pty Ltd (IQumulate) in 2019, the Group had a portfolio of three premium funders which contributed an
insignificant amount of revenue to the Group compared to insurance fee and commission income. Following the acquisition of
the remaining 50% shareholding in IQumulate and the change to its funding model, premium funders now contribute significantly
to the Group’s underlying earnings result and the Group’s total assets and total liabilities. For this reason, the Company has
separately disclosed premium funders as a second reporting segment. The comparatives for the prior year have been restated
on this basis.
The Group distributes insurance and premium funding products primarily in Australia and New Zealand. The Group is also
expanding its footprint in the United Kingdom and Singapore, and has a non-controlling interest in unisonSteadfast, a network
headquartered in Germany. Regarding geographical information, the revenue and non-current assets attributed to geographies
outside of Australasia are currently immaterial to the Group and hence no separate geographical disclosure has been made.
The financial performance of the Group’s operating segments, as regularly provided to the Chief Operating Decision
Maker (considered to be the Managing Director & CEO), is outlined in the below table. The financial performance of
insurance intermediaries and premium funders is presented on a consolidated basis, that is, net of transactions between
reportable segments.
Steadfast Group Annual Report 2020 89
Notes to the Financial Statements continued
2020
Insurance
Intermediary
$’000
Premium
Funding
$’000
Intercompany
Eliminations
$’000
Total
Underlying
$’000
Re-
classifications
$’0001
Other
$’000
Non-
trading
items
$’0002
Total
statutory
$’000
Total revenue
755,969
73,127
4,402
(7,230)
826,268
(145,073)
15,942
697,137
Total expenses
(595,227)
(62,531)
(13,537)
7,230
(664,065)
165,252 (190,938)
(689,751)
Share of EBITA
from associates and
joint ventures
Financing expense
- associates
Amortisation expense
- associates
Net profit/(loss)
before tax
Income tax
benefit/(expense)
Net profit/(loss)
after tax
Non
controlling interests
Net profit after income
tax attributable to
owners of Steadfast
Group Limited (NPAT) -
excluding JLG
Mark-to-market
adjustment from
revaluation of
investment in Johns
Lyng Group (JLG)
Net profit after income
tax attributable to
owners of Steadfast
Group Limited (NPAT) -
including JLG
21,507
(432)
(2,267)
-
-
-
106
(22)
(72)
179,550
10,596
(9,123)
(54,733)
(2,858)
2,618
124,817
7,738
(6,505)
(16,704)
(649)
-
-
-
-
-
-
-
-
21,613
(29,170)
7,557
(454)
454
(2,339)
2,339
-
-
-
-
-
181,023
(6,198)
(167,439)
7,386
(54,973)
6,198
8,638
(40,137)
126,050
-
(158,801)
(32,751)
(17,353)
-
(5,140)
(22,493)
108,113
7,089
(6,505)
-
108,697
-
(163,941)
(55,244)
3,168
-
-
-
3,168
-
(3,168)
-
111,281
7,089
(6,505)
-
111,865
-
(167,109)
(55,244)
1 Much of the reclassification relates to commissions paid by the Group's underwriting agencies. Such commisions paid are netted off against revenue in the statutory
numbers, and are disclosed as expenses in the underlying numbers.
2 This consists of the IBNA acquisition of $72.701 million and the PSF rebate offer of $77.861 million, impairment of investments, and other non-trading items such as
the mark-to-market revaluation of Johns Lyng Group, PSF rebate offer income received by associates, and gain from deferred consideration adjustments.
90 Steadfast Group Annual Report 2020
2019
Insurance
Intermediary
$’000
Premium
Funding
$’000
Intercompany
Eliminations
$’000
Total
Underlying
$’000
Re-
classifications
$’000
Other
$’000
Non-
trading
items
$’0001
Total
statutory
$’000
Total revenue
676,872
9,939
3,028
(1,481)
688,358
(125,662)
15,743
578,439
Total expenses
(546,199)
(4,671)
(10,369)
1,481
(559,758)
140,578
-
(419,180)
Share of EBITA
from associates and
joint ventures
Financing expense
- associates
Amortisation expense
- associates
Net profit/(loss)
before tax
Income tax
benefit/(expense)
Net profit/(loss)
after tax
Non
controlling interests
Net profit after income
tax attributable to
owners of Steadfast
Group Limited (NPAT) -
excluding JLG
Mark-to-market
adjustment from
revaluation of
investment in Johns
Lyng Group (JLG)
Net profit after income
tax attributable to
owners of Steadfast
Group Limited (NPAT) -
including JLG
22,315
2,404
250
(427)
(56)
(2)
(2,446)
(400)
(72)
150,115
7,216
(7,165)
(44,055)
(1,025)
1,312
106,060
6,191
(5,853)
(17,225)
(483)
-
88,835
5,708
(5,853)
507
-
-
89,342
5,708
(5,853)
-
-
-
-
-
-
-
-
-
-
24,969
(24,969)
(485)
485
(2,918)
2,918
-
-
-
-
-
-
150,166
(6,650)
15,743
159,259
(43,768)
6,650
(307)
(37,425)
106,398
(17,708)
88,690
507
89,197
-
-
-
-
-
15,436
121,834
(281)
(17,989)
15,155
103,845
(507)
-
14,648
103,845
1 Non-trading items have been restated to exclude the mark-to-market revaluation of Johns Lyng Group which was $0.725 million pre tax and $0.507 million post tax.
Steadfast Group Annual Report 2020 91
Notes to the Financial Statements continued
Note 5. Earnings per share
A. Reporting period value
Basic earnings per share
Diluted earnings per share
If non-trading items were removed, the underlying earnings per share would be as follows:
Basic earnings per share1
Diluted earnings per share - excluding JLG
Diluted earnings per share - including JLG2
2020
Cents
(6.47)
(6.47)
12.73
12.70
13.07
2019
Cents
13.16
13.12
11.30
11.14
11.20
1 The underlying earnings per share in 2020 have been adjusted as if the shares issued for the IBNA acquisition and the PSF rebate offer occurred on 1 July 2019, to match
the underlying earnings from these transactions.
2 The underlying earnings per share was historically reported including the mark-to-market gains from the revaluation of the investment in Johns Lyng Group (JLG).
B. Reconciliation of earnings used in calculating earnings per share
Profit/(loss) after income tax
Non-controlling interests
Profit/(loss) after income tax attributable to the owners of Steadfast Group Limited for
calculation of statutory basic and diluted earnings per share
Removing non-trading items (net of tax and non-controlling interest):
IBNA acquisition expense (Note 24)
PSF Rebate expense (Note 25)
Impairment of investments (Note 7F)
Change in value and sale of investment
Net gain on deferred consideration estimates
Other non-trading items
Profit after income tax attributable to the owners of Steadfast Group Limited (underlying NPAT)
for calculation of underlying basic and diluted earnings per share - including JLG
Less: mark-to-market adjustment from revaluation of investment in Johns Lyng Group (JLG)
2020
$'000
(32,751)
(22,493)
2019
$'000
121,834
(17,989)
(55,244)
103,845
72,701
63,068
40,737
(2,009)
(5,439)
(1,949)
-
-
-
(14,599)
62
(110)
167,109
(14,647)
111,865
(3,168)
89,198
(508)
Profit after income tax attributable to the owners of Steadfast Group Limited (underlying NPAT)
for calculation of underlying basic and diluted earnings per share - excluding JLG
108,697
88,690
92 Steadfast Group Annual Report 2020
C. Reconciliation of weighted average number of shares used in calculating earnings per share
I. Weighted average number of ordinary shares issued
Weighted average number of ordinary shares issued
Weighted average number of treasury shares held in trust
2020
Number in
'000
2019
Number in
'000
857,050
793,036
(3,432)
(3,973)
Weighted average number of ordinary shares used in calculating basic earnings per share
853,618
789,063
II. Weighted average number of dilutive potential ordinary shares related to
Weighted average number of ordinary shares
Effect of share-based payments arrangements
853,618
789,063
2,080
2,579
Weighted average number of ordinary shares used in calculating diluted earnings per share
855,698
791,642
The weighted average number of ordinary shares or dilutive potential ordinary shares is calculated by taking into account the
period from the issue date of the shares to the reporting date unless otherwise stated as below:
Steadfast operates share-based payments arrangements (being an employee conditional rights scheme, a short-term incentive
plan and a long-term incentive plan) where eligible employees may receive conditional rights instead of cash. One conditional
right will convert to one ordinary share subject to vesting conditions being met. These share-based payment arrangements
are granted to employees free of cost and no consideration payable on conversion to Steadfast’s ordinary shares. These
arrangements have a dilutive effect to the basic earnings per share (EPS).
Note 6. Dividends
A. Dividends on ordinary shares
2020
2020 interim dividend
2019 final dividend
2019
2019 interim dividend
2018 final dividend
Cents per
share
Total amount
$'000
Payment date
Tax rate for
franking credit
Percentage
franked
3.6
5.3
3.2
4.7
31,075
26 March 2020
42,031
20 September 2019
25,377
37,272
21 March 2019
20 September 2018
30%
30%
30%
30%
100%
100%
100%
100%
It is standard practice that the Board declares the dividend for a period after the relevant reporting date. A dividend is not accrued
until it is declared and so the dividends for a period are generally recognised and measured in the financial reporting period
following the period to which the dividends relate.
The dividends recognised in the current reporting period include $0.233 million (2019: $0.252 million) paid in relation to treasury
shares held in a trust controlled by the Group. All the treasury shares participate in the Dividend Reinvestment Plan (DRP).
B. Dividend Policy
The Company targets a dividend payout ratio in the range of 65% to 85% of underlying net profit after tax attributable to
shareholders of the Company with a minimum dividend payout ratio of 50% of net profit after tax and before amortisation,
impairment and other non-trading items.
C. Dividend reinvestment
A Dividend Reinvestment Plan (DRP) allows equity holders to elect to receive their dividend entitlement in the form of the
Company’s ordinary shares. The price of DRP shares is the average share market price calculated over the pricing period (which
is at least five trading days) less any discount as determined by the Board for each dividend payment date.
Steadfast Group Annual Report 2020 93
Notes to the Financial Statements continued
D. Dividend not recognised at reporting date
On 25 August 2020, the Board resolved to pay the following dividend. As this occurred after the reporting date, the dividends
declared have not been recognised in this financial report.
2020 final dividend
6.0
51,792
25 September 2020
30%
100%
Cents per
share
Total amount
$'000 Expected payment date
Tax rate for
franking credit
Percentage
franked
The Company’s DRP will operate by the issue of new shares. A 2% discount will be applied. The last election notice for participation
in the DRP in relation to this final dividend is 3 September 2020.
