Steadfast Group Limited (SDF) Earnings Call Transcript

Welcome to Steadfast's 2025 Full Year Results. [Operator Instructions] If you have any issues using the platform, dial-in details can also be found on the homepage under Asking Audio Questions. [Operator Instructions]. And I'll now hand over to Robert Kelly.

Thank you, David, and welcome, everybody, to the -- I think it's the 11th call that we've made as a publicly listed company, and it's my pleasure to explain to you today that we're going to do our call a little bit differently than what we've done in the past. In fact, the people that generate the cash that produces the profit for Steadfast and then ultimately produces the dividend flow will all talk. Instead of me rattling on and trying to cover things that they might say, you get to speak to the real people that are at the head of the cash-generating units contained within the network. So if David, you could go to Page 4. This is a boring slide that people look at and say, so what? And I want to get into the meaty part. I have to tell you, this slide is the DNA of how we have run this business since August 2013. It is the way we look at the business every month to make sure that whatever we do is better than what we did the months before, to make sure that the end result of handling nearly $7 billion of public money, produces what we said that we would do when we actually put the prospectus out back in the beginning of 2013. And you'll see, if you read from left or right, that we have achieved compounding growth all the way along. This is what we strive for. This is what we believe Steadfast has to represent as a public entity. And I ask you to reflect upon those areas. Boring as the slide may look, simple as the slide may look, it is exactly how we drive the business. So if you could go now to Page 5 of the deck. We're just extremely proud of what we've just achieved in the last 12 months. Our underlying NPATA, up 14.5% to $346.2 million. Our underlying NPAT, up 17.2% to $295.5 million. Our underlying EBITA, up to $591.4 million or 11.9%. And our diluted EPS NPAT, up 14.2% at $0.267. We, as a group, are extremely proud of those numbers. We think those numbers are outstanding. We think for a group of people that operate in various sectors of the insurance industry to be able to continually show accretive compounding growth like that, it is our job done. Part of how we do that is the selection and working with a group of people that are the engine room behind Steadfast. I'm very fortunate and proud to say that this transition that we've been making over the last few years is well represented. I'm pleased to say that this year, Tim Mathieson has stepped into one of our chief cash generators, the insurance broking operations. Tim has been with our business into his 11th year. He has done many things for me during those 11 years. Firstly, he came in and understood what we were trying to do and then helped build our businesses by producing business plans for them. And secondly, undertook a few years ago to step out of the executive role and into the job I gave him to build a mini network of Steadfast up in Queensland. He completed that job for me about a year ago, and I asked him to come back in to Steadfast executive. And he said to me, "What would I do?" And I said, "I'm not sure." When he said, "Well, when you're sure, ring me up." And so earlier this year, I got sure, and I rang him up, and I said, "I want you to take over nearly 45% of our revenue, which is the insurance broking network and I want you to be CEO, and I want you to build a team underneath you." And he came and started with me. The next person that I want to reflect upon in no specific order. So please don't draw any inference that I'm saying this is somebody that I've worked with for into the second decade, Mark Senkevics. I worked with Mark during his various iterations at the highest level in Swiss Re. And I was fortunate enough to convince him that the job of running a $2.5 billion MGA business was more important than working for the second or the first largest depending on what you are reinsurer in the world. So Mark's skill level has been outstanding as he worked across a whole range of disciplines contained within Swiss Re, not the least being managing and executing many MGA initiatives and supporting us back 21 years ago almost, as Swiss Re underwrote our ERATO program, which is the system that we have for providing $100 million cover for our network brokers if they make an error or a mission in the execution of the duties. That relationship with Swiss Re goes back to June 2004. So I welcome Mark in. I welcome all his skills. I welcome all the things that he brings in having worked on an international basis and his kind way that he usually is able to interact with people. And then what happened when Nigel decided last year that he was not going to make public life his future, but in fact, he wanted to go out on himself. We're supporting that in other ways. We were lucky to pull a fantastic woman to come in and be our Chief Operating Officer, Noelene Palmer. Noelene came in as an understudy to Nigel last year, which is a terrible way to express it because candidly, when she knew she was going to be COO, she pushed past everybody and actually in a de facto way started from day 1 to be the COO. Her CV is exceptional. It's at the highest level of corporate life, and we're very happy to bring that sort of influence into our organization. It's been a successful integration and a powerful start to her career with Steadfast that goes back well over 12 months ago now. We also, for years, struggled, I believe, to get a really appropriate and correct person to run the technology division. We've had a few iterations. And whilst we've developed and gone extremely powerful with our IT division, it's the envy of the market. I say that with great gusto and I say that with a great direction that it is. And we were fortunate to get the ex-CIO of Allianz to come and join us, David Gillespie. The impact that he's made directly in our IT division, and remember, our IT division is a huge function of anything we do in the insurance industry has been outstanding. Ferzana Yale has stepped into our Chief People Officer, and Ferzana comes with experience in a couple of companies that we've known and we welcome her into the organization. And then last thing, by no least, is one of our long-standing employees. Over 9 years, Hannah Lee has worked in Steadfast. She worked assiduously to produce an incredible framework of how we produce our balance sheet. And when we decided that we were going to put an international division together, we asked somebody that was actually shadowing Stephen, if he was ever going to leave, to move into the CFO of International, and then that gave Hannah the opportunity to shadow Stephen, which has been going on for quite some time. And as Stephen's leaving the organization this afternoon after 12.5 years of painstakingly working with me and doing an incredible job in producing 11 wonderful results, Hannah will do an interim job of doing that. So I just mentioned those new people that have strengthened the team. And I want to make reference to the transition that Sam Hollman has made from COO over the last couple of years and to take on the CEO role of the international assets. It's been an outstanding job and a great