Steadfast Group Limited (SDF) Earnings Call Transcript

Is it 10:00, is it?

Yes.

All right. Well, good morning, ladies and gentlemen. My apologies if some of you had difficulty finding the B1 because I did and I walked up 2 flights of stairs and down again and I thought I may have to go up again, but I decided to go and ask someone, but I hope everyone that made the travels in this morning are actually here, not still trying to find out where we are downstairs. But on behalf of the Steadfast Group Board, I am pleased to welcome you to the Steadfast 2023 Hybrid Annual General Meeting. As I am in Sydney, I would like to acknowledge the Gadigal people of the Eora Nation and pay my respects to their elders, past, present and emerging. If we experience any technical issues today, a short recess or an adjournment may be required depending on the number of shareholders being affected. If this occurs, I will advise you accordingly. As a quorum is present, I declare the meeting open. Next to me is the Managing Director and CEO, Robert Kelly AM. All of your nonexecutive directors are present today: Vicki Allen, Joan Cleary, Gai McGrath, Greg Rynenberg and David Liddy, but David -- David is on the phone, he's not well at all and didn't want to make anyone feel ill in a couple of days' time. So David is on the phone, and obviously, we all wish him well. Our Company Secretary, Duncan Ramsay is also unwell today with the same course complaint, I think. So we have [ Chris Sargent ] acting as our Company Secretary. Also attending the meeting is [ David Coles ], relationship partner of KPMG, our auditor, for the FY '23 year. David is available to answer any questions you may have about the conduct of the audit of Steadfast financial statements and the auditor's opinion. The meeting will proceed as follows. I will provide an opening address, and then we'll ask Robert Kelly to speak about the company's performance, strategy and outlook. I will then deal with the items of business in the order in which they appear in the AGM notice of meeting, shareholders will be given the opportunity to ask questions in relation to items of business being considered at this meeting. This is the Chairman's address. Ladies and gentlemen, on behalf of my fellow Board of Directors, I'm again pleased to report another year of outstanding earnings by Steadfast Group. With our underlying FY '23 net profit after tax at the top end of our upgraded guidance range, which we advised to the market in February '23. In summary, in the year ended 30 of June '23, the group produced a 26.5% increase in underlying earnings before interest, tax and amortization, which is called EBITDA. And the EBITDA was $430.7 million, and we also announced a 22.5% increase in underlying net profit after tax of $207 million. Pleasingly, we reported an increase of 14.6% in underlying earnings per share to $0.2015. Statutory net profit, which was after nontrading losses mainly due to actual earnout payments for the businesses which we acquired -- which performed better than expected. So in other words, we set aside some money for earnout payments to the sellers and they've exceeded our expectations. So the statutory net profit was $189.2 million compared with $171.6 million for FY '22. The Board declared and paid on 21st September '23, a fully franked final dividend of $0.09 per share. Total dividends for FY '23 were $0.15 per share fully franked, up from 15.4% on FY '22. The group's performance has continued since listing in 2013 and shareholders have experienced consistent growth in fully franked dividends and the value of their shares. Our total shareholders' return was 22.5% for FY '23 and since listing, it has been 497.7% as at the 30th of June '23. The performance has been largely achieved from the Board and management's continued focus on opportunities to deliver short- and long-term growth in revenue and profit within our risk appetite. We remain prudent with our capital management as we assess potential acquisition opportunities against our disciplined criteria. In FY '23, we made a number of earnings accretive investments for a total outlay of $574 million with the largest acquisition being Insurance Brands Australia. The current active acquisition pipeline remains strong. In FY '24, we anticipate completing $280 million of this pipeline, including the recent acquisition of ISU Group on the 6th of October '23 which was a low-risk approach to the U.S. market. These acquisitions are to be funded by debt and free cash flow. We have already made good progress towards this target since last year. That's the $280 million. At 30 June '23, our group gearing ratio was 19.0% excluding premium funding, which, as you know, is secured against receivables, which is well within the Board mandated group maximum of 30%. As of today, our group gearing ratio was 25.6%. We consider a low level of gearing is prudent given rising interest rates, inflation and current uncertainties around the world. Steadfast currently has unutilized facilities of $189 million plus our free cash flow for future expansion. Steadfast Group continues to adhere to the corporate government principles as set out by the ASX Corporate Governance Council. I note another year in which there were no material departures from these principles. Our corporate governance statement outlines how these principles are applied in both the statement and the policies that support these principles are available on our website. Steadfast recognizes that climate change continues to be a global risk and that action is required to reduce emissions over time as adequate solutions are introduced. In recognition of the issues arising from climate change in December 2022, Steadfast published the first phase of its carbon neutral transition plan. This plan is also available on our website. The Board regularly reviews the remuneration of our senior executives. Our remuneration policy takes into account individual performance, market condition, retention of our quality team and encouragement to continue to outperform without increasing the risk profile of the group. Our short-term and long-term incentives are aligned to the growth in shareholder value. Independent advice is obtained on a regular basis. The strong growth in profit, earnings per share and return on capital above the budget we set for management meant that a large percentage of our short-term and long-term incentives were earned by our senior management team last year. On behalf of the Board, I would like to thank our Managing Director and CEO, Robert Kelly AM, all of the Steadfast team for their significant contribution to delivering consistent outstanding results for our shareholders and the high-quality support to -- they provide to our network brokers and other stakeholders. Further, our continuing strong performance would not have been possible without the outstanding contribution from our Steadfast network brokers, Steadfast underwriting agencies, our complementary businesses and our ever-expanding client base. During the year, Anne O'Driscoll retired as a director after 10 years at Steadfast as part of our succession planning. Anne assisted we're Steadfast transition from a broker network to listing on the ASX in August 2013. Anne was appointed as a Director and Chair of the Audit and Risk Committee of Steadfast Group on 1st of July 2013. On behalf of my fellow directors, I would like to thank Anne for her outstanding contribution to the considerable growth in shareholder value since listing. I would also like to extend my gratitude to my fellow Board directors who continue to be focused on driving increased shareholder value, supporting the Steadfast team and improving our already strong governance. Finally, the Board appreciates the enormous support it receives from its shareholders, particularly in providing additional capital to make acquisitions to grow revenue and to grow profits. The group's outlook for FY '24 will be covered by Robert in a few moments, but it is for further growth in profit and earnings per share. I will now hand over to Robert, whose outstanding vision and leadership has been instrumental in getting Steadfast from where it was in 1996 to where it is today. So Robert, over to you.