E. Franking credits
Franking account balance at reporting date at 30%
Franking credits to arise from payment of income tax payable/(refundable)
Franking credits available for future reporting periods
Franking account impact of dividends declared before issuance of financial report but not
recognised at reporting date
Franking credits available for subsequent financial periods based on a tax rate of 30%
2020
$'000
61,587
4,283
65,870
(22,197)
43,673
2019
$'000
33,764
(6,573)
27,191
(18,013)
9,178
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
franking credits that will arise from the payment of the amount of the provision for income tax relating to the parent entity at
the reporting date;
franking debits that will arise from the payment of dividends not recognised as a liability at the reporting date; and
franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
Note 7. Intangible assets and goodwill
A. Composition
2020
At cost
Customer
relationships
$'000
Capitalised
software
$'000
Other
intangible
assets
$'000
Total
intangible
assets
$'000
Goodwill
$'000
291,993
51,622
7,976
351,591
973,601
Accumulated amortisation and impairment
(143,652)
(18,806)
(6,761)
(169,219)
(43,292)
148,341
32,816
1,215
182,372
930,309
94 Steadfast Group Annual Report 2020
B. Movements
2020
Customer
relationships
$'000
Capitalised
software
$'000
Other
intangible
assets
$'000
Total
intangible
assets
$'000
Goodwill
$'000
Balance at the beginning of the financial year
164,128
Additions
Additions through business combinations
Reduction upon loss of control
Amortisation expense – acquired intangibles
8,752
6,679
(1,109)
(27,572)
27,090
13,749
-
(12)
(82)
Amortisation expense – developed intangibles
-
(7,929)
Impairment expense
Net foreign currency exchange difference
(2,412)
(125)
-
-
1,988
193,206
945,498
121
-
(107)
(787)
-
-
-
22,622
-
6,679
25,152
(1,228)
(3,592)
(28,441)
(7,929)
-
-
(2,412)
(36,400)
(125)
(349)
Balance at the end of the financial year
148,341
32,816
1,215
182,372
930,309
C. Composition
2019
At cost
Accumulated amortisation and impairment
D. Movements
2019
Customer
relationships
$'000
Capitalised
software
$'000
Other
intangible
assets
$'000
Total
intangible
assets
$'000
Goodwill
$'000
278,311
(114,183)
164,128
37,873
(10,783)
27,090
8,031
324,215
952,451
(6,043)
(131,009)
(6,953)
1,988
193,206
945,498
Customer
relationships
$'000
Capitalised
software
$'000
Other
intangible
assets
$'000
Total
intangible
assets
$'000
Goodwill
$'000
Balance at the beginning of the financial year
148,048
Additions
Additions through business combinations
Reduction upon loss of control
Amortisation expense – acquired intangibles
Amortisation expense – developed intangibles
Net foreign currency exchange difference
68
42,963
(2,168)
(24,836)
-
53
20,960
11,934
-
-
(114)
(5,686)
(4)
2,652
116
-
-
171,660
816,246
12,118
-
42,963
132,798
(2,168)
(3,707)
(780)
(25,730)
-
-
(5,686)
49
-
-
161
Balance at the end of the financial year
164,128
27,090
1,988
193,206
945,498
Steadfast Group Annual Report 2020 95
Notes to the Financial Statements continued
E. Amortisation rates per annum
2020
Customer
relationships
Capitalised
software
Other
intangible
assets
Goodwill
Amortisation rates per annum
10.0%–33.3% 20.0%–100.0% 20.0%–33.3%
-
F. Impairment testing
The Group performs impairment testing for all goodwill on an annual basis and for any identifiable intangibles including
investments in associates and joint ventures that have impairment indicators. In performing impairment testing, each business
acquired or portfolio of businesses acquired is considered a separate Cash Generating Unit (CGU) or grouped into one CGU
where operations are linked. Goodwill and identifiable intangible assets are allocated across each of the Group’s CGUs, the
majority of which operate in the Insurance Intermediary segment. The goodwill and identifiable intangible assets allocated to each
individual CGU is not considered significant in comparison to the Group’s total carrying value of these assets.
For the year ended 30 June 2020, the Group recognised an impairment provision for all these assets of $41.461 million
($40.737 million net of tax) (2019: nil). All assets impaired were insurance intermediaries who collectively had a carrying value post
impairment of $346.959 million after considering their value in use. With the significant uncertainties surrounding the COVID-19
pandemic, the carrying value of assets was reviewed against a number of potential prudent scenarios.
Impairment losses for each category of intangible assets and investments in associates and joint ventures are shown in Section B
above and Note 12 respectively. When assessing the recoverable amount of customer relationships, the Group considered client
retention rates, current market conditions and the potential impact of the COVID-19 pandemic to determine both fair value and
value in use of each CGU.
To conduct impairment testing, the Group compares the carrying value with the recoverable amount of each asset. The
recoverable amount is the higher of:
value in use – a discounted cash flow model, based on a five-year projection of the FY21 approved budget of the tested CGUs
with a terminal value; and
fair value – based on the Group’s estimates of sustainable earnings before interest expense, tax and amortisation of acquired
intangible assets (EBITA) for each CGU multiplied by an earnings multiple appropriate for similar businesses less costs to sell.
The following table outlines the key assumptions for the value in use model:
Post tax discount rates1
Pre-tax discount rates
2020
2019
9.7% to 10.7%
13.0% to 13.7%
10.0% to 11.0%
13.5% to 15.9%
Revenue growth rate – year two to five extrapolation2
2.0% to 4.0% per annum
4.0% to 6.7% per annum
Long-term revenue growth rate3
3.00% per annum
3.25% per annum
1 Post tax discount rates reflect the Group’s weighted average cost of capital (WACC), adjusted for additional risks specific to each CGU. The WACC takes into account
market risks (including the uncertainty created by COVID-19), size of the business, current borrowing interest rates, borrowing capacity of the businesses and the risk
free rate. External advice has been sought in relation to the determination of appropriate discount rates to be used.
2 Year one FY21 approved budget applied
3 The Group considers that a long-term revenue growth rate of 3.00% is appropriate, based on the current market conditions and historical Gross Written Premium
(GWP) trends.
Given the significant uncertainty surrounding future growth rates as a result of the COVID-19 pandemic, the Group ran a number
of scenarios and took a probability weighted approach to estimate value in use. The growth rate assumptions utilised in the value
in use model are shown above.
A reasonable change in individual assumptions would result in the following impairments:
WACC rate increased by 0.5%: an additional $20.816 million impairment
Revenue growth rate in years one to five decreased by 0.5%: an additional $17.975 million impairment
Long-term revenue growth rate decreased by 0.25%: an additional $6.994 million impairment
The Group has also considered the impact of climate change from an asset impairment standpoint. The Group has incorporated
the potential risks and opportunities of climate change in the current asset impairment review methodology and processes. Based
on what is currently known, it is not expected that climate risks will have a significant impact on the Group's principal activities.
96 Steadfast Group Annual Report 2020
Note 8. Borrowings
The Group has two types of borrowings, as follows:
I. Bank loans and lines of credit in corporate and subsidiaries for the purpose of carrying out the Group’s principal activities
including the distribution of insurance policies via insurance brokerages and underwriting agencies and related services, as
well as acquisitions and bolt-ons. These loans are secured against the Group’s assets, excluding IQumulate Premium Funding
Pty Ltd.
II. Loans to finance the premium funding businesses (predominantly IQumulate Premium Funding Pty Ltd). These loans have
recourse to the assets of the premium funding business.
These two types of loans are not cross-collateralised, and therefore are shown separately.
The Group complied with all debt covenants during the financial year.
A. Corporate and subsidiaries; borrowings
I. Bank loans
Current
Non-current
Capitalised transaction costs
II. Bank facilities available
a. Bank facilities drawn down or applied
Bank loans - corporate facility
Bank loans - subsidiaries
Lines of credit - corporate facility
Lines of credit - subsidiaries
b. Bank facilities not drawn down or applied
Bank loans - corporate facility
Bank loans - subsidiaries
Lines of credit - corporate facility
Lines of credit - subsidiaries
c. Total bank facilities available
Bank loans
Lines of credit
2020
$'000
2019
$'000
2,840
320,254
323,094
25,707
311,543
337,250
(2,032)
(311)
321,062
336,939
2020
$'000
2019
$'000
275,000
290,654
48,094
3,931
-
46,596
3,874
3,781
327,025
344,905
175,000
88,346
5,792
6,069
600
1,142
2,126
7,294
187,461
98,908
503,886
426,738
10,600
514,486
17,075
443,813
Steadfast Group Annual Report 2020 97
Notes to the Financial Statements continued
III. Corporate facility details
The Company entered into a new multibank syndicated facility (corporate facility) during the year. This new corporate facility was
drawn upon in January 2020 to repay the previous facility.
As at 30 June 2020:
the Company had a $460.000 million multibank syndicated facility (corporate facility) (2019: $385.000 million); and
$275.000 million of the $460.000 million facility had been drawn down, which together with $3.931 million for bonds and rental
guarantees, leaves $181.069 million available in the corporate facility for future drawdowns (30 June 2019: $90.472 million).
IV. Key terms and conditions of corporate facilities
The $460.000 million corporate facility includes the following tranches:
a revolving (partly drawn) $260.000 million tranche for three years, maturing January 2023;
a revolving (undrawn) $75.000 million tranche for five years, maturing January 2025;
a fully drawn (term loan) $62.500 million tranche for five years, maturing January 2025 – with the potential for two extensions
of one year each; and
a fully drawn (term loan) $62.500 million tranche for seven years, maturing January 2027.
Other key terms of the corporate facility are:
variable interest rate – based on BBSY plus an applicable margin for all tranches of the corporate facility; and
the facility is guaranteed by certain wholly-owned subsidiaries and is secured over all of the present and future acquired
property of the Company and the guarantors (other than certain excluded property), which is standard in facilities of this nature.
The Company has entered into two interest rate swaps, with face values of $150.000 million and $62.500 million, where the
Company swaps the floating rate payment into fixed rate payments. Refer Note 14B for further details on the interest rate swaps.
The key terms and conditions of the multibank syndicated facility are consistent with a facility of this size and nature and the
circumstances of Steadfast. The Company remains compliant with the terms and conditions.
B. Premium funding borrowings
I. Premium funding borrowings
Premium funding borrowings
Less: capitalised transaction costs
II. Premium funding borrowings available
Premium funding borrowings drawn down or applied
Premium funding borrowings not drawn down or applied
2020
$'000
2019
$'000
399,675
(366)
399,309
399,309
118,923
518,232
4,009
(625)
3,384
3,384
504,594
507,978
The premium funding borrowings are loans from third party financial institutions to finance the premium funding businesses of
the Group, predominantly IQumulate.
The key terms and conditions of the IQumulate premium funding borrowings as at 30 June 2020 were as follows:
two Australian Dollar (AUD) facilities for $472.500 million and $10.000 million, and a New Zealand Dollar (NZD) facility for
$35.000 million;
the maturity date of these facilities were 8 July 2020, 31 July 2020 and 30 June 2022 respectively;
variable interest rate – AUD facilities and NZD facility based on BBSY (Bank Bill Swap Bid Rate) and BKBM (Bank Bill Benchmark
Rate) respectively plus a margin; and
recourse to the assets of IQumulate only and are not cross-collateralised with other borrowings in the Group.
The Australian facility was refinanced to July 2022 post balance date (refer to Note 16).
98 Steadfast Group Annual Report 2020
C. Reconciliation of movements of liabilities and cash flows arising from financing activities
Bank loans -
corporate
facility
$'0001
Bank loans -
subsidiaries
$'000
Bank loans -
Corporate
facility and
subsidiaries
$'000
Premium
funding
borrowings
$'0002
Total
borrowings
$'000
2020
Balance at the beginning of the
financial period
Proceeds from borrowings
Repayment of borrowings
Unwind capitalised transaction costs
Balance at the end of the financial period
(net of capitalised transaction costs)
2019
Balance at the beginning of the
financial period
Proceeds from borrowings
Repayment of borrowings
Acquisitions
Unwind capitalised transaction costs
Balance at the end of the financial period
(net of capitalised transaction costs)
290,343
124,000
(139,655)
(1,720)
46,596
9,009
(7,511)
336,939
133,009
(147,166)
-
(1,720)
3,384
395,559
-
366
340,323
528,568
(147,166)
(1,354)
272,968
48,094
321,062
399,309
720,371
170,700
138,154
(19,000)
-
489
48,540
220
(4,411)
2,247
-
219,240
138,374
(23,411)
2,247
489
-
-
-
3,384
-
219,240
138,374
(23,411)
5,631
489
290,343
46,596
336,939
3,384
340,323
1 This balance comprises $275m drawn down less capitalised transaction costs of $2.032m.
2 Proceeds from and repayment of premium funding borrowings are classified as cash flows from operating activities in the Consolidated Statement of Cash Flows.