relief to me, that breathing down my neck every day and telling me what I'm doing wrong. So although she's not on the screen, she's intimately part of what we're doing. So let me reflect upon the business structure and how we work. We are -- I always get asked after we do our results, are they complicated. We're not quite sure what it means. And I think Stephen for years has absolutely explained that to people to make sure they absolutely know what it is. So the way of the future for us will be to actually demonstrate our chief -- our cash-generating units and we'll give you their performance towards their budget, towards their contribution to the guidance in the future. It will be a simpler and a clearer way for you to understand how our money comes in, how our divisions work and you will be able to look carefully at the prior year's performance and the ongoing performance as it performs to guidance. In the Steadfast broking system, FY '25 saw us complete all of the acquisitions that we put into our '25 guidance. We completed the numbers. We did what we said we were going to do. Sometimes people say to us that we are a little boring about what we do. So I want to tell you that when we make a determination of what we're going to do, we work very, very carefully to make sure that we achieve that. And part of that was the questions that got put to me all the time is, "How are you going with the completion of your acquisitions?" And the answer was, "We're going really well, and we're doing what we did." Okay? I'm just being told that I'm clicking the paper that I've got in front of me. So I'll stop clicking it. Our Investor Relations AGM took my pen off me so that I didn't sit at the table clicking it. As I have very little to play with, I'll stop playing with the paper. The person who did that first is one of our key people in our IT division. And [indiscernible] Chris and Google, which some people think it's a bit rude. It's not. Why would you -- why would an IT expert be Chris and Google? I answered that question for people that are wondering and thinking it's a terrible thing to do, because she knows everything. So thank you for reminding me that I was clicking the paper. Getting back to it, okay, on the broking, we made the decision to bring Tim in, as I've explained, who Tim is, okay? And we also brought over -- you met Nick those who attended the conference and the investor briefing, Rhiannon Toohey. So Rhiannon was doing the analysis of how we improve all our businesses. So she's accepted the role of CFO of the Broking division under the CEO, which is Tim Mathieson. Our data and analytics and reference system that we have has just been completely enoughly the success of our business in many ways. We started data analytics in this organization in June 1999. Our database that we know about what we do and who does what in the insurance industry is the envy of everybody. We actually have major insurers coming to us and asking us, "Hey, what do you think about this based on our data analytics?" We complete -- the reference center has been completely upgraded. Our benchmarking process has been expanded. The ability to be able to tell 403 brokers what their peers are doing over a range of income and a range of areas of expense is being outstanding and been fantastic. And our compliance audit system has been centralized. The rollout of CX360 has been immensely helpful to people about what they should and shouldn't do. It's a system that automates their responsibility and delegates who should do what in their organization and produces reports. And then our network needs to grow, and I'm pleased to say that we are continually growing the network. 17 new brokers joined the network in FY '25. Just reflecting on the insurance markets. Everybody talks about, is the insurance market dropping, okay? And everybody thinks that by dropping premiums, that, obviously, our net profit is going to go down. The mid-market, which is 96% of the businesses in Australia, which we own, a vast percentage of in the distribution in this country, the mid-market is still pushing rate, okay? So whatever you hear, at our end, and we're reasonably successful in insurance distribution, we're seeing rate being pushed in the mid-market. The reality is that some select lines, cyber is a big example; D&O, of course, you're aware of that, over the last 2 or 3 years, collapsing and some parts of the PI market are softening. But in broad terms, it is not a waterfall. It is a moderation and softening of compounding increases that we've seen over the last 4 or 5 years. Eventually, it had to stop and eventually, they had to get towards technical rating. Now some stupidity is occurring out of the Lloyds' market by Lloyds' throwing some capital into this market at silly prices. And that will reflect in a few ways. It reflects a little bit in the strata industry. In other places, they spoke about that. We would say that, yes, the impact of some strata -- new strata players into the Australian market has created -- others are saying a drop in price. I'm saying competition. An example of that was Hutch when it came together. When the CEO of Hutch came and spoke to me and said, "We're going to set up a strata agency in competition to you. What do you think?" I said, we'll connect you with our client trading platform to put competition into the market because that's the DNA of insurance broking, to be competitive, to be on top, to be ahead. So now I'm proud to say that we are a major supporter of companies like Hutch, and we will continue to bring people into our organization that create competition, that create price efficiency for the consumer. Just let me reflect on the statement that everybody asks. So if you ask this question, I'll still answer it. But every time I am asked, "Well, is the market softening?" When is the market, the investor market and the analyst market in Australia go to realize that insurance broking doesn't get predicated completely on the rise and fall of premiums? You've seen our own organization be at the forefront of asking for reductions in commission on householders. And the simple proposition that we put to the market was if a consumer is playing 3 and 4x more for their household policy than they were 5 years ago, is the REM we got 4 or 5 years ago worth 4 or 5x more in the consumer's eyes? I want you to reflect on that because when we say we want to reduce commission on some product wise, it's not because we're raving lunatics and you know what? It's because we want to meet the expectations of the consumer and provide what we should do. In other words, charge a price that's reflective upon the advice and the detailed work we have to go through to place it. So please reflect on us. When you look at us and say, if we say we're going to get 3% to 5% rise. That's probably just the normal rise you would expect to get on an inflationary upset for increased costs. It doesn't mean that our net profit is going to drop. Just reflecting on Steadfast underwriting agencies. I'll highlight, Sure. Sure was an acquisition that people looked at us as if we didn't know what we were doing. Hang on. You're going to buy an agency in Queensland that helped people that couldn't get insured get insurance free, that nobody looked past the efficacy of how Sure did business. Nobody looked at the fact that they knew how to underwrite