Thanks, Frank, for those kind words and welcome, everybody, on my behalf as well. It's our 10th anniversary, which is being an ASX-listed company. August 2013 was quite a daunting time for me with my first venture into the public arena. And I had lots of advice at that particular time from our merchant bankers and from our plethora of lawyers that supported getting it off their way. And I was asked, could I craft myself in a manner that would suit the public arena. In other words, take what I was and remake myself into something that would be appropriate for the public arena. And it was probably a time when a lot of people -- many people took a risk on our initial public offering with the business model and our strategy was new to the investment community, and the markets and the investment markets. And in fact, it was unproven, okay? It was a steep learning curve for me. I was determined to conquer it. And I thought at that stage, I had to consider the advice I was getting from everybody, the responsibility that was being handed to me in the public arena. And then I started to reflect I'm of Irish extraction, both sides [ of my fan the Iris pure bed kits all the way back and]reflected a little bit on Oscar Wilde, the famous Irish poet and he said, "Always be yourself because everybody else is taken." And I thought if I'm going to be a success in this business, I must be myself and that people will either accept me or reject me on that basis. I'd like to say thank you for the people who didn't reject me, for helping us get to where we are today. So the intent of the IPO was quite clearly to provide the existing network brokers the opportunity not to have to sell, okay? And to have security that they could remain in a network that had been very strong and developed in 1996. Prior to that, the IPO, network brokers had to sell their businesses mostly outside the network because it wasn't something that people did. And the IPO gave us the real opportunity to retain brokers inside the Steadfast network and provide a succession vehicle alleviating the uncertainty of either not having a friendly buyer or indeed not having a buyer at all. So when we prepared the IPO prospectus, we undertook to stay true to ourselves and to the model and that had been successfully operating since 1996. In the prospectus, we detailed our intention to provide consistent organic and acquisition growth. We undertook that we would remit mostly around 75% of our profits by way of dividend. And our plan to achieve this was to continue to build the Steadfast network model as the best and most progressive available. For the last 10 years, we've delivered on this strategy. And for the next 10 years, we intend to continue to build on this successful strategy. We stayed true to our network servicing them, offering a fundamental business model, which is sustainable. We executed exactly what we said we were going to do. And that meant that we continued to follow the parameters of what has made us a collection of small businesses, very successful and now within the public framework and all that sets required to continue to always protect shareholders' value. As Steadfast became a listed company, our focus had to broaden besides the network to include diversity, the quality, inclusion, protection of our environment, gender equity within our operations, create a strong position on climate change, [ work with our investors, our analysts, and our ] proxy advisers. The success of Steadfast is largely due to the enormous commitment and passion of our people. [indiscernible] their passion within the network with all the brokers who signed on to this is a good way to work together. And secondly, the team of people that have made the success. The Steadfast teamwork long hours. They've driven the business. Our shareholder returns to where they are today are because of that. Our lives are driven by performance and the integrity of delivering our strategy and meeting and exceeding our forecast, making sure that our people are rewarded for our performance. For weekends, they work, the 12-hour days. The continuous attack from the war on talent striving to induce our key people away from our business with offers of great rewards in other countries -- companies. We are very successful with our people, okay? And they work for you extensively our shareholders. It surprises me however sometimes when the proxy advisers look at what we have achieved over the 10 years, recognize the company's success and yet only some of them support our remuneration hurdles. It's a funny situation when you praise the company's performance, you forget about how it gets there and you forget about the incentivization programs that make people stay within the company and keep working in the company to make its success. I can assure you what we do is a highly competitive industry and very difficult to make successfully, and you have to have a team that's very strong. It takes vision, a dedicated hard-working professional team to deliver on that vision and a strategy that goes with it to achieve consistent success. I'm pleased that in FY '23, it continues