D. Borrowing by associates and joint ventures
As at 30 June 2020, the Group’s associates and joint ventures had a total of $40.578 million (2019: $35.370 million) of bank
borrowings (including bank overdrafts and loans).
As the associates and joint ventures are equity-accounted, these borrowings are not included in the Group consolidated
statement of financial position. The Group’s proportionate share of the associates’ and joint ventures’ bank borrowings is
$16.976 million (2019: $14.776 million). Refer Note 12C for summarised financial information of associates and joint ventures.
Steadfast Group Annual Report 2020 99
Notes to the Financial Statements continued
Note 9. Notes to the Statement of Changes in Equity and Reserves
A. Share capital
2020
Number of
shares
$'000
2019
Number of
shares
$'000
2020
$'000
2019
$'000
Reconciliation of movements
Balance at the beginning of the financial year
793,036
793,036
912,517
912,347
Shares issued under the institutional and retail share
placement (August/September 2019)
Shares issued for IBNA acquisition (October 2019)
Shares issued for PSF rebate offer (November/
December 2019)
Shares issued for the Dividend Reinvestment Plan
Less : Transaction costs (and adjustments thereto), net of
income tax
35,227
21,382
12,216
1,344
-
-
-
-
-
-
119,068
72,701
42,895
5,070
-
-
-
-
(2,650)
170
Balance at the end of the financial year
863,205
793,036
1,149,601
912,517
Ordinary shares in the Company have no par value and entitle the holder to participate in dividends as declared from time to time.
All ordinary shares rank equally with regard to the Company’s residual assets.
B. Treasury shares held in Trust
Reconciliation of movements
Balance at the beginning of the financial year
Shares allocated to employees
Shares acquired
Shares allotted through the Dividend Reinvestment Plan
Balance at the end of the financial year
2020
Number of
shares
$'000
2019
Number of
shares
$'000
4,017
(1,977)
1,341
67
3,448
4,002
(1,274)
1,207
82
4,017
2020
$'000
9,890
(3,966)
5,052
233
11,209
2019
$'000
7,728
(1,775)
3,685
252
9,890
Treasury shares are ordinary shares of the Company bought on market by the trustee (a wholly-owned subsidiary of the Group)
of an employee share plan for meeting future obligations under that plan when conditional rights vest and shares are allocated
to participants.
100 Steadfast Group Annual Report 2020
C. Capital risk management
The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can continue
its listing on the ASX, provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital
structure to minimise the cost of capital, within the risk appetite approved by the Directors.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares, take on borrowings or sell assets to reduce debt.
The Group monitors capital on the basis of its total gearing ratio excluding premium funding borrowings, as these borrowings are
only securitised against the assets of the premium funder. The total gearing ratio is calculated as total borrowings of the Company
and its subsidiaries divided by total equity and total borrowings of the Company and its subsidiaries. Currently the Group’s total
maximum gearing ratio determined by the Board is 30.0% excluding premium funding borrowings.
The total gearing ratio has been calculated both including and excluding the premium funding borrowings as follows:
2020
$'000
2019
$'000
Maximum
Board
approved
Total borrowings of the Company and its subsidiaries (excluding premium
funding borrowings)
Total Group equity
327,025
344,905
1,197,395
1,095,252
Total Group equity and total borrowings of the Company and its subsidiaries
1,524,420
1,440,157
Total gearing ratio excluding premium funding borrowings
21.5%
23.9%
30.0%
Total borrowings of the Company and its subsidiaries (including premium
funding borrowings)
Total Group equity
726,334
348,289
1,197,395
1,095,252
Total Group equity and total borrowings of the Company and its subsidiaries
1,923,729
1,443,541
Total gearing ratio including premium funding borrowings
37.8%
24.1%
D. Nature and purpose of reserves
I. Foreign currency translation reserve
The foreign currency translation reserve records the foreign currency differences from the translation of the financial information
of foreign operations that have a functional currency other than Australian dollars.
II. Share-based payments reserve
The share-based payments reserve is used to recognise the fair value at grant date of equity settled share-based remuneration
provided to employees.
III. Other reserves
The other reserves are used to recognise other movements in equity including: cumulative net change in fair value of hedging
instruments; the fair value of put options issued to a shareholder of a subsidiary over that subsidiary’s shares; and the net effect
on disposal of partial equity ownership in subsidiaries without loss of control.
IV. Undistributed profits reserve
The undistributed profits reserve consists of any retained amount from prior periods transferred from retained earnings. This
reserve will be utilised should the Board declare a dividend from this reserve.
V. Revaluation reserve
The revaluation reserve is used to record the movement in the fair value of the Group’s land & buildings following Board valuation
based on independent appraisal.
Steadfast Group Annual Report 2020 101
Notes to the Financial Statements continued
Note 10. Business combinations
Acquisitions for the year ended 30 June 2020
During the year ended 30 June 2020, the Group completed a number of acquisitions in accordance with its strategy. None of
these acquisitions were material to the Group and hence the information is shown in aggregate. Note 10E includes the ownership
interest in the one insurance broking business acquired which became a subsidiary of the Group.
A. Consideration paid/payable
2020
Cash
Deemed consideration(a)
Deferred consideration(b)
Total
Acquisitions
$'000
12,262
10,136
4,339
26,737
Table notes
a. This amount represents the fair value of the original investments at the date the Group gained control of the entity which was
previously an associate of the Group.
b. Pursuant to the Share Purchase Agreements, some of the consideration will be settled based on future years’ actual financial
performance and thus was recognised as deferred consideration by the Group. The deferred consideration is estimated based
on a multiple of forecast revenue and/or earnings. Any variations at the time of settlement will be recognised as an expense or
income in the consolidated statement of profit or loss and other comprehensive income. The deferred consideration shown
above represents:
- $4.028 million of deferred consideration for which the maximum amount of payment is not capped; and
- $0.311 million of deferred consideration which is fixed.
B. Identifiable assets and liabilities acquired
2020
Cash and cash equivalents1
Trade and other receivables2
Property, plant and equipment
Right-of-use assets
Deferred tax assets
Identifiable intangibles
Other assets
Trade and other payables
Income tax payable
Lease liabilities
Provisions
Deferred tax liabilities
Other liabilities
Total net identifiable assets acquired
1 Includes cash held on trust
2 The trade receivables comprise contractual amounts and are expected to be fully recoverable.
Acquisitions
$'000
7,641
682
567
942
307
6,679
118
(7,956)
(115)
(1,302)
(433)
(2,175)
(2,631)
2,324
If new information obtained within one year from the acquisition date about facts and circumstances that existed at the
acquisition date identifies adjustments to the above amounts, then the acquisition accounting will be revised.
102 Steadfast Group Annual Report 2020
C. Goodwill on acquisition
2020
Total consideration paid/payable
Total net identifiable assets acquired
Non-controlling interests acquired
Goodwill on acquisition1
Acquisitions
$'000
26,737
(2,324)
739
25,152
1 The majority of goodwill relates to benefits from the combination of synergies as well as the acquired subsidiary's ability to generate future profits. None of the goodwill
recognised is expected to be deductible for tax purposes.
D. Financial performance of acquired subsidiaries
The contribution for the period since acquisition by the acquired subsidiaries to the financial performance of the Group is outlined
in the table below.
2020
Revenue
EBITA
Profit after income tax
Acquisitions
$'000
5,453
2,803
1,942
If the acquisitions of subsidiaries occurred on 1 July 2019, the Group’s revenue for the year ended 30 June 2020 would increase
from $697.137 million to $697.294 million and loss after income tax would decrease from $32.751 million to $32.747 million.
E. Subsidiary acquired
The table below outlines the subsidiary acquired during the year ended 30 June 2020. The other acquisitions represent portfolio
purchases and are therefore not included in this table.
Name of subsidiary acquired
Scott & Broad Pty Ltd and its subsidiary
Ownership
interest as at
30 June 2020
%
Table note
(i)
65.00
Table note
i. The Group acquired additional shares in Scott & Broad Pty Ltd (Scott & Broad). As a result, Scott & Broad, which was previously
an associate, became a subsidiary of the Group. In March 2020, the Group sold 5% interest in Scott & Broad, reducing Steadfast’s
ownership to 65% as at 30 June 2020.
Steadfast Group Annual Report 2020 103
Notes to the Financial Statements continued
F. Deferred consideration reconciliation
The following table shows a reconciliation of movements in deferred consideration for the years ended 30 June 2020 and
30 June 2019.
Balance at the beginning of the financial year
Settlement of deferred consideration
Non-cash settlement of deferred consideration
Additions from new acquisitions in business combinations
Additions from new acqusition of associates
Additions from new acqusitions of intangibles
Additions from step-up investments
Net (gain)/loss in proft or loss on settlement or reassessment
Balance at the end of the financial year
Disclosed as:
Deferred consideration current
Deferred consideration non-current
Balance at the end of the financial year
The balance of deferred consideration at the end of the financial year represents:
Amount payable is limited
Amount payable is not capped
Amount payable is fixed
2020
$'000
34,406
(23,284)
-
4,339
-
1,236
950
(5,432)
12,215
7,780
4,435
12,215
2020
$'000
-
12,014
201
12,215
2019
$'000
3,946
(17,389)
(2)
47,347
121
-
273
110
34,406
28,064
6,342
34,406
2019
$'000
22,108
12,298
-
34,406
104 Steadfast Group Annual Report 2020
Note 11. Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following key subsidiaries.