householders, in fact, better than most major insurers did. Nobody looked at the fact that they selected their risks, they underwrote their risks. Now interestingly, Sure wanted to expand around Australia. We were the ones that wanted to buy it to expand it around the Australia. The existing overseas insurers and in some places, Lloyds, were not anxious to put more capital in certain areas. So we had to realign the binders of Sure. I can tell you that we did it nicely, and we did it effectively. Nobody got offended. And we have 2 of the major insurers in Australia taking 40% of Sure's binder business, Chubb and QBE. Now you think Chubb and QBE, who are 2 of the most astute insurers in Australia, are going to back something that they don't think is viable. So we're very pleased to say that the Sure binders for Queensland and Far North Queensland now have 40% support of 2 Australian insurers. Interestingly, what morphed out of that was before people will come in and underwrite a binder, they actually come and look, the astute ones do, the smart ones do, of how you do business, how you go about getting your business, how you handle your claims and how you underwrite for profit? And I'm pleased to say, as a result of that, one of those insurers, QBE, elected to allow us to take Sure under a different name, Castle, all around Australia with their system, with their digital way they analyze things and 100% supporter of Sure. Another thing that we've done is with the advent of Mark coming in and Stephen Ward is supporting him in what you might call Chief Underwriting Officer role, is the consolidation of the 30 underwriting agencies that we've got, the ability to bring capital together, and that's been effectively done over the last 12 months. And I think you're going to see a bit of a renaissance that Mark will talk more about a little bit later on. And finally, in terms of the underwriting agencies, our binder system, which Sam Hollman will talk about a little bit later, is in a 2-year period of moving it out of where it's been in the past and into HWS specialty. So on international, we did the H.W. Wood acquisition. It operates in all sectors of the world. We're very happy with what we've got. Sam will give you a section on it. We also just completed the acquisition of Novum, and I'll talk about Novum in a little while on the next page. And ISU, which was our first foray into North America, has been extremely successful, and there's a couple of iterations on it. So I won't talk any more of that. I'll talk a little bit about Novum and then I'll ask Sam Hollman to talk about it because she runs that. Then in the technology side, I spoke about David Gillespie, his impact on it. And also, we've just acquired Insurebot, an online little broker system, which we thought was sensational. Could we have build it? Yes, we could have built it. Would it have taken us time? Maybe a year to get it run out. We like the guys in Insurebot. We thought they were absolutely aligned to the way we think about business, and we were fortunate enough to buy them and run it alongside our other digital platforms. And those guys will make a big difference to our business. And then finally, and I'll get off at this particular time, I'm sorry I've been rattling the thing again. Finally, let me say that the Steadfast Apps, which is -- Tim will talk about this. Unfortunately, David Gillespie can't present today. He's got a death in the family and he's flown home to look after that in Europe today. But Tim will go through that. What we've done in Steadfast Apps is the most revolutionary thing that's ever been done in the Australian insurance market on a technology basis. It takes insight and client trading platform to another area that nobody is going to understand how efficient it is. People think it's efficient and works well now, strap in for the ride when Steadfast runs out next year because it's going to be hard and fast and you're going to wonder how did anybody do that. We do. Not me. Thank God. Somebody else that works with us. Okay. Page 6. Thanks, David. If you understand that, you're a genius. But we put it up there to confuse you to make you think, "God, that's really incredible the way that looks, okay?" And the reality is, it is incredible. It's a [indiscernible] for why we bought Novum. If you're going to go into North America with 350 million people and you want to flog general insurance, then if you think you're going to get people in cars with hats running around and buy people donuts, you are mad. You have to work digitally in North America. We needed a platform. We have a platform in Australia. We could have picked it up. We could have put capital into North America. We could have made it work. And we could have said how great it was and that would probably have been 1929, okay? We got the opportunity to buy this platform. There's 8,000 agents who use the platform. It's an MGA platform. In the last 12 months, 2,000 of those agents placed over USD 100 million business into the platform, and we can bring our MGAs into North America in an orderly manner, in a simple manner. And we can, for instance, the first one will be Emergence probably. So the day Emergence connects into the platform in Cleveland, it will have access to 8,000 agents and Novum can put out an advice and say, "Hey, we write cyber insurance through this area." And then those 8,000 agents around -- remember, 2,000 did business with us last year, they have the opportunity to send a slip in. I mean, Sam will talk more about that as long as I haven't said too much. She can't kick me under the table. She's too far away. So if I [indiscernible], I apologize. Page 7. For those that have bored with me speaking, this is the last page. This is our guidance. The NPATA, we're guiding $360 million to $375 million. The NPAT, $315 million to $325 million; EBITA, $650 million to $665 million; and our EPS, underlying NPAT, up 6% to 10%. So people always say to me, why do you guide high and low. And I think Stephen and I have, ad nauseam said, we give you a high to low is that you can bank the low, and we give you a high not because we put the thumb on the ear and say, one day we will be there, because there are things in machinery within Steadfast that could get you that high level. They may or may not come up, but we want you to be able to bank the low. And I ask you to have a look at the guidance below. And have a look at FY '24, we did $0.234, $0.267 in '25, and then go across to the FY '26, you'll see it's between 6% and 10%. Now if you have a look at the organic, just back from there, it's 3% to 7%. The target is 7%, okay? The minimum before we cut our throats is 3%. We're working to -- if we get the 7% and the 3%, we get the 10%, okay? We're trying to bring you in to show you that what we put out is not some fallacy. It's not some I hope that works. It's actually predicated, and those figures are correct, and we want to never confuse the market by saying, "Hey, we're going to do this and we're going to do that." So the bottom will be 6%, top will be 10%. Key risks, obviously, we have to do that disclaimer. And we expect the 3% to 5% rise in premiums. That I think is probably just covering the cost of increased clients. But without further ado, I'll stop talking. For those sick of me talking, that will make it pleasure for you. And I'll introduce you to Tim Mathieson.