our year-on-year record growth. Frank detailed this so well in his address, so I'm not going to bore you on going back through that. In investor meetings around the world, yes, around the world, we hit the tracks and sometimes it's quite hard on us, but we -- our territories, Sydney, Victoria, up to Singapore, Hong Kong over to New York, Boston and back to London and then how we have to extend it very shortly to include in that little segue we have to include Chicago and we have to go up to Scotland as well. So we are congratulated when we go around the world on the success of the business, okay? And the reliable profits and the growth targets that we're able to achieve on a compounding basis. The product steadfast is market-leading and well received by the whole market in which we operate. Our results are the consequence of an enduring business model, the skills and stability of our executive team, our prudent approach to acquisitions and the strong performance of those equity-owned businesses that we've integrated into the public company. Our equity broking business again benefit from both acquisition and the continuation of the hard market premium cycle. And our underwriting agencies, again, because of their ability to be quick and to be precise and to service the industries that they ensure have had strong organic growth. I'd like to extend my personal thanks to our employees, definitely the Board of Directors, the network brokers, our underwriting agencies, our complementary businesses, our client base, our strategic partners and -- for continuing to keep recording record performance, okay? Part of our success and integral to our success is that we've built a full-service insurance broking back office system INSIGHT. 205 brokers, 6,000 users now operate this system. It's exclusive to the Steadfast Network and we have an order book to migrate a further 30 additional brokers. It could probably be 60, but we work to timeframes. Further, we developed and implemented something, which is quite outstanding. The only fully-integrated multi-insurer competitive quoting system for network brokers. I can tell you it's the only one around the world that does what it does, okay? I'm not making that statement because I think it's a grand statement to make it. I'm telling you that the Steadfast client trading platform, quotes, binds, cancels, endorses, issues certificates of currency, produces the policy document and does your renewal and does all of that again after its renewed in 20 seconds. Groundbreaking efficiency for consumers and brokers. Pleasingly, we've got a tad over 10% now of our GWP being transacted on the client trading platform. And FY '23 looks like it will keep going at the rate it is. Brokers continue to be attracted to its efficiency, the ease of obtaining the best terms, tailored policy wordings, which are continually reviewed by our triage team, which is a team of people that looks at claims and gives feedback. And the wide market access to insurers that the platform delivers together with our product range, which is market leading. Steadfast continues to roll out more product and ensures offering on an automated system, the client trading platform and to improve the integration capacity to onboard insurers and move more efficiently. During now, past year, additional insurers joined. We added more into our private motor home, landlords, residential strata and fleet. In '23, Steadfast Network brokers' GWP rose by 12.8% to $11.6 billion. It's past the $12 billion mark now. The growth was again driven by increased volumes over the year and further premium rate increases by our strategic partners. Trapped capital has been a phenomenal success for both our shareholders and our Brit network brokers. We've continued to deliver on active -- on our active acquisition pipeline while seeking to increase our equity position in the incumbent network brokers we already own. Organic growth in revenues from our equity brokers, more than mitigated the active expected expense that Stephen Humphrys put through all of our accounts over the last 2 years. So we've been able to sustain that growth with increasing underlying costs. Organic growth, strong acquisition growth resulted in excellent underlying EBITDA growth from our equity brokers, just under 28%. Underwriting agencies continue to produce a strong result, sustained organic growth, $2.2 billion GWP last year, 16.7% uplift for FY '22 and working well towards $2.6 billion in the current year. The GWP growth combined with further premium price increases by insurers led to an underlying EBITDA growth of 15.7%. I'm always asked about succession. And that's a polite way of saying when are you going to go? You're old, okay? So I like it when people say, "Can we address succession?" This year, we're successfully -- well, I'm not going, okay? I'm reminded that Hank Greenberg at 98 is still running Star. I've got another 25 years to go. Okay. This year, we successfully expanded our executive team and deepened the strength of our succession planning process to allow expansion of the team and provide retirement pathways as they're