Name
A. Parent entity
Steadfast Group Limited
B. Subsidiaries - operating entities
I. Insurance broking businesses
Steadfast Insurance Brokers Pty Ltd
Steadfast Group UK Ltd
Abbott NZ Holdings Ltd and its subsidiaries
Asparq Consolidated Pty Ltd (formerly Lanyon Partners Consolidated Pty Ltd)
and its subsidiaries
Austcover Holdings Pty Ltd and its subsidiary
Ausure Group Pty Ltd and its subsidiaries
Ballyglisheen Pty Ltd (trades as Steel Pacific)
Body Corporate Brokers Pty Ltd
Capital Insurance (Broking) Group Pty Ltd and Capital Insurance Broking
Group Unit Trust and its subsidiaries
Centrewest Holdings Pty Ltd and its subsidiaries
Community Broker Network Pty Ltd (formerly National Adviser Services Pty
Ltd) and its subsidiaries
Consolidated Insurance Agencies Pty Ltd and its subsidiary
Corporate Insurance Brokers Ballina (NSW) Pty Ltd
G.W.S. Pty Ltd and its subsidiaries
Galaxy Insurance Consultants Pte Ltd
Great Wall Insurance Services Pty Ltd
ICF (Australia) Pty Ltd and its subsidiary
Joe Vella Insurance Brokers Pty Ltd
Mega Capital Holdings Pty Ltd and Mega Capital Unit Trust and its subsidiary
National Credit Insurance (Brokers) Pty Ltd (incorporating IMC Trade Credit)
and its subsidiaries
Newmarket Grand West Pty Ltd and its subsidiaries
Newmarket Insurance Brokers Pty Ltd
Newsure Insurance Brokers Pty Ltd (formerly Garaty Murnane Insurance
Brokers Pty Ltd)
Paramount Insurance Brokers Pty Ltd
Phoenix Insurance Brokers Pty Ltd
PID Holdings Pty Ltd and its subsidiaries
Ownership interest
Country of
incorporation
2020
%
2019
%
Australia
Australia
100.00
100.00
United
Kingdom
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Singapore
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100.00
69.87
97.56
50.00
50.01
63.64
100.00
65.48
97.56
50.00
50.01
60.00
100.00
100.00
85.11
70.18
100.00
55.00
100.00
65.00
73.00
67.50
100.00
70.00
100.00
86.25
100.00
100.00
75.00
62.50
89.00
79.46
70.18
100.00
55.00
100.00
62.50
73.00
67.50
56.25
70.00
100.00
91.20
90.00
100.00
93.68
62.50
89.00
100.00
100.00
Quattro Risk Services Pty Ltd (formerly Finn Foster & Associates Pty Ltd) and
its subsidiaries
Australia
65.00
93.68
Steadfast Group Annual Report 2020 105
Notes to the Financial Statements continued
Name
Resolute Property Protect Pty Ltd
RIB Group Holdings Pty Ltd and its subsidiaries (RIB Group)
Scott & Broad Pty Ltd and its subsidiary
Steadfast Brecknock Insurance Brokers Pty Ltd (formerly Brecknock Insurance
Brokers Pty Ltd) and its subsidiaries
Steadfast Distribution Services Pte Ltd
Steadfast Hub Pty Ltd
Steadfast IFS Pty Ltd
Steadfast IRS Pty Ltd and its subsidiaries
Steadfast NZ Holdings Ltd
Steadfast NZ Ltd
Steadfast QIS Pty Ltd (formerly NCA Insurance Services Pty Ltd) and
its subsidiary
Steadfast Re Pty Ltd
Steadfast Shared Services Pty Ltd
Steadfast Taswide Insurance Brokers Pty Ltd and its subsidiaries
T&G Insurance Brokers Pty Ltd and its subsidiary
Trident Insurance Group Pty Ltd and its subsidiary
VBIH Pty Ltd and its subsidiary
Webmere Pty Ltd and its subsidiaries
Whitbread Life Pty Ltd
Whitbread Holdings Pty Ltd and its subsidiary
Work Health Alternatives Pty Ltd
II. Underwriting agency businesses
Steadfast Underwriting Agencies Holdings Pty Ltd
SUA Services Pty Ltd
Associated Marine Underwriting Agency Pty Ltd
Axis Underwriting Services Pty Ltd
Calliden Group Pty Ltd and its subsidiaries
CHU Underwriting Agencies Pty Ltd and its subsidiaries
Emergence Insurance Group Pty Ltd and its subsidiary
Grange Underwriting Pty Ltd
HMIA Pty Ltd
Hostsure Underwriting Agency Pty Ltd
Miramar Underwriting Agency Pty Ltd
NM Insurance Pty Ltd and its subsidiary
Procover Underwriting Agency Pty Ltd
Protecsure Pty Ltd
Proteus Marine Insurance Pty Ltd
Residential Builders Underwriting Agency Pty Ltd
106 Steadfast Group Annual Report 2020
Ownership interest
Country of
incorporation
Australia
Australia
Australia
Australia
Singapore
Australia
Australia
Australia
New Zealand
New Zealand
Australia
Australia
2020
%
100.00
86.85
65.00
100.00
100.00
65.00
50.98
65.00
100.00
100.00
76.00
50.00
Philippines
100.00
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
66.12
80.00
80.00
80.00
76.00
100.00
100.00
57.00
100.00
100.00
100.00
100.00
100.00
97.00
50.00
76.00
80.00
100.00
100.00
80.00
100.00
89.19
87.50
100.00
2019
%
100.00
81.08
-
95.00
100.00
62.50
50.98
56.25
100.00
100.00
70.91
50.00
-
73.12
80.00
80.00
80.00
88.00
100.00
100.00
57.00
100.00
100.00
100.00
100.00
100.00
97.00
50.00
88.00
95.00
100.00
100.00
75.00
100.00
90.00
87.50
80.00
Name
Sports Underwriting Australia Pty Ltd
Steadfast Placement Solutions Pty Ltd
Steadfast Placement Solutions UK Ltd
Underwriting Agencies of Australia Pty Ltd
Underwriting Agencies of Fiji Pte Ltd
Underwriting Agencies of New Zealand Limited
Underwriting Agencies of Singapore Pte Ltd
Unity Trade Credit Pty Ltd
Winsure Underwriting Pty Ltd
WM Amalgamated Pty Ltd and its subsidiaries
III. Complementary businesses
Aus Funding Solutions Pty Ltd
CHU Services Pty Ltd
IQumulate Premium Funding Pty Ltd
InsuranceCONNECT Pty Ltd
Steadfast Business Solutions Pty Ltd
Steadfast Convention Pty Ltd
Steadfast Foundation Pty Ltd
Steadfast INSIGHT Holdings Pty Ltd (formerly Actionquote Holdings Pty Ltd)
Steadfast Share Plan Nominee Pty Ltd
Steadfast Technologies Group Holdings Pty Ltd
Steadfast Technologies NZ Ltd
Steadfast Technologies Pty Ltd
Steadfast Technologies Shared Services Pty Ltd
Steadfast Technology Services Pty Ltd
Steadfast Technology Services NZ Ltd
Steadfast UnderwriterCentral Holdings Pty Ltd (formerly Insurance Connect
Holdings Pty Ltd)
Steadfast Virtual Underwriter Holdings Pty Ltd
Country of
incorporation
Australia
Australia
United
Kingdom
Australia
Fiji
New Zealand
Singapore
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Australia
Australia
New Zealand
Australia
Australia
Ownership interest
2020
%
90.00
2019
%
90.00
100.00
100.00
100.00
100.00
88.33
88.33
83.92
88.33
100.00
100.00
99.01
80.00
97.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
88.33
88.33
83.92
88.33
100.00
100.00
86.14
80.00
97.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Steadfast Group Annual Report 2020 107
Notes to the Financial Statements continued
Note 12. Investments in associates & joint ventures
A. Details of associates & joint ventures
Interests in associates and joint ventures are accounted for using the equity method of accounting. Information relating to key
associates is set out below.
Name
I. Insurance broking businesses
Armstrong's Insurance Brokers Pty Ltd and Armstrong's
Insurance Brokers Unit Trust
Ausure Group Pty Ltd – associates thereof
Blackburn (Insurance Brokers) Pty Ltd and Liability Brokers
Pty Ltd
Collective Insurance Brokers Pty Ltd
Covercorp Pty Ltd
Edgewise Insurance Brokers Pty Ltd and The Bradstock GIS
Unit Trust
Empire Insurance Services Pty Ltd and McLardy McShane &
Associates Pty Ltd
Finpac Insurance Advisors Pty Ltd
Glenowar Pty Ltd
IPS Insurance Brokers Pty Ltd
J.D.I. (YOUNG) Pty Ltd
Johansen Insurance Brokers Pty Ltd
King Insurance Brokers Pty Ltd
McKillops Insurance Brokers Pty Ltd
Melbourne Insurance Brokers Pty Ltd
Origin Insurance Brokers Pty Ltd
Pollard Advisory Services Pty Ltd
Quattro Risk Services Pty Ltd - associates thereof
Risk Partners Pty Ltd
Rose Stanton Insurance Brokers Pty Ltd
Rothbury Group Ltd and its subsidiaries
RSM Group Pty Ltd
Sapphire Star Pty Ltd
Scott & Broad Pty Ltd and its subsidiary
Southside Insurance Brokers Pty Ltd
Steadfast Eastern Insurance Brokers Pty Ltd
Steadfast Life Pty Ltd and its subsidiary
Tudor Insurance Australia (Insurance Brokers) Pty Ltd and
Tudor Insurance Agency Unit Trust
unisonSteadfast AG
Watkins Taylor Stone Insurance Brokers Pty Ltd and D&E
Watkins Unit Trust
108 Steadfast Group Annual Report 2020
Ownership interest
Equity-accounted
2020
%
2019
%
2020
$'000
2019
$'000
25.00
19.65
40.00
49.00
49.00
25.00
20.00
40.00
49.00
49.00
954
5,652
2,818
20
1,111
848
4,604
2,814
62
1,112
35.31
35.31
4,990
4,174
37.00
49.00
49.00
-
25.00
48.35
37.00
49.00
49.00
49.00
46.50
13.00
45.00
49.00
42.80
49.00
30.00
-
49.00
25.00
50.00
48.00
40.00
37.00
49.00
49.00
40.00
25.00
48.35
37.00
49.00
49.00
26.00
46.50
-
45.00
49.00
42.80
49.00
30.00
49.00
49.00
25.00
50.00
48.00
40.00
4,464
1,040
4,046
-
921
4,333
-
4,646
1,616
149
3,897
174
9,166
701
27,412
5,043
1,184
-
606
515
3,182
2,026
2,975
3,912
1,037
4,072
3,034
874
4,454
-
4,670
1,629
399
3,817
-
9,085
684
25,726
4,929
1,167
8,938
611
444
3,084
2,055
2,868
35.00
35.00
1,304
1,656
Name
II. Underwriting agency businesses
Community Broker Network Pty Ltd (formerly National
Adviser Services Pty Ltd) - associates thereof
QUS Pty Ltd
Sterling Insurance Pty Ltd
III. Complementary businesses
HJS Unit Trust
Meridian Lawyers Ltd
IV. Joint ventures
ABICO Insurance Brokers and its related entities (ABICO)
Ausure City & Rural Pty Ltd
BAC Insurance Brokers Ltd Pty
Blend Insurance Solutions Pty Ltd
Clubs New Zealand Insurance Services Ltd
Steadfast Risk Services Pty Ltd and its subsidiary
Rhymemat Pty Ltd
B. Reconciliation of movements of associates & joint ventures
Ownership interest
Equity-accounted
2020
%
2019
%
2020
$'000
2019
$'000
35.00
45.00
39.50
33.33
25.00
50.00
50.00
50.00
50.00
34.94
50.00
27.80
37.50
45.00
39.50
33.33
25.00
50.00
50.00
50.00
50.00
32.74
50.00
27.80
285
919
6,872
272
2,083
2,183
58
220
1,367
433
669
1,446
303
1,016
6,981
257
2,149
2,206
8
11
984
444
340
1,420
2020
$'000
2019
$'000
Balance at the beginning of the financial period
128,259
145,605
Additions - cash
Additions - non-cash
Step-up investment to subsidiaries
Disposal of associates
Share of EBITA from associates & joint ventures
Less share of:
Finance costs
Amortisation expense
Income tax expense
Share of associates' profit after income tax
Dividends received/receivable
Impairment
Net foreign exchange movements
Balance at the end of the financial year
1,125
2,062
(8,182)
(3,182)
12,396
2,868
(33,140)
(111)
120,082
127,618
29,332
25,126
(477)
(2,528)
(6,148)
20,179
(18,712)
(2,649)
12
(485)
(3,075)
(6,650)
14,916
(14,256)
-
(19)
118,912
128,259
Steadfast Group Annual Report 2020 109
Notes to the Financial Statements continued
C. Summarised financial information of associates & joint ventures
I. Disclosure in aggregate
These disclosures relate to the investment in all associates and joint ventures in aggregate. The figures below represent the
financial position and performance of the associates and joint ventures as a whole and not just the Group’s share.