Great. Thanks very much, Robert. I have to start off by saying how wonderful it is to be back here at Steadfast. I can see so much opportunity ahead and it feels a bit like coming back home again. Looking at Slide number -- next slide, please, David. The Australasian broker network performed strongly in FY '25 with gross written premium up 6% to $12.5 billion. Our growth was primarily due to increased sales volume over the prior year and premium rate increases from our strategic partners. During the year, we had 17 new brokers join our network, taking us to 402 network brokers: 297 of these are in Australia, 17 in New Zealand, and 35 in Singapore. Steadfast Group now has equity holdings in 68 of the 402 network brokers who place around half of the network's gross written premium. Important to note, the spread of our brokers across geographies and product lines has offered us good protection from the moderating market. Next slide, please. Looking across our global broking network, broking achieved solid underlying earnings growth of 10.6%. This includes a number of step-ups in existing equity businesses, taking our ownership of EBITA from 77% in FY '24, 81% in FY '25. Included this table and waterfall chart for comparison to prior year investor updates, shows that on a consolidated basis, assuming 100% ownership of all equity businesses, underlying EBITA has grown from $412 million in FY '24 to $441.2 million in FY '25. Group has achieved a good balance of organic growth from our core broking businesses while complementing this with acquisitions across our global network. Next Slide, please, David. As Robert mentioned earlier, insurTech is such an important part of our strategy. And I thought I'd spend some time on this discussing how these platforms are key to driving revenue growth and margin improvements into the future. Market-leading insurTech platforms enables brokers to operate more efficiently and grow their business. These platforms free our brokers to focus on client engagement, providing them tailored advice and in-depth risk analysis. Firstly, the SCTP, or the Steadfast Client Trading Platform, it's our digital marketplace, which provides brokers the ability to input client risk information in minutes and source quotes from multiple insurers in seconds. In FY '25, GWP transacted through the SCTP. That's gross written premium transacted through the Steadfast Client Trading Platform increased 15.6% to $1.4 billion. It's important to note this figure excludes the likes of PSC, Honan and Envest, who are no longer part of the network. So there's now $1.4 billion going through that platform. Secondly, INSIGHT, our proprietary broker management system, it's a cloud-based system accessible anywhere in the world and designed as an open platform to enable connectivity to other business applications by its integrated dashboards to show business insights, business performance insights and allows brokers to make data-driven decisions. In FY '25, there's now 235 broking businesses live on the INSIGHT platform with over 7,800 individual platform users. Robert mentioned, we recently announced the acquisition of Insurebot. The system uses rapid or robotic automation to source insurance quotes from multiple sources, speeding up the delivery of service to our clients. Insurebot currently generates quotes for domestic motor, home and contents, landlords and workers' compensation products with additional offerings planned to further improve automation for brokers. I'm told this morning that we currently have 38 brokers already using Insurebot and 93 of additional brokers within the Australian network who are waiting on demonstrations who are on board to that system shortly. In the appendices of today's pack from Page 44, you'll find some further detail on each of our tech platforms, along with an overview of our new CRM and workflow automation solution, which Robert referred to as Steadfast Apps. Steadfast Apps will bring together the entire technology stack and provide an incredible benefit to our broker network. On that note, I'll go to the next slide, David, and hand over to Mark Senkevics to talk through the Underwriting Agencies. Over to you, Mark.