beginning to occur. Unfortunately, we've got one of our retirees here, Allan Reynolds, who worked tirelessly alongside me for over 2 decades, putting up with my tantrums, putting up with all my innuendo, putting up with all of the things and making me look successful. And 4 years ago, he said I want to retire. And I said, you can't. Just keep working, get out of my office, right? Anyway, because he's a gentleman, he worked alongside me for another 4 years, but he did tell me 18 months ago, I am not going to continue working. I'd like to say it's pretty exciting to me to have somebody like Allan put in over 2 decades with me, retire. And then now I'm able to put him on to some of our subsidiary Boards. He has the DNA of Steadfast completely and utterly in his vein. He knows what we want to achieve, and can now slip into a [ mid ] role. And there's other people in our organization, we can do that with too. Firstly -- secondly, I guess I should say, in talking and reflecting about transition of succession within our business. Samantha Hollman, who worked as our COO, next to me for 23 long years managed to stay happily married and still have 3 kids and still talk to me, which I think is a big advantage. And we've moved her -- because of our international expansion, both into New Zealand, Singapore and London and of course, into Hamburg. We -- this was building if we were going to do something in North America, we had to have a team involved in working it. So she stood down as COO and went in as CEO of our International operation. 23 years is like a sentence to work with somebody, but I think that we've been able to still stay friends and I still do as I'm told, so that makes life easier when you're working with Sam. So I'm very pleased to say that -- that transition has been smoothly. That -- to facilitate that, we had to bring in somebody strong into our organization, somebody who I've worked with for another iteration for probably 12 or 13 years, and Nigel Fitzgerald joined from the AIG Group as our Chief Operating Officer in April this year. With him, he brings a diverse range of skills that complement our revenue streams, okay? He makes it a big increase in our high-caliber executive strength at a level that we need. And people say to me, has Nigel been brought in to replace you. Nigel could replace me, okay? And I guess, it gets to a time when I have to go, he will be one of the key assets that we will look to, to replace me. By the time that happens, he may want to retire himself. So I make that set, okay? So I'll understand that. Further, we needed to move alongside Sam, somebody could step in as COO of the international operations. And we were able to get Nick Mckee to come and join us. Nick had worked 23 years in North America. He's Australian citizen, came back to Australia. And he's been fantastic -- fantastically, [ I hope ]. And then if you look at what we needed to do in terms of the international expansion, they're getting to a stage where we needed to further support our assets. And I have to be careful how I say that Stephen for 11 years has been developing. Unfortunately, I used to always use the word grooming and that's become such a sad thing that you have to change your vernacular. So we've had to change it to developing. Developing a girl called Eimear McKeever. She's been a delight to work with for those 11 years. She has a lovely personality and a twinkle in her eyes. So I christened her Twinkle many years ago. So throughout Steadfast, somebody says, is Twinkle going to do that. It's a term of endearment, okay? She's agreed to step in from her Finance Director role on the public company to take on the Chief Financial Officer role of the international assets. She's sitting down here in front of you here. So you've got -- Nigel's here, if you want to meet him as well. Steven's there and so is Sam, okay. What else? The executive, the bench strength has provided Steadfast the capacity to commence and execute these international expansion. We wouldn't have -- people said to me many times, we wouldn't have been able to -- what are you going to do? How are you going to do this? We've been planning this for 5 years, I mean the really, really, I don't get offended, but I think, really, you've got a successful business that we built. It's fantastic. Are we going to just go bang and do something? This is the long-term plan. So with Nick coming in, and the bench strength of Eimear going over there, I'm very happy to say that we continue on, okay? His 23 years experience will help dramatically. Okay, so what do I know about North America? Well, I've spent 14 years working alongside the accord team out of the U.S. And let me explain what accord is. Accord is and non-for-profit that was started some 40-odd years ago when the American insurance industry was becoming very acutely aware of computerization. And so they build a whole lot of processes that go alongside at the insurers. For instance, if you want to get a certificate of a currency or a certificate of insurance in America, everybody gives you an Accord certificate. I've been very fortunate to be able to then study