2020
$'000
2019
$'000
266,609
141,657
244,052
39,932
124,282
245,980
74,969
56,231
56,231
2020
$'000
91,126
(3,200)
87,926
57,772
238,921
120,827
208,570
31,372
119,806
306,945
73,201
40,372
40,372
2019
$'000
84,958
(2,780)
82,178
82,441
145,698
164,619
2020
$'000
539,263
(2,030)
537,233
2019
$'000
76,398
(220)
76,178
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Revenue
EBITA
Profit after income tax
Total comprehensive income
Note 13. Trade and other receivables
Trade and other receivables
Fee and commission receivable
Less: expected credit loss provision (refer Note 14C)
Net fee and commission receivable
Other receivables
Premium funding receivable
Premium funding receivable
Less: expected credit loss provision
110 Steadfast Group Annual Report 2020
Note 14. Financial instruments
A. Financial risk management objectives
The Group's activities expose it to a variety of financial risks: interest rate risk, credit risk and liquidity risk. The Group's overall risk
management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the
financial performance of the Group. The Group uses different methods to measure different types of risk to which it is exposed.
These methods include sensitivity analysis in the case of interest rate risk and ageing analysis for credit risk.
Financial risk management is carried out by senior finance executives (finance) under policies approved by the Directors. These
policies include identification and analysis of the risk exposure of the Group and appropriate procedures, controls and risk limits.
Finance identifies, evaluates and may hedge financial risks within the Group's operating units. Finance reports to the Directors on
a regular basis.
B. Market risk
Interest rate risk
As at the reporting date, the Group had the following variable rate bank accounts and borrowings:
Non-derivatives
Cash at bank
Cash on deposit
Bank overdrafts
Bank loans
Premium funding borrowings
Derivatives
Interest rate swaps
2020
Weighted
average
interest rate
%
0.36
1.05
-
2.181
2.161
2019
Weighted
average
interest rate
%
0.98
1.96
-
3.321
5.161
2020
Balance
$'000
538,405
121,194
-
(321,062)
(399,309)
(60,772)
2019
Balance
$'000
435,192
108,925
(3,781)
(336,939)
(3,384)
200,013
1.982
(212,500)2
-
-
1 Weighted average interest rate excludes any applicable line fee paid to lenders.
2 The Group has entered into two interest rate swaps, with face values of $150.000 million and $62.500 million, where the Group swaps the BBSY indexed floating rate
payment into 1.84450% and 2.29875% fixed rate payments respectively. The interest rate swaps for the $150.000 million and $62.500 million mature in January 2023
and January 2025 respectively. The Group entered into the interest rate swaps to minimise the Group’s exposure to interest rate risk, in which the Group agrees to
exchange the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon face value. The swaps are designed to hedge
interest costs associated with the underlying corporate debt obligations. At 30 June 2020, after taking into account the effect of the interest rate swaps, the Group had
approximately 22.2% of the Group’s corporate debt exposed to variable rates (2019: 100%).
An increase/decrease in interest rates of one hundred (2019: one hundred) basis points would have the following effect on
profit/(loss) after tax:
Increase of one hundred basis points: $0.425 million unfavourable per annum (2019: $2.047 unfavourable)
Decrease of one hundred basis points: $2.852 million favourable per annum (2019: $2.047 favourable); assuming a zero interest
rate floor on cash at bank balances.
The basis point change is based on the expected volatility of interest rates using market data, historical trends over prior years and
the Group's ongoing relationships with financial institutions.
Steadfast Group Annual Report 2020 111
Notes to the Financial Statements continued
C. Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.
The Group obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to credit risk at the reporting
date to recognised financial assets is the carrying amount (net of any provisions for impairment of those assets) as disclosed in
the statement of financial position and notes to the financial statements. The Group does not hold any collateral, except for the
collateral specified in relation to loans to facilitate management buy-ins as described below.
Credit risk of the Group mainly arises from cash and cash equivalents, and trade and other receivables.
The Group has funded $46.511 million (2019: $33.211 million) of loans to facilitate management buy-ins to certain businesses
under the Group’s owner-driven business model. These loans are disclosed as other non-current assets in the Consolidated
Statement of Financial Position. These loans attract commercial interest rates, with dividends from these businesses used to fund
interest and loan repayments. The shares held by management in those businesses are provided as loan collateral.
The Group’s exposure to credit risk is concentrated in the financial services industry with parties that are considered to be of
sufficiently high credit quality (including cash held with major Australian banks) to minimise credit risk losses. Receivables include
amounts due from policyholders in respect of insurances arranged by controlled entities. The Group assumes that the credit risk
on fee and commission receivable increases significantly if outstanding past credit due terms. The expected credit loss provision
is recognised for the fee and commission receivable.
The Group also has exposure to credit risk from premium funding loans. The expected credit loss provision for premium funding
loans is based on historical data as a percentage of total loans written, after expected recoveries from trade credit policies.
The following table shows the movement in expected credit loss that has been recognised for fee and commission receivable
and premium funding receivables in accordance with the simplified approach set out in AASB 9:
Fee & commission receivables
Balance at the beginning of the financial year
Increase in expected credit loss
Additions through business combinations
Foreign exchange losses
Balance at the end of the financial year
Premium funding receivables
Balance at the beginning of the financial year
Increase in expected credit loss1
Balance at the end of the financial year
2020
$'000
2,780
420
2
(1)
2019
$'000
2,403
305
56
16
3,200
2,780
2020
$'000
220
1,810
2,030
2019
$'000
-
220
220
1 The increase in premium funding expected credit loss is directly related to IQumulate Premium Funding Pty Ltd (IQumulate). In June 2019, IQumulate changed its
funding model to become the originator of premium funding loans. The increase in expected credit loss reflects the growth in the premium funding business, including
an increase in provision of $0.460 million. The expected credit loss provision has not been significantly impacted by COVID-19.
D. Liquidity risk
Vigilant liquidity risk management requires that the Group maintains sufficient liquid assets to be able to pay debts as and when
they become due and payable. For both the Group’s insurance intermediaries and premium funders, this is largely achieved by
maintaining sufficient cash reserves in the forms of cash and cash equivalents and available borrowing facilities.
The Group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities, continuously
monitoring actual and forecast cash flows, and by matching the maturity profiles of financial assets and liabilities.
For the Group’s premium funders, liquidity risk is mitigated by allocating premium funding to a diverse range of Corporate and
SME businesses, limiting the majority of premium funding loans to 10 monthly instalments, minimising the life cycle of funds in
use, retaining adequate levels of available funds to safeguard against exceeding facility limits, and by matching the maturity profile
of current and prospective financial assets against available funding limits.
The following tables detail the Group's remaining contractual maturity for its financial liabilities. The tables have been drawn up
based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required
to be paid.
112 Steadfast Group Annual Report 2020
Weighted
average
interest rate
%
1 year or less
$'000
Between 1 to 2
years
$'000
Between 2 to 5
years
$'000
Over 5 years
$'000
Total
contractual
maturities
$'000
435,572
99,827
144,061
7,780
4,435
435,572
99,827
144,061
12,215
2020
Non-derivatives
I. Non-interest bearing
Payables on
broking/underwriting
agency operations
Trade and other payables
Premium funding payables
Deferred consideration
II. Interest bearing
Bank loans
2.18
2,902
5,595
250,954
68,618
328,069
Premium
funding borrowings
Total non-derivatives
Derivatives
Hedge interest rate swaps
(net settled)
Total derivatives
2019
Non-derivatives
I. Non-interest bearing
Payables on
broking/underwriting
agency operations
Trade and other payables
Premium funding payables
Deferred consideration
II. Interest bearing
Bank loans
Premium
funding borrowings
Total non-derivatives
Derivatives
Hedge interest rate swaps
(net settled)
Total derivatives
2.16
407,936
407,936
1,098,078
10,030
250,954
68,618
1,427,680
(99)
(99)
(99)
(99)
410,334
-
99,232
66,873
28,064
3,003
-
6,342
-
-
-
-
-
-
-
-
410,334
102,235
66,873
34,406
3.33
5.16
26,151
301,416
13,099
7,444
348,110
3,559
-
-
-
3,559
634,213
310,761
13,099
7,444
965,517
-
-
-
-
-
-
-
-
-
-
Steadfast Group Annual Report 2020 113
Notes to the Financial Statements continued
Note 15. Contingencies
Contingent liabilities
Macquarie Bank put options
The Group has granted options to Macquarie Bank Limited (Macquarie) to enable Macquarie to put shares held by other
shareholders in associates to the Group at fair value if Macquarie enforces its security over those shares. These have been
granted in relation to shares held by other shareholders in associates over which Macquarie holds a security interest to secure
indebtedness by those shareholders. The Group expects no material net exposure from this arrangement as the contingent
liabilities have contingent assets (being rights to shares held by the relevant shareholders) approximating similar values.
Bank guarantee
In the normal course of business, certain controlled entities in the Group have provided security for bank guarantees principally
in respect of their contractual obligations on commercial leases.
Note 16. Events after the reporting period
On 25 August 2020, the Board declared a final dividend for 2020 of 6.0 cents per share, 100% franked. The dividend will be paid
on 25 September 2020.
The IQumulate borrowing facilities were refinanced in July 2020 to July 2022. The facilities total $470 million (inclusive of
$16.450 million Steadfast Group funds) and have terms and conditions similar to the facilities in existence at balance date, with
trade credit coverage continuing.
The Group has invested circa $70 million since balance date into broking businesses.
At the date of approving these financial statements, the Directors are of the view the effects of COVID-19 do not change
the significant estimates, judgements and assumptions in the preparation of the financial statements (refer Note 3), however
COVID-19 and its associated economic impacts remain uncertain. The Directors and management continue to closely monitor
developments with a focus on potential financial and operational impacts and note that the situation is continuing to evolve.
Note 17. Share-based remuneration
Share-based payments – employee related
Share-based remuneration encourages employee share ownership, links employee reward to the performance of the Group and
assists with attracting, retaining and motivating highly qualified and key personnel.
The Company intends to settle its obligations under share-based payment arrangements by the on-market purchase of the
Company’s ordinary shares which will be held in trust pending exercise of vested rights by employees. The Group has established
a practice of purchasing a tranche of shares on or near grant date at the prevailing market price to facilitate building up a portfolio
sufficient to meet the obligations when rights vest.
Trading in the Company’s ordinary shares awarded under the share-based remuneration arrangements is covered by the same
restrictions that apply to all forms of share ownership by employees. These restrictions prohibit an employee trading in the
Company’s ordinary shares when they are aware of price sensitive information and limit their trading at other times.
The Group has the following types of share-based remuneration arrangements provided to employees; each arrangement has
different purposes and different rules:
short-term incentive plan; and
long-term incentive plan.
The share-based payments are included in the employment expense line in the statement of profit or loss and other
comprehensive income.
Senior management and executive share plans
The senior management and executive share plan arrangements are awarded based on the terms and conditions as set out in
the short-term and long-term incentive plans. When granted, the awards in these two plans may be in the form of cash and/or
conditional rights. The Remuneration & Succession Planning Committee has approved the participation of each individual in
these arrangements as well as the actual awards based on the performance conditions in these two plans being met.
A. The short-term incentive plan (STI)
The STI plan is a discretionary, performance-based, at risk reward arrangement. STI is awarded based on each participant’s
performance hurdles and whether the financial performance hurdle of a minimum 5% of diluted earnings per share growth of the
Group are met.