Great. Thanks very much, Tim, for the start. So you've actually got a proper job here, are you?

I have. Yes.

Sounds good. I feel better.

I'm grateful. You've welcomed me back.

All good, all good. In case, [indiscernible], you do have 45% of our revenue.

[indiscernible].

Thank you. Come on Mark. I am in hurry.

No, thank you, Robert. I've also enjoyed working with Tim. So excellent growth in the GWP of the agency space. We have 30 agencies and brands delivering 100 different products. And the important element here is that we have a very diversified portfolio, mainly focused on SME, but sits across commercial, consumer and specialized products. And I think that's a really important element when we speak about the moderation of the market that we have a strong immunization delivered by that diversification. A few highlights, I think, that have taken place in the year and a little bit of a look forward. First of all, CPS230 has been a theme in the agency space. I'm really pleased to say that we've gone a long way to -- across all of our agencies in achieving the regulatory requirements that are required as -- by our insurers as a result of the CPS230 regulation. And in doing that, we've also looked, therefore, across how do we align our businesses. So we've taken our in-house underwriting agencies, and we've separated those into a consumer and retail-focused business and our commercial business. And that has seen some consolidation of a number of our smaller agencies into that space to provide greater efficiency and delivery to market. As part of that, we're investing in underwriting platforms. We've seen that in our high net worth offering throughout FY '25. And as a result, great broker participation in the portals that we have and therefore, an increase in revenue that's being derived from that. We'll be rolling out similar products -- similar platforms into our commercial agencies as we look forward. And that will also offer us an ability to put more of those agencies onto the Steadfast Client Trading Platform, I think, will be an excellent revenue driver. The underwriting platforms and actuarial capability that we've built in-house will also facilitate much deeper relationships with our insurance carriers, which is critical to us. And you would have seen throughout the year that both CHU and UAA signed on for long-term deals. And Robert mentioned the Castle binder with QBE. That also is a relatively long-term proposition. So that will help us carry that business forward into the future. Moving forward on to Slide 14, David, please. If we look at the results for the agencies, we see revenue growth of 11.1% for the year and a 10% growth of EBITDA. That sits slightly behind, and that's explained by the investment that we've made into CPS230 and the underwriting platforms that I mentioned earlier. So we've seen continued strong growth across the agencies and actually profitable growth. We've delivered profit to our underwriting partners, which is, as you can imagine, really important for us. Plenty going on for FY '25. Robert mentioned the Castle brand, and you'll see from us a number of other brand launches and new product launches looking forward. And with that, I'll hand over to Sam Hollman, who has the exciting news of some growth in our international network.