in detail the way distribution and insurance and software works in North America over the last 14 years. And I was an adviser on to their Board 10 years ago, and I'm from my sins, I'm the Chairman of Accord out of New York. So understanding the U.S. insurance scene and the way technology operates there, and after lots of analysis and over the last few years, we decided that the strategy that made successful -- Steadfast successful in Asia Pac and other places could be replicated, will be replicated in North America. This was a review of the potential -- then we started to review how we would do this with potential acquisitions. In October, as Frank said before, 6th of October this year, we purchased ISU. It was a low risk in to 40-odd states. It was -- it's one of the largest privately-owned independent insurance agency networks in the U.S. It's very similar to Steadfast 15 years ago. You see it is a family-run business. The father started it. The son and daughter continue to run it, okay? The U.S. insurers that we spoke to about ISU before we undertook it, confirmed they were reliable and ethical. ISU gives Steadfast a foothold in a very successful business in North America to expand our network services and products. Our feedback from ISU and its network is that when our systems are brought in, they will enhance ISU. They'll make their network stronger and be attractive to people who want to join. Apart from the range of services and systems that are transferable to the ISU Network, we have established a strong interest in the rollout of the premium funding company. We've just done 5 town halls across America. The #1 thing they all said was we have to improve our software and our computer systems. So INSIGHT and the SCTP are eagerly awaited by the ISU network, plus 5 of our successful, very successful MGAs in Australia will be able to slip into the American market slowly and [ unknown ] extrusively, but we're getting there. ISU Networks have shown also a keen interest in our trapped capital project. Interestingly, over the last 3 years, ISU had lost between 30 and 40 of their members who did not want to leave the network but wanted to take some capital off the table. And then mostly, they went almost exclusively to private equity. Now the horror stories of what happens when somebody buys you and says, nothing will change, okay? Everything is changing now. And so there's a whole lot of disgruntled people in Middle America and Micro American insurance that are sold into areas where they're now lame ducks, they're not wanted. In fact, last week, there was a very successful ISU business that's sold outside the network, and I won't tell you who they sell to, and they walked in and they sacked everybody. Because what they've done over the last 12 months is morph all of their business into other sections of their business. That's done coldly, calculatedly and not by the person who said, nothing will change. So our proposition in North America is much more conducive to the way people would like to operate. So overall, the first quarter, unaudited. Our EBITDA was up 22.4%, ahead of the same period for last year. And the underlying NPAT is 15.3% ahead of the same period last year. Since we reported our FY '23 results, we've still had the continuing increasing in premium rates due to a large number of the weather events and the higher claims inflation. A much -- just on claims inflation, it hasn't hit yet. I spent 26 meetings in Monte Carlo recently. The #1 thing that was coming out of the reinsurance under view in Monte Carlo was we are not rating for claims inflation. So this, together with solid volume growth has been the major contributor to our performance for the first quarter, the continuing price increases. The outlook for FY '24, it continues to be strong growth for growth and profitability on the back of FY '23 acquisitions. We're going to get the pull-through of stuff we did in '23 will hit us in '24. So Steadfast Group. Happy to reaffirm our guidance. Underlying EBITDA of between $500 million and $510 million, underlying NPAT between $230 million and $240 million, underlying NPATA $277 million $287 million. Underlying diluted EPS NPAT between 10% and 15%. The FY '24 guidance remains subject to assumptions that you'll see in your [ time path ] but it's there. Lastly, I'll stop talking now. I'll finish my -- please don't look at it as a diatribe. Just look at as an emotional people telling you how proud he is and what happens with all the people I've worked for the last 10 years to give you what you have. Thank you for the shareholders. Thank you for your ongoing support. I'm very proud of my experience, hard-working executive. All the people, coworkers with us. And indeed, our numerous businesses have continued to buy into products Steadfast make it successful. The team we've got, the services we've got, the way we operate, the next 10 years is going to be better than the first 10 years. I look forward to continue to work with our shareholders and to continue our track record. So on that, thank you for your time. Thank you for your effort, and I'll hand back to Frank.