114 Steadfast Group Annual Report 2020
The key terms of the STI plan for 2020 financial year are:
total STI will be awarded and settled in the form of cash and conditional rights as approved by the Board if diluted EPS growth
targets and individual participant’s performance criteria for the performance period (i.e. 1 July to 30 June) are met. If met:
60% of STI will be settled in the form of cash and will be paid annually in September after the performance period; and
40% of STI awarded will be deferred and granted in the form of conditional rights;
conditional rights (rights) are granted for nil consideration;
the vesting condition of rights is not market related and requires the participant to continue in relevant employment from the
grant date of the rights (retention period), split one-third over one, two and three years;
the rights will accrue notional dividends during the retention period;
when vesting (after completion of the retention period), each right will be converted into one Steadfast ordinary share per right
for nil consideration upon exercise by the participant. The notional dividends will be converted into an equivalent number of
Steadfast ordinary shares based on the Dividend Reinvestment Plan issue price applicable to each dividend;
the Board has discretion to settle the rights in cash instead of Steadfast ordinary shares;
the vesting is conditional on there being no material adverse deterioration in the 2020 reported results during the performance
period before the exercise of the rights; and
if the vesting condition is not met then the rights lapse.
Further details of the 2020 STI in relation to the Group’s key management personnel are disclosed in the Remuneration Report.
B. The long-term incentive plan (LTI)
The LTI plan is a discretionary, performance-based, at risk reward arrangement. LTI is awarded based on each participant’s
performance hurdles and whether the minimum financial performance hurdles in diluted earnings per share growth and Total
Shareholder Return (TSR) are met.
The key terms of the LTI plan awarded in August 2019 were:
LTI will be awarded in the form of conditional rights as approved by the Board and will be granted in August following the end
of each financial year;
conditional rights (rights) are granted for nil consideration;
the vesting condition of rights is not market related and is conditional on meeting the following performance hurdles:
the participants meeting their individual performance hurdles during the three-year employment tenure from the grant date
of the rights (retention period);
75% based on the Group achieving a minimum 5% (maximum at 10%) average straight line per annum diluted EPS growth
during the retention period; and
25% based on the Group achieving a minimum TSR above the 50th percentile (maximum at 75th percentile) of the peer group
during the retention period;
the rights will not accrue notional dividends during the retention period;
before vesting, the Board will determine the number of rights to vest based on the combined outcome of the
performance hurdles;
when vesting (after completion of the retention period), each right will be converted into one Steadfast ordinary share for nil
consideration upon exercise by the participant;
the Board has discretion to settle the rights in cash instead of Steadfast ordinary shares; and
if the vesting conditions are not met then the rights lapse.
Further details of the 2020 LTI in relation to the Group’s key management personnel are disclosed in the Remuneration Report.
Employee share plan
The Short-Term Employee Incentive Plan (STEIP) was introduced during FY19. The STEIP is a discretionary, performance based
at-risk reward arrangement that aims to recognise the contributions of the eligible employees of Steadfast Group Limited when
outstanding financial results and individual performance objectives are achieved.
The STEIP consists of two reward components:
cash component – a cash award which may be delivered if diluted EPS growth targets are met; and
deferred equity component – a deferred equity award (DEA) of conditional rights to Steadfast shares if diluted EPS growth
targets are met and subject to a tenure hurdle and no negative material deterioration in EPS from prior year adjustments in the
subsequent year. Participation in the DEA component of the STEIP is by invitation only and is limited to participants approved
by the Group Managing Director & CEO.
The dilued underlying EPS growth targets for the STEIP are aligned with those in the senior management and executive STI plan.
Notional dividends on the conditional rights will accrue during the tenure hurdle period from the first interim dividend after the
grant date. The notional dividends will be calculated in accordance with the Dividend Reinvestment Plan (DRP) as varied from time
to time. The accrued value of notional dividends will be provided to a participant on the vesting date of a conditional right in the
form of additional Steadfast shares (or cash in lieu).
Steadfast Group Annual Report 2020 115
Notes to the Financial Statements continued
Note 18. Taxation
A. Income tax (expense)/benefit
Profit before income tax expense
Income tax expense at statutory tax rate
Tax effect of change in corporate tax rate
Tax effect of amounts that are not (deductible)/taxable in calculating taxable income
Share of after-tax profits of associates and joint ventures
Non-assessable and other deductible items
Non-deductible and other assessable items
Impact of IBNA and PSF Rebate
Over/(under) provision for income tax of prior periods
Income tax expense
B. Major components of income tax expense
Current tax
Movement in deferred tax assets
Movement in deferred tax liabilities
Adjustments for current tax of prior periods
C. Income tax on items recognised directly in equity
Deferred tax assets
Deferred tax liabilities
D. Deferred tax assets
I. Composition
Accrued expenses
Provisions
Employee share scheme
Deferred income
Business related capital costs (including PSF Rebate)
AASB16 Leases
Other
II. Movements
Balance at the beginning of the financial year
Add: reversal of offset against deferred tax liabilities
Gross balance at the beginning of the financial year
116 Steadfast Group Annual Report 2020
2020
$'000
2019
$'000
7,386
(2,216)
-
6,054
7,060
(16,495)
(32,250)
(37,847)
(2,290)
(40,137)
159,259
(47,778)
29
4,475
9,340
(6,068)
-
(40,002)
2,577
(37,425)
(64,059)
(39,272)
17,608
8,604
(2,290)
(40,137)
269
5,172
5,441
8,104
9,993
2,050
9,554
14,577
2,166
8,516
54,960
7,358
27,449
34,807
(1,421)
691
2,577
(37,425)
782
85
867
10,637
8,800
1,951
8,943
-
-
4,476
34,807
3,514
15,910
19,424
Opening balance adjustments to retained earnings
Charged to profit or loss
Charged to equity
Additions through business combinations
Balance at the end of the financial year before offset
Less: offset against deferred tax liabilities
Balance at the end of the financial year
E. Deferred tax liabilities
I. Composition
Intangible assets
Receivables
Accrued income
Asset revaluation
Other
II. Movements
Balance at the beginning of the financial year
Add: reversal of offset against deferred tax assets
Gross balance at the beginning of the financial year
Charged to profit or loss
Charged to equity
Additions through acquisitions
Balance at the end of the financial year before offset
Less: offset against deferred tax assets
Balance at the end of the financial year
2020
$'000
1,969
17,608
269
307
54,960
(37,529)
17,431
42,090
28,616
6,882
5,172
1,290
2019
$'000
7,134
(1,421)
782
8,888
34,807
(27,449)
7,358
47,733
25,487
11,999
-
88
84,050
85,307
57,858
27,449
85,307
(8,604)
5,172
2,175
84,050
(37,529)
46,521
56,320
15,910
72,230
(691)
(85)
13,853
85,307
(27,449)
57,858
Steadfast Group Annual Report 2020 117
Notes to the Financial Statements continued
F. ATO transparency reporting
The Australian Taxation Office (ATO) publishes total income, taxable income and tax payable in relation to large taxpayers, with
the 2018 financial year being the latest information released. The information published is sourced from the income tax return
lodged by Steadfast Group Limited as the head company of the Australian tax consolidated group (which captures only the entities
that are 100% owned by the Group).
Total income includes all Australian income, including commission and fee income, investment return and dividends. It does not
include any business expenses such as commission and fees expense, salaries or other operating expenses.
Taxable income is the net profit that is subject to tax and takes into account allowable deductions for business expenses and other
tax concessions, including non-taxable dividends from foreign subsidiaries.
Tax payable on taxable income is calculated with reference to the Australian corporate tax rate of 30%, adjusted for franking
credits and other tax concessions. On release of the 2019 tax information, we envisage the following will be reported:
Total income
Taxable income
Tax paid by head entity
Effective tax rate
2019
$'000
276,336
82,302
48
0.06%
2018
$'000
245,197
83,886
1,480
1.76%
The most significant reason for the low effective tax rate for the parent entity is that a substantial portion of its disclosed taxable
income is dividends received and the attached franking credits (derived from those entities paying tax) reduce the tax payable by
the head entity.
For a complete view of the effective tax rate, the following needs to be considered:
Tax paid by head entity
Tax paid by investees (and passed to head entity as franking credits)
Underlying tax paid
Taxable income
Effective tax rate (excl. franking credits)
2019
$'000
48
24,643
24,691
82,302
30%
2018
$'000
1,480
23,686
25,166
83,886
30%
The 2020 income tax return for Steadfast Group Limited is expected to have an effective rate continuing at circa 30%.
118 Steadfast Group Annual Report 2020
Note 19. Notes to the Statement of Cash Flows
A. Composition
Cash and cash equivalents
Cash held on trust
Bank overdrafts
B. Reconciliation of profit after income tax to net cash from operating activities
2020
$'000
210,644
448,955
2019
$'000
116,520
427,449
-
(3,781)
659,599
540,188
2020
$'000
2019
$'000
Profit/ (loss) after income tax expense for the year
(32,751)
121,834
Adjustments for
Depreciation, amortisation and (gain)/loss on disposal of property, plant and equipment
Share of profits of associates and joint ventures
Income tax paid
Dividends received from associates/joint ventures
Fair value gain on listed investments
Net gain from investments
Share-based payments and incentives accruals
Insurance Brokers Network Australia Limited (IBNA) acquisition
Professional Services Fee (PSF) rebate offer
Impairment expense
Interest income on loans
Capitalised interest on loans
Change in operating assets and liabilities
54,481
(20,179)
(67,968)
18,712
(4,525)
(9,309)
8,189
72,701
77,861
41,461
231
(2,322)
36,112
(14,916)
(41,077)
14,256
(725)
(14,829)
7,501
-
-
-
(986)
1,336
(Increase)/decrease in trade and other receivables
(45,380)
(42,331)
(Increase)/decrease in deferred tax assets
(Increase)/decrease in other assets
Increase/(decrease) in trade and other payables
Increase/(decrease) in income tax payable
Increase/(decrease) in deferred tax liabilities
Increase/(decrease) in other liabilities
Increase/(decrease) in provisions
Net cash from operating activities
(7,583)
(1,346)
95,135
74,537
(26,817)
(3,636)
160
12,624
5,200
80,977
35,440
(10,639)
(25,894)
(2,535)
221,652
161,348
Steadfast Group Annual Report 2020 119
Notes to the Financial Statements continued
Note 20. Leases
As a lessee
The Group predominantly leases three types of underlying assets including property, vehicles and office equipment. With the
exception of short-term leases and low-value underlying assets, each lease is reflected in the statement of financial position as
a right-of-use asset and as lease liabilities. Variable lease payments which do not depend on an index or rate are excluded from
the initial measurement of the lease liability and asset and are expensed on a straight-line basis in the statement of profit or loss
and other comprehensive income. The average lease term across the portfolios of underlying assets is 5 years, with many of
the property leases including an option to extend. The weighted average incremental borrowing rate applied in calculating the
present value of lease liabilities at the date of initial application was:
4% for the Group's Head Office entities;
4% for insurance intermediaries that are guarantors on the Group's syndicate facility agreement; and
6% for all other insurance intermediaries and premium funders.
A. Right-of-use assets
Balance at the beginning of the financial year
Accumulated depreciation
Additions
Disposals
Lease modifications and reassessments
Additions through business combinations
Foreign currency translation reserve
Balance at the end of the financial year
B. Lease liabilities
Property
$'000
Non-Property
$'000
37,781
(11,481)
7,537
(1,735)
157
956
(68)
1,807
(624)
392
(69)
(2)
7
(4)
Total
$'000
39,588
(12,105)
7,929
(1,803)
155
962
(71)
33,146
1,508
34,654
I. Amounts recognised in the statement of profit or loss and other comprehensive income
Interest expense on lease liabilities
Depreciation expense on right-of-use assets
Income from sub-leasing right-of-use assets1
Expenses relating to short-term leases
Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets
Net gain on disposal of leases
Total expense from leases2
Total
$'000
(2,472)
(12,104)
140
(447)
(48)
128
(14,804)
1 The Group sub-lease some its property and equipment under operating leases. On the statement of profit or loss and other comprehensive income, income from
sub-leasing right-of-use assets is recognised under "other income".