Thank you, Mark. So I'll move on to Slide 16, please, David. Thank you. And I'll start with ISU Steadfast. ISU Steadfast is the first full financial year that we've had the ownership of this organization. I'm really pleased to say how it's performing strategically, financially and operationally at this point. It's continued to grow its earnings base and exceeded budget in FY '25 profit. And we've had 7% net growth in members. We're receiving more interest than ever before for independent agencies to join the network due to the combination of our improved value proposition and marketing initiatives. We've rebranded the company to ISU Steadfast. We ranked third largest agency network in the U.S. based on agency revenue, and we've been awarded the 5-star Insurance Network Agency and Alliance in the U.S. But we're also receiving a lot of demand from independent agencies that are smaller agencies that don't quite meet our criteria to join the membership. And due to this incredible demand, we are considering and implementing a lighter membership tier that will be able to attract these independent agents who are representing a growing market in the U.S. segment. H.W. Wood, I'll move on to. It was a new acquisition for us in FY '25. We've since rebranded it to HWS specialty, and it's really an important acquisition to support our international expansion and global networks. We've already put our Steadfast placements team integrated into HWS specialty and the synergies are being realized by merging those businesses already with more to come. We've also launched this proposition and opportunity into Australasian and U.S. and our UnisonSteadfast networks, which basically equates to 900-plus new agencies in networks for them to be dealing with. And we are building out the capability in the property and casualty team to service the demand of the global networks because when we purchased this acquisition, they had 7 specialty areas that we knew weren't the strength of 100% of where we wanted to build out, which was the demand of the networking property and casualty. So we're building that capability in that business to service those needs. And we're also building out capability in the delegated underwriting authority space to move the management of the agency binders in-house over the next 2 years, which will create a new revenue opportunity for Steadfast. And of course, finally, on this page is the Novum underwriting, our most recent acquisition post June 30, but we needed to mention this and talk about this as it will be significant to our strategic foundation. So that brings me on to Slide 17, please, David. Thank you. We completed the strategic acquisition of a majority stake in Novum Underwriting Partners, a specialty underwriting agency and wholesale brokerage located in the U.S. Novum was acquired in line with our previously acquired international businesses and will be value accretive day 1 on a stand-alone basis. It is a strong and fast-growing business today. What I emphasize is the runway of additional growth opportunities to come we are excited about. The rationale for acquiring Novum is to leverage our U.S. strategy, creating growth and accelerating our opportunities. It will significantly expand the market and technology capabilities for our ISU Steadfast network, our underwriting agencies in Australia and HWS Specialty in London. We will use Novum as our program development and management platform in the United States, offering specialist managing general agency and wholesale solutions for our ISU Steadfast network members and the broader market. It will also serve as the platform and marketplace to support the launch of select Steadfast underwriting agencies into the U.S. market and binder solutions created by HWS Specialty in London. The Novum acquisition is an exciting step forward in building out our global operation. If we could move to Slide 18, please, David. This explains our international strategy, how it interconnects our distribution networks and solutions we provide across geographies, all benefiting from being part of the size and scale of the Steadfast Group. It encompasses 5 main areas, one being referral network. Our U.S. and Australasian networks have access to international broking solutions by Unison Steadfast and referrals can go both ways. We also have retail distribution by HWS Specialty and Novum, and wholesale brokerage by HWS Specialty and Novum. All 3 networks have access to HWS Specialty providing London market access for individual risks and the development of London binders for other product and program solutions. But we also touch on the underwriting agency space in the binders and the programs. HWS Specialty brings Lloyd's capability to existing and new programs in Novum and Steadfast Underwriting agencies. Both also had the ability to distribute HWS Specialty solutions to their broker and agency clients. And this will also allow us the ability to expand our underwriting agencies into the U.S. Novum will provide that platform for our Australian agencies to expand and it will expediate the process and make it more economical with technology already in place. We also underpin this structure with the ability to share expertise and resource across the entities in technology, functional support, capital and market relationships. This map is the strategic foundation we set out to establish and will serve our members, their clients, our subsidiaries and Steadfast Group with a runway of additional growth and opportunity. Thank you. I can move on to the next slide. Thank you, David, and our next topic.