Thank you, Robert. There's nothing better than having a person that's passionate about the business. And it plays through the whole organization, including the Board of Directors. It's just wonderful to work with Robert and his team. And obviously, we do our job as directors and put our hands up and say hold on a sec every now and again. But all in all, it's an amazing relationship between the Board and management and vice versa. So we will now proceed with the formal business of the meeting. I propose to take the notice of the Annual General Meeting as read. Also, I will dispense with the formality of moving or seconding resolutions as all matters are properly before the meeting. Voting on the resolutions will be conducted by way of poll. Please note that only shareholders, proxy advisers or shareholder company representatives may vote. I declare the polls open. Link Market Services is the returning officer for this meeting. Shareholders attending the meeting online will be able to cast their vote using the electronic voting card received when online registration is validated. If you have any difficulties, please refer to the guide available in the AGM tab in the online Steadfast Investor Center. There is also an AGM help line provided. Shareholders attending the meeting in person will have a yellow card, which you will be asked to complete and hand to the registry staff at the appropriate time. I will advise when it is time to complete your voting card. If you need assistance, please ask one of the registry staff. Shareholders who have a blue card have already voted. There are 2 ways to ask a question, either by using a microphone in the room or by typing and submitting a question through the online platform. We did not receive any request to submit questions by phone. [Operator Instructions] I encourage shareholders online who have questions to send them through as soon as possible. Online questions will be read aloud by the Acting Company Secretary during the relevant item of business. Steadfast and proxy holders present in person will be holding either a blue or yellow card. There are team members of staff holding roaming microphones. Please put your hand up at the appropriate time if you wish to ask your question about a particular resolution. Following the voting, general business questions will be taken. Shareholders' questions received prior to the meeting will be addressed after the formal business of the meeting. Each resolution set out in the Notice of Meeting, is an ordinary resolution and as such, must be approved by a simple majority of votes cast by shareholders entitled to vote and voting on the resolution. Shareholders should note the voting exclusion set out in the AGM notice of meeting. Please note that I intend to vote in favor of each resolution for those proxies that are open for the Chair's discretion. The first item on the agenda is to consider and receive the financial report for the company and its controlled entities, the directors' report and the auditor's report for the financial year ended 30th of June 2023 as set out in the company's 2023 annual report. These documents have been made available to shareholders. There is no vote on this item of business. Chris, are there any questions online?