2 If AASB 16 had not been adopted, the Group would have recorded total lease expenses of $14.825 million.
120 Steadfast Group Annual Report 2020
II. Reconciliation of operating lease commitments as at 1 July 2019
The following is a reconciliation of total operating lease commitments as at 30 June 2019 to the lease liabilities recognised on
initial adoption of AASB 16 at 1 July 2019.
Operating lease commitments as at 30 June 2019
Recognition exemptions:
Leases of low-value assets
Leases with remaining lease term of less than 12 months
FY20 lease commitments disclosed at 30 June 2019 not yet commenced
Other exempt lease contracts
Non-lease components
Operating lease liabilities before discounting
Lease Liabilities as at 1 July 2019 (discounted using the incremental borrowing rate)
Total
$'000
66,509
(89)
(180)
(7,398)
(2,330)
(2,255)
54,255
46,594
At 30 June 2020, the Group had not contractually committed to any leases that were yet to commence.
Note 21. Related party transactions
A. Key management personnel compensation
The aggregate remuneration received/receivable by the Directors and other members of key management personnel of the
Group is set out below.
Short-term employee benefits
Post-employment benefits
Long-term benefits
Accrued share-based expenses
2020
$'000
6,016
126
102
4,496
10,740
2019
$'000
5,247
123
84
3,451
8,905
B. Transactions with subsidiaries
All transactions that have occurred among the subsidiaries within the Group have been eliminated for consolidation purposes.
Steadfast Group Annual Report 2020 121
Notes to the Financial Statements continued
C. Transactions with other related parties
The following transactions occurred with related parties:
I. Sale of goods and services
Professional services fees received from associates on normal commercial terms
Professional services fees received from joint ventures on normal commercial terms
Commission income received/receivable from associates on normal commercial terms
2020
$'000
2019
$'000
156
-
1,152
120
2,417
103
II. Interest income
Interest income received/receivable from joint ventures
-
41
III. Payment for goods and services
Estimated Steadfast Network broker rebate expense paid or payable to associates on the basis
as determined by the Board
Commission expense paid/payable to associates on normal commercial terms
Service fees paid to associates
IV. Other transactions
Steadfast Network Broker rebate offer expense paid to associates
Arm's length consideration for purchase of customer relationships paid to an entity controlled
by a director
V. Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with
related parties:
a. Current receivables
Receivables from associates
Dividend receivable from associates
b. Current payables
Payables to associates
VI. Loans to related parties
The following balances are outstanding at the reporting date in relation to loans with
related parties:
a. Non-current receivables
Loans to associates
31
8,583
12
16,469
4,000
901
6,724
111
-
-
575
27
6,055
-
1,118
1,527
-
500
122 Steadfast Group Annual Report 2020
Note 22. Parent entity information
The financial information provided in the table below is only for Steadfast Group Limited, the parent entity of the Group.
A. Statement of comprehensive income
Profit after income tax
Other comprehensive income
Total comprehensive income
B. Statement of financial position
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent entity comprising of:
Share capital
Share-based payments reserve
Undistributed profits reserve
Retained earnings
Revaluation reserve
Total equity
2020
$'000
47,457
(141)
2019
$'000
49,014
42
47,316
49,056
2020
$'000
2019
$'000
71,248
68,026
1,515,214
1,358,442
21,692
68,599
297,270
363,865
1,149,601
4,782
-
51,492
12,069
912,517
6,187
89,509
(13,636)
-
1,217,944
994,577
C. Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in Note 2, except for investments
in subsidiaries, associates and joint ventures which are accounted for at cost, less any impairment. Dividends received are
recognised as income by the parent entity.
D. Going concern
The parent entity financial statements have been prepared on a going concern basis.
E. Contingent assets/liabilities not considered remote
The Company is exposed to the contingent assets and liabilities pertaining to the Macquarie Bank put options set out in Note 15.
F. Parent entity capital commitments for acquisition of property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2020 and 30 June 2019.
G. Parent entity guarantees in respect of the debts of its subsidiaries
The parent entity provided no guarantees in relation to the debts of its subsidiaries as at 30 June 2020 and 30 June 2019.
Steadfast Group Annual Report 2020 123
Notes to the Financial Statements continued
Note 23. Remuneration of auditors
A. KPMG
I. Audit and review services
Audit and review of financial statements - Group
Audit and review of financial statements - controlled entities
II. Assurance services
Regulatory assurance services
Other assurance services
III. Other services
Taxation advice and tax compliance services
Other services
B. Other auditors
I. Audit and review services
Audit and review of financial statements
II. Assurance services
Regulatory assurance services
Other assurance services
III. Other services
Taxation advice and tax compliance services
Other services
2020
$
2019
$
712,011
662,000
1,159,424
1,097,210
1,871,435
1,759,210
25,677
48,735
74,412
190,106
255,099
445,205
26,200
-
26,200
157,035
67,837
224,872
2020
$
2019
$
349,904
334,239
7,820
380
8,200
15,102
49,734
64,836
-
-
-
35,069
395,744
430,813
Note 24. Acquisition of Insurance Brokers Network Australia Limited (IBNA)
Insurance Brokers Network Australia Limited (IBNA) was an unlisted public company and network of insurance brokerages, with
approximately 80 members across Australia. Steadfast Group acquired an interest in IBNA in September 2019 via a scrip for
scrip offer.
Steadfast issued 21,382,569 consideration shares on 14 October 2019 to acquire IBNA. On the share issue date Steadfast shares
closed at $3.40 per share. Therefore the total consideration amount was $72.701 million. Refer Note 9.
As anticipated and previously advised to shareholders, the total consideration was expensed. This contributed to a statutory loss
in the current financial year, and is considered a non-trading item in deriving normalised underlying earnings. Refer Note 4.
124 Steadfast Group Annual Report 2020
Note 25. Professional Services Fee (PSF) Rebate Offer
In July 2019 Steadfast Group sought expressions of interest from Steadfast Network brokerages to receive either cash or Steadfast
shares in exchange for renouncing rights to PSF rebates that may be declared from 1 July 2019 with consideration calculated by
reference to FY19 PSF rebates. The option of cash or shares was available to non-equity brokers only. For Network brokerages in
which Steadfast has an equity interest, the consideration for renouncing rights to future PSF rebates was cash only. For external
shareholders of equity brokers, once the cash consideration was received they had a right to participate in a placement of
Steadfast shares.
Total consideration of $77.861 million was paid to the Network brokerages which accepted the PSF rebate offer. This comprised
of cash consideration of $43.062 million and share consideration of $34.799 million, being 9,747,565 shares at $3.57 per share (the
closing price of Steadfast shares on date of issue). In December 2019 a further 2,468,214 shares were issued at $3.28 per share for
the external shareholders of equity brokers who received cash consideration and subsequently exercised their right to participate
in a placement for Steadfast shares. As a result, the total number of shares issued for the PSF rebate offer was 12,215,779 valued
at $42.895 million. Refer Note 9.
As anticipated and previously advised to shareholders, the total consideration for the PSF rebate offer of $77.861 million was
expensed. The after tax impact of this PSF rebate offer was $63.068 million. This contributed to a statutory loss in the current
financial year, and is considered a non-trading item in deriving normalised underlying earnings. Refer Note 4.
Steadfast Group Annual Report 2020 125
Steadfast Group Limited
Director's declaration
1. In the opinion of the Directors of Steadfast Group Limited (‘the Company’):
a. the consolidated financial statements and notes that are set out on pages 70 to 125 and the Remuneration Report in the
Directors’ Report, are in accordance with the Corporations Act 2001, including:
i. giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its performance, for the financial year
ended on that date; and
ii. complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
2. The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the chief executive
officer and chief financial officer for the financial year ended 30 June 2020.
3. The Directors draw attention to Note 2A to the consolidated financial statements, which includes a statement of compliance
with International Financial Reporting Standards.