This is Stephen Humphrys now. You may remember Stephen Humphrys. He's my CFO over the last 12.5 years. You may also remember that he actually set up Steadfast back in -- 29.5 years ago in 1996 as a young accountant in the firm. He ended up heading up and being the managing partner for. Stephen retires today after delivering this another outstanding result. And I'd just like to say, as far as I'm concerned, he's been an unbelievable support to me. He has terrible jokes. So I won't miss his one liners. And he has poor judgment on football clubs. He backs up the West Tigers. I don't think I've had more intimate relationship with anybody in my life than I've had with Stephen and how we think about life, how we think about people and how driven we both were to make this a success. So just on behalf of the shareholders, the 1,000,047,000 shares that we have out in the market and $7 billion worth of capital. Thank you, Stephen, for the work you've done to produce the side-by-side support of me. And I hope in your retirement, you get your health back in order and spend a bit of time with your family. On behalf of everybody, thank you. And this is your last [indiscernible] rodeo, so off you go.

Thanks, Rob, and didn't realize our relationship was that intimate.

Well, there was that one night, there was that one night.

Good morning, everybody. I'm going to actually share the financial sections today with a very capable Hannah Lee, who's been accepted the role of acting CFO going forward and has actually been working with me for 9 years. Most recently as a Group Financial Controller, and she's of course, across the complexity of our Group, shadowing me on various strategic and capital management initiatives. So I'll start on the results. So the FY '25 results were actually in line, as you know, with our guidance metrics and delivering that bottom line NPAT growth of 17.2% and our earnings per share uplift of 14.2% over last year. The cash earnings per share were up 11.6%. But there's solid organic growth delivered by the brokers, the agencies as well as our complementary businesses. The moderating insurance market conditions are being well publicized, but it was pleasing to see what we might call the first fruits of our performance initiatives come through in the second half, which allowed the earnings momentum of that first half flow through into the second half also. We flagged that there would be more moderate revenue growth, but this would be coupled with a moderating expense base, and that showed in our sectional results, particularly in the broking that we've already mentioned. The organic growth was again supplemented by that further acquisition growth with acquisition of new businesses as well as increased ownership stakes in existing subsidiaries. So some opening remarks and results. First of all, as I said, we noted that the pricing momentum from our strategic partners was moderating and that did continue in the second half. The guidance for next year assumes that more moderate pricing environment. Secondly, we executed slightly early on some of our trapped capital acquisitions, which delivered that strong results. We continue to have a strong pipeline of acquisition opportunities. That doesn't -- that's never dried up in the time we've been here. As noted at the half year call, some of those acquisitions were step-up in existing equity holdings in our current businesses. So that means the way you account for it, you don't have additional EBITDA, but you actually have reduced noncontrolling interest, which is why on the slide that Tim talked to. We wanted to show the fact that a lot of our acquisition spend actually did increase our bottom line earnings. Even though it didn't may not have flow through to EBITDA, it just comes through that less noncontrolling interest. In contrast, for next year, in late June '25, we actually bought 2 further stakes -- further stakes in 2 businesses, one in New Zealand, one in Australia, where those businesses go from an associate to a subsidiary, which means we actually have additional earnings in next year, but greater noncontrolling interest. So for instance, there's $140 million of revenue and $100 million of expenses that will now come into the P&L. And that $40 million will replace roughly $17 million of profit from associates. However, you then have to record the additional tax amortization, financing expenses and the noncontrolling interest when you flow through to the final guidance metrics. Hence, why the EBITDA guidance is a slightly stronger number than what you have for the bottom line. But it's all to do with our lovely accounting standards, which I've never tried to justify. The seasonality for FY '25 was just over 43% in the first half and just under 57% in the second half, which is what we forecasted in February. Next year, '26, we would expect first half seasonality being around about that 44% to 45% range. But as per usual, it's always subject to the timing and the quantum of acquisitions that we complete through the year. Given time constraints, we've actually shown the normalization of statutory profit to underlying in the appendices this year, but they have the same typical items that we always adjust for. The growth in EBITA has come from -- Slide 22, please. Sorry, David, Slide 22. Growth in EBITA, as I said, has come from both our lens, organic and acquisition growth -- sorry, back one slide, sorry -- I beg your pardon, I'm sorry, Slide 21. And we've talked about the pricing environment. There's continued volume growth in agencies, in particular. They continue to win market share. We have higher interest received, obviously, in '25 on the trust and operating bank accounts. But that expense discipline across the business, including the head office was leveraging across our expanded business footprint. That's come through. And that's rebased our spend. So you don't necessarily get that uplift in '26, but you certainly saw it coming through into '25. We also had positive contributions from our whole range of our complementary businesses this year, including the premium funding, the risk area and the claims. So some of those areas, they don't show up in the broking in the agency side, but they certainly come through into the group result, which is why that overall organic growth rate was 8.8% for the group. And of course, the acquisition growth of 3.1% doesn't include the step-up in the subsidiaries, as I explained on the last slide. So you get another nearly 3% of acquisition growth that doesn't get shown on here. It gets shown in the noncontrolling interest coming down. There was a little bit of bias in the acquisition growth in the first half mainly because of the rollout of [indiscernible] was completed in FY '24. So that's just how it flows through into '25. If we can move to the next slide and talk through the balance sheet.