Chair, there are no questions online.

Are there any questions from the floor?

Yes, Mr. Chairman, your client trading platform seems to be very successful. I'm just curious as to how many computer professionals you need to develop and maintain that platform?

I'll hand that over to Mr. Kelly as he knows all this stuff like the back of his hand.

Unfortunately, Steadfast technology has nearly 150 employees in it, okay? So it's not a few nerds around in the back office, but pushing spreadsheets around and thinking they've done a good job. It's been a $100 million investment over the last 15 years that we've put into it. And so we're now at this stage, people are always asking me, when are we going to stop money on it. But every year, we seem to get more insurers who want to join it, more brokers that want to use it. So it's not -- it's a work in progress all the time, but it's fairly substantial. If you look at our accounts, I think our cost of the, I guess the division was around $18 million this year, and we get recoveries back from that from what we charge out to do it. So it's a very substantial part of our organization. I hope that helps you from that.

That's a good question, and fortunately, fortunately, we have a huge network that give us tremendous feedback on the client trading platform. So if it's not working for customers, Robert and his team hear about it pretty quickly.

Elizabeth Fish from the Australian Shareholders' Association. I wanted to ask you, you talked quite a bit in the opening address about being authentic. And I would like to know what is the point of having a corporate shareholder relationship manager if she doesn't engage with the Shareholders' Association.

Robert did...

There's no bar on who engaging with the Shareholders' Association. In fact, if you want to be put on the -- we're very happy to talk to you at any time.

But you haven't.

Well, I think it's your obligation to make contact with us to say we'd like to be on your call list. And if you do that, I'm very happy to make sure we do.

We have spoken to her a number of times.

I think, Robert, in addition to that, we've got Shalome over here. If you have a word to after the meeting we'll certainly make sure that the appropriate people come down and talk to you and your shareholders and your members if that's necessary.

I have one other question and it's to do with the Trapped Capital pipeline acquisition. How much of the market do you consider prudent for Steadfast to acquire?

Robert?

I don't think we look at the percentage of the market. We look at assets upon what they can do to firstly, if they're culturally aligned with the way we run the business. Secondly, if they've got a strategic reason for coming in. And if we could combine them into another business over a period of time. So we don't have a position where we want to have so much of the market. The advantage of our system as opposed to a corporate entity that controls is that all of our acquisitions that we make are run separately with their own P&Ls and they have their own Boards, and they make their own decisions about where they place business or how they act for an insurer in particular. So I guess volume doesn't make any difference in the Australian market anymore, it's service and how you provide the services to the consumer that attracts people to you. So we don't have a plan about getting bigger or anything like that. We control roughly about 31% of the intermediated business in Australia through the network, of which we own basically about 50% of that.

[indiscernible] 30%.

Yes, yes. That's the numbers.

And of course, Robert, that doesn't include retail products such as home and motor where we've got a very small market.

Yes. For instance, if you look at home and motor the individual, which is dominated really by IAG and Suncorp in Australia, who have about 80% of that market that they control. We -- of our sales, 14% of our sales is in-house and [ cars ] . So we have a very small percentage of the turnover in that.

Just one more question. How do you ensure the overseas acquisitions retain the ethics and personal commitment of your Australian staff?

I think you look at them in advance and understand the way they're built. And indeed, it's a good question. It's a great question because it's germane to how we think about business everywhere. And we looked at 6 probable assets over there. And we looked at from spending a lot of money to spending a small amount of money. We looked to get a business that was aligned to the way we were. This is a business that was started by a father 40 years ago, transitioned into the son and the daughter. I mean they're 69 and 66. So they're not exactly young kids running around. And the whole premise about how they do business is on an ethical basis. And in fact, that's what I made a point on in my speech was to actually say that we did a lot of inquiry about what these people operate like and how their agencies are considered in the market, and we've got a really clean bill of health from all the insurers. We're well known to the U.S. insurers and the U.S. market knows who we are quite well. So we do a lot of work on that.

And I think, Robert, there's a very good example of what Steadfast has done in internationally, particularly in New Zealand, where Allan played a very significant role, and we've built a fabulous business there. And a few of the directors, including myself were over there for the Steadfast convention in New Zealand the other day. And the feedback from the brokers is just one of admiration. In actual fact, there's a 2 or 3 brokers from one of our competitors have come to join us because of the significant amount of services that we provide that are not available from our competitor. And then we've also got Singapore. We're now up to -- I forget how many it is, brokers in Singapore, Allan, you probably remember, but 28 brokers in Singapore. So that's really starting from scratch in that business. And Singapore is a difficult market to get in, but at the same point in time, through the hard work of Robert and Allan, in particular, to build a network of 28 brokers in Singapore and get support that we have from the insurance carriers is quite amazing. So we've got that learning curve behind us, and we've got a format that has worked. U.S. is a difficult market. I think most of us understand and Robert actually mentioned Nick McKee, and Nigel has had significant experience in the U.S. market and so have I. And obviously, Robert has been traveling there for a long time. So thank you for that -- those questions are very good.