Signed at Sydney on 25 August 2020 in accordance with a resolution of the Directors:
Frank O’Halloran, AM
Chairman
Robert Kelly
Managing Director & CEO
126 Steadfast Group Annual Report 2020
Steadfast Group Annual Report 2020 127
KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Liability limited by a scheme approved under Professional Standards Legislation. Independent Auditor’s Report To the shareholders of Steadfast Group Limited Report on the audit of the Financial Report Opinion We have audited the Financial Report of Steadfast Group Limited (the Company). In our opinion, the accompanying Financial Report of the Company is in accordance with the Corporations Act 2001, including: • giving a true and fair view of the Group's financial position as at 30 June 2020 and of its financial performance for the year ended on that date; and • complying with Australian Accounting Standards and the Corporations Regulations 2001. The Financial Report comprises: • Consolidated Statement of Financial Position as at 30 June 2020; • Consolidated Statement of Profit or Loss and Other Comprehensive Income, Consolidated Statement of Changes in Equity, and Consolidated Statement of Cash Flows for the year then ended; • Notes including a summary of significant accounting policies; and • Directors' Declaration. The Group consists of the Company and the entities it controlled at the year end or from time to time during the financial year. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with the Code. Key Audit Matters The Key Audit Matters we identified are: • Valuation of goodwill, Other intangible assets and Investments in associates and joint ventures • Decentralised operations Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Report of the current period. These matters were addressed in the context of our audit of the Financial Report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 128 Steadfast Group Annual Report 2020
Valuation of Goodwill, Other intangible assets and Investments in associates and joint ventures Refer to Note 7: Goodwill ($930.3m) and Other intangible assets ($182.4m), Note 12: Investments in associates and joint ventures ($118.9m), and Note 3: Critical accounting judgements, estimates and assumptions The key audit matter How the matter was addressed in our audit The valuation of goodwill, other intangible assets and investments in associates and joint ventures is a key audit matter as: • Goodwill, other intangible assets and investments in associates and joint ventures represented 45% of the Group’s total assets. • The high number of individual Cash Generating Units (CGUs), of more than 70 at 30 June 2020, necessitated our consideration of the Group’s determination of CGUs and the valuation for each of the CGUs, intangible assets and investments in associates and joint ventures. • The Group recognised an impairment of $41.5m during the financial year. • Our evaluation of impairment involves applying judgement in relation to the Group’s forecast cash flows and forward looking assumptions, including discount rates, short term growth rates and terminal growth rates. The ongoing economic uncertainty from the COVID-19 pandemic has impacted the forecast cash flows and other assumptions in the valuation models. These conditions increase the inherent uncertainty of the forecasts and the probability of a wider range of possible outcomes. We involved valuation specialists to supplement our senior audit team members in assessing this key audit matter. Our procedures included: • Assessing the Group’s determination of CGUs based on our understanding of the operation of the Group’s business, and how independent cash flows were generated, against the requirement of the accounting standards. • Assessing the Group’s analysis of indicators of impairment of other intangible assets and its investments in associates and joint ventures. Working with our valuation specialists, our procedures included: • Considering the appropriateness of the valuation methods applied (value in use and fair value less costs of disposal) by the Group against the requirements of the accounting standards. • Considering and challenging the Group’s assessment of the impact of the COVID-19 pandemic on cash flows and assumptions. • Comparing the forecast cash flows contained in the valuation models to the Board approved budgets. We also evaluated the forecasting process undertaken by the Group and assessed the precision of prior year forecast cash flows by comparison to actual outcomes, both before and after, the COVID-19 pandemic commenced. • Applying increased professional scepticism to forecasts in the areas where previous forecasts were not achieved. We compared the forecast revenue growth rate and terminal growth rate assumptions to recent external data on inflation rates and projected revenue growth for the insurance industry in Australia. We used our knowledge of the Group, their past performance, business and customers, and our general insurance industry experience in considering the appropriateness of the forecasts used. • Independently developing a discount rate range based on analysis of comparable companies using publicly available market data, adjusted by risk factors specific to the Group and the industry it operates in. • Performing sensitivity analysis on the discount rate, and forecast growth rate for key CGUs. We did this to Steadfast Group Annual Report 2020 129
identify those CGUs at higher risk of impairment and those assumptions at higher risk of bias or inconsistency in application, and to focus our further procedures. This included the impact of various COVID-19 scenarios. Additionally, we cross checked the valuation results against earnings multiples inherent in the value of other comparable companies. • We assessed the integrity of the value in use model used, including accuracy of the underlying calculation formulas. Decentralised operations Refer to Note 2: Significant accounting policies, Note 11: Subsidiaries, and Note 12: Investments in associates and joint ventures The key audit matter How the matter was addressed in our audit The Group comprises more than 130 subsidiaries, associates and joint ventures (components) whose operations are spread across Australia, New Zealand, and to a lesser degree, the United Kingdom, Singapore and Germany. The Group’s primary business is general insurance distribution, and the individual components are wide ranging in size and also in the customers and products of each business operation. The decentralised and varied nature of these operations requires significant oversight by the Group to monitor the activities, review component financial reporting and undertake the Group consolidation. This is an extensive process due to the variety of accounting processes and systems used across the Group. This was a key audit matter for us given the high number of subsidiaries, associates and joint ventures and the varied operations, accounting processes and systems. We focused on: • Understanding the components and identifying the significant risks of misstatement within each component; • The scoping of relevant procedures consistent with the risks identified and to enable coverage of significant aggregated balances; Our procedures included: • Instructing component audit teams to perform procedures on the financial information prepared for consolidation purposes by 36 components. The selected components were significant to the audit of the Group, either by size or by risk, and covered over 89% of the Group’s revenue and 93% of total assets. The objective of this approach was to gather evidence on significant balances that aggregate to form part of the Group’s financial reporting. • The component audit teams performed audits of the financial information of these components which included specific Group reporting package information and local statutory financial reporting. We worked with the component audit teams to identify risks significant to the audit of the Group and to plan relevant procedures. • Discussing the component audits as they progressed to identify and address any issues, working with the component audit teams as appropriate. We read the audit reports issued to us and the underlying memos explaining component results, including the impacts of the COVID-19 pandemic on each component. • Evaluating the work performed by the component audit teams for sufficiency for our overall audit purpose. We also considered the components’ compliance with the Group’s accounting policies, including those relating to the recognition of revenue as part of our evaluation of the component teams reporting to us. 130 Steadfast Group Annual Report 2020
• The assessment of components compliance with the Group accounting policies, particularly regarding compliance with the new accounting standard AASB 16 Leases; and • The consolidation process and aggregation of results from component procedures. • Testing the financial data used in the consolidation process for consistency with the financial data audited by component audit teams. We also assessed the consolidation process for compliance with accounting standards, giving particular focus on the implementation of AASB 16. • For those selected significant components, inspecting the component auditors’ files for consistency between the auditor’s opinion and the underlying audit work. • For the other components not within the scope of the component audit teams’ procedures, our head office audit procedures included testing the Group’s key monitoring controls and performance of analytical procedures. We inspected a sample of bank reconciliations, debtors reports, statutory financial reports and accompanying audit reports, and inquired of head office and component management. In our analytical procedures we compared actual financial results to budgets and the prior year results. We inquired of head office and component management and considered trends within the insurance market. Other Information Other Information is financial and non-financial information in Steadfast Group Limited’s annual reporting which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for the Other Information. Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report. Responsibilities of the Directors for the Financial Report The Directors are responsible for: • preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001; • implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair view and is free from material misstatement, whether due to fraud or error; and • assessing the Group and Company's ability to continue as a going concern and whether the use of the going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so. Steadfast Group Annual Report 2020 131
Auditor’s responsibilities for the audit of the Financial Report Our objective is: • to obtain reasonable assurance about whether the Financial Report as a whole is free from material misstatement, whether due to fraud or error; and • to issue an Auditor’s Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Financial Report. A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our Auditor’s Report. Report on the Remuneration Report Opinion In our opinion, the Remuneration Report of Steadfast Group Limited for the year ended 30 June 2020, complies with Section 300A of the Corporations Act 2001. Directors’ responsibilities The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with Section 300A of the Corporations Act 2001. Our responsibilities We have audited the Remuneration Report included in pages 47 to 66 of the Directors’ report for the year ended 30 June 2020. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. KPMG Scott Guse Partner Sydney 25 August 2020 Shareholders' information
as at 31 July 2020
Ordinary share capital
There were 863,205,401 fully paid ordinary shares held by 6,032 shareholders. All the shares carry one vote per share and carry
the rights to dividends.
Distribution of shareholders
The number of shareholders by size of holding are as follows:
Range
100,001 and over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
No. of holders
No. of shares
% of issued capital
407
1,593
843
1,788
1,401
6,032
801,016,707
50,375,629
6,229,691
4,914,227
669,147
92.80%
5.84%
0.72%
0.57%
0.08%
863,205,401
100.00%
There were 236 shareholders holding less than a marketable parcel based on a market price of $3.35 at the close of trading on
31 July 2020.
SUBSTANTIAL SHAREHOLDERS
Name
Challenger Limited
Commonwealth Bank of Australia
Alphinity Investment Management Pty Ltd
Date of notice
No. of shares
% of issued capital
5 March 2020
23 April 2020
13 May 2020
53,103,980
43,398,988
43,220,300
6.15%
5.03%
5.01%
This information is based on the most recent substantial holder notices lodged with the ASX.
132 Steadfast Group Annual Report 2020
TWENTY LARGEST SHAREHOLDERS
Name
No. of shares
% of issued capital
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Pty Limited
Citicorp Nominees Pty Limited
National Nominees Limited
BNP Paribas Nominees Pty Ltd
Mackay Insurance Services Pty Ltd
BNP Paribas Noms Pty Ltd
Citicorp Nominees Pty Limited
Argo Investments Limited
HSBC Custody Nominees (Australia) Limited-Gsco Eca
Mackay Insurance Services Pty Ltd
HSBC Custody Nominees (Australia) Limited
Steadfast Share Plan Nominee Pty Ltd
Mr Robert Bernard Kelly
RC & IP Gilbert Pty Ltd
BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd
Mr David Ingram
AMP Life Limited
Brispot Nominees Pty Ltd
Australian Executor Trustees Limited
224,481,861
173,543,269
68,337,885
67,611,912
31,596,189
27,768,740
15,814,450
15,464,412
12,778,079
9,773,964
6,315,383
5,607,790
3,447,945
3,237,473
3,100,000
2,717,484
2,686,242
1,948,036
1,651,061
1,634,630
26.01%
20.10%
7.92%
7.83%
3.66%
3.22%
1.83%
1.79%
1.48%
1.13%
0.73%
0.65%
0.40%
0.38%
0.36%
0.31%
0.31%
0.23%
0.19%
0.19%
Total
DIVIDEND DETAILS
Dividend
Interim
Final
679,516,805
78.72%
Franking
Amount per share
DRP issue price
Payment date
Fully franked
Fully franked
3.6 cents
6.0 cents
$3.28
26 March 2020
1 25 September 2020
1 The DRP issue price of the final dividend is scheduled to be announced on 18 September 2020
The final dividend has an ex-dividend date of 1 September 2020, a record date of 2 September 2020, a payment date of
25 September 2020 and is eligible for Steadfast's Dividend Reinvestment Plan (DRP) which carries a 2% discount.
Steadfast Group Annual Report 2020 133
Glossary of Terms
Term
AGM
Client
CPS
DPS
DRP
EBITA
Explanation
Annual General Meeting
Customer of broker/underwriting agency
Cents per share
Dividend per share
Dividend reinvestment plan
Earnings before interest (after premium funding interest income and expense), tax and amortisation. To
ensure comparability, underlying EBITA also deducts the interest expense on lease liabilities and depreciation
of right-of-use assets
EPS (NPAT)
Earnings per share that reference NPAT
EPS (NPATA)
Earnings per share that reference NPATA
Equity Brokers
An insurance broker who is a member of the Steadfast network, where Steadfast does have an equity interest
Group
GWP
Hayne Royal
Commission
Steadfast Group Limited (ABN 98 073 659 677, AFSL 254928)
Gross Written Premium – the amount paid by customers for insurance policies excluding taxes and levies
Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry
Hubbing
The merger of two or more insurance intermediary businesses
IBNA
IFRS
IPO
NCI
IBNA Limited, an Australian general insurance broker network acquired by Steadfast in FY20
International Financial Reporting Standards
An initial public offering of the Company’s fully paid ordinary shares
Non controlling interests
Network
The collective reference to the distribution network that is comprised of all Steadfast Network Brokers
Network Broker
An insurance broker who is a member of the Steadfast network, where Steadfast has no equity interest
NPAT
NPATA
PSF
Rebate
SCTP
SME
Net profit after tax
Net profit after tax adjusted for (post non controlling interests) amortisation of customer relationships
Professional services fee
An annual payment made to Steadfast Network Brokers, at the discretion of the Board
Steadfast Client Trading Platform – a web based platform that is a digitally contestable market place providing
Steadfast Network Brokers access to obtain multiple, detailed quotes from a variety of insurers, with only one
data input as well as place and maintain policy contracts
Small to medium enterprise
Steadfast PSF
Rebate offer
An offer by Steadfast to Steadfast Network brokerages to receive Steadfast shares or cash in exchange for
renouncing their rights to professional service fee (PSF) rebates from the Group
Strategic Partner
Preferred product partners underwriting or arranging the general insurance policies and premium funding
products which are placed by Steadfast Network Brokers
Underlying
earnings
Statutory earnings adjusted for non trading items
Underwriting
agency
Underwriting agencies act on behalf of general insurers to design, develop and provide specialised insurance
products and services for specific market segments
134 Steadfast Group Annual Report 2020
Corporate Directory
Directors
Frank O’Halloran, AM (Chairman)
Corporate Office
Steadfast Group Limited
Robert Kelly (Managing Director & CEO)
Level 4
David Liddy, AM
Gai McGrath
Anne O’Driscoll
Philip Purcell
Greg Rynenberg
Company secretaries
Linda Ellis
Peter Roberts
Notice of the AGM
The AGM will be held on Wednesday 28 October 2020.
Due to the uncertainity of the COVID-19 pandemic, the
AGM will be held as a virtual meeting. Steadfast Group
will provide further details with the Notice of 2020 Annual
General Meeting to be released in September 2020.
99 Bathurst Street
Sydney NSW 2000
Postal Address
PO Box A980
Sydney South NSW 1235
P 02 9495 6500
E investor@steadfast.com.au
W steadfast.com.au
ACN 073 659 677
Share registry
Link Market Services
Level 12
680 George Street
Sydney NSW 2000
Postal Address
Locked Bag A14
Sydney South NSW 1235
P 1300 554 474
E registrars@linkmarketservices.com.au
Stock Listing
Steadfast Group Limited ordinary shares are listed on the
Australian Securities Exchange (ASX code: SDF).
Steadfast Group Annual Report 2020 135
1Steadfast Group Limited Annual Report 2020