A little more. Thanks very much, Robert, for that explanation about the agencies in the U.S. and where that business is going. I guess you realize Australian shareholders are a bit nervous about Australian companies going to the U.S. because they often drop a bundle there. Where do you see it going from here? Do you see a morphing into the broking network and acquiring brokers and building that area up as well or just the agencies?

Look, I think you've got to look at -- to answer that question, you've got to look at distribution in North America quite concisely. And you've got the internationals, which operate. And then you've got a range of what you'll call insurance brokers. And there's not a huge amount of those in North America, okay? Then you've got a plethora of 40,000-odd what's called multi-agents who are, in fact, insurance brokers by a different name. They act for sometimes 3, 5 or 6 insurers. And so that area has been neglected by PE, it's been neglected by the bigger guys, we think that it's very simpatico with the way we operate. And because it's been neglected, we've got a great ability when we go there and share what we've done. I mean it's very similar to what we did. They are our people. They're similar to the way we are. There are 5 and 6 people. They're husbands and wives. They're -- second, third generation coming through. So what we bring to that market is we bring all the services that we -- that has made the Steadfast Network very strong. And as Frank alluded to, we had a lot more -- a lot of people coming to us in New Zealand because of the services that we provide. So we think that transmits very quickly over into the U.S. And as I say, we've just done a town hall. Sam, do you want to make a contact -- a comment on that? Sam is the CEO of that.

Thank you very much. Yes, we've just done a 2-week round scenario of 4 different regions of their members where they operate from. And it was our range of products and services that excited and enticed the opportunity of which one of those products and service offering is the Trapped Capital scenario where they had the option to sell a portion of their business and we become a partner in growth, not a PE provider. So that is where we saw the opportunity in the U.S. market. There's a lot of networks over there, but they don't have the range of products and services that we offer to help these smaller businesses grow and develop. So we are a partner of growth in them, and that's the exciting opportunity.

Yes. And then from the Board's point of view, we had options in the U.S. and the Board agreed with management that the best option for the U.S. for the reasons you mentioned is the low-risk approach to the U.S. market, not an aggressive approach. And we believe our approach is low risk because we're buying a network. We're not buying in effect a large brokerage business.

And I guess, Frank, if I can. I guess we're not arriving and saying we're here from Australia. We now here to revolutionize and we're going to taper $50 million in and show you how to do it. And I mean the companies that have been successful in America, Rem, okay, a little Australian company that went there. Reiss another little Australian company that went there. If you go there, and you bite little bites and, you've got an incredibly good product or system and take it there, you'll be successful in North America. If you arrive there and say we're going to change the way everything happened, and we're going to go out with a big flash, you'll get eaten. And so we will build North America the way we've built Australia, slowly and methodically and not stepping outside our defined paradigms of how we go about doing things. b

All right. It's a very good question.

Good question.

Any other questions? As there are no further questions for this item, we will move to the next item of business. The next item on the agenda is to adopt the remuneration report for the financial year ended 30th of June 2023. Noting the personal interest of the directors in this resolution, the Board recommends that shareholders vote in favor of this resolution. Chris, are there any questions online?

No questions online.

Are there any questions from the floor?

The ASA has looked very closely at your remuneration report. And we have not been very happy with it. Amongst some of the aspects we were not happy with was the details of a sign-on benefit with no performance hurdles. Share rights accruing notional dividends because the rights have not been earned yet. No [ SDI ] performance measures for KPI other than the CEO, a remarkably high level of actual [ STD ] outcomes and limited details on [ STEIP ], S-T-E-I-P. And because of this, the ASA will vote open proxies against this resolution.

Thank you. Maybe I just, first of all, mention about the first part of your question, allocating some sign-on bonuses to a member of the team Nigel -- and I have to say that in this day and age, if you are going to attract high-quality people from who are experienced -- with the experience that Nigel has around the world. And if you want to talk to him later about his experience, you'll be as pleasantly surprised as we have been. So to attract those sort of people, you're not going to get them by not offering. Just offering a pay from day 1 with some incentives carried forward.

Can I add a little color on that? A sign-on bonus like that is to replace the bonuses that the person who is working at an extremely high level in another company has to forego if they come to join your company. So that's why sign-on bonus is a retention -- are crucial to attract talent.