Thank you, Stephen. So moving on to Slide 22. We have our consolidated balance sheet and details of the debt facilities that we have refinanced in the last half. We currently have $1.1 billion of debt facilities with a range of 3 to 7 years term. In addition to that, there are further accordion and shelf facilities that have renegotiated terms that we could seek to access for another $425 million. The Board has approved an increase in our maximum gearing ratio from 30% to 35% in the first half. This provides us with a greater flexibility for capital management and allows the next range of acquisitions to be debt-funded, further assisting our EPS growth. Our gearing ratio was 27% as of 30 June 2025. We could borrow an additional $365 million and stay within maximum gearing ratio of 35%, providing considerable financial flexibility to fund growth opportunities. We have limited risk exposure to interest rate movements. There can be some minor impacts to our P&L. So in FY '25, the strong interest rates have given us a 2% tailwind to our EBITA growth as we had circa $250 million more cash in our trust accounts compared to our borrowings. We're currently forecasting at about 1% headwind for our FY '26 as interest rates come off. We would forecast an increase in our financing costs in FY '26, given we enjoyed an actual hedge on our borrowings in FY '25, which has now been fixed and further leverage of our balance sheet as we fund future acquisitions by our debt facilities. David, moving on to the next slide, please. Our businesses are more capital light and turn profit into operating cash flow. We again had a strong cash conversion in FY '25 with net operating cash flows of $374 million. We returned nearly $250 million to shareholders with the remaining free cash flow of circa $125 million for the year. This, of course, adds to our funding capacity for acquisitions each year. So this $125 million of free cash plus $365 million of debt capacity that I have mentioned in the last slide nearly equates to circa $500 million total capacity of the year. So now I'll hand back to Stephen for some final comments on the financials.

So before we go to the dividends, if I could just make a couple of my little eulogy at the end, if I could. It does seem strange to say farewell. I remember on the roadshow, I coined the phrase, Steadfast is like Hotel California because you check in, but you never leave. Yet, somehow I found the exit sign. I'd like to thank all the amazing colleagues in Steadfast family. You've been a joy to work with. We've actually invested into over 300 businesses since 2013. And there's just such amazing entrepreneurial talent contained in each one of them. I want to acknowledge the strength of the C-suite historically. And of course, the current team who devised an incredibly strong business plan that just keeps on delivering. The foundation stone's always been the network and the ability for the brokers to obtain a whole range of services to better run their businesses and serve their clients, the technology tools that we've had developed and continue to develop are global leading. And there -- from there, you get that opportunity to co-invest into their businesses as well as the agencies providing that continued growth opportunities for us. But we've always held the view you only buy good assets at good prices, and we stuck to that along the way. We've actually been able to deliver growth throughout the business -- with that business plan no matter what the economic cycle has been, no matter what the regulatory environment has been, regardless of COVID, regardless of the insurance cycle, like Rob has mentioned. We've always had an eye on short-term growth, but most importantly, an eye on investing into that medium and the long term because we believe that the most logical investor in Steadfast is a long-term investor who appreciates consistent growth on a defensive asset base with solid recurring revenues that can just grow over time. And with the latest acquisition in U.S.A, I think you've got now the key foundational assets from which Steadfast can execute on the international expansion plans into the future. If I can quote one number for you because I'm a numbers man. My number today is 20%. If you go back and compare '25 to the 2013, respective to what we took to the market, the compound annual growth rate on both the top line revenue and the bottom line profits is 20%. That's something that we're all proud of. It's been my pleasure to report to you record underlying profits each and every of the 25 half yearly reports that I've been part of since the IPO. So thank you. I'll hand it back to you.

Thank you, Stephen. The biggest pain in the b*** you were to your partners in the accounting firm that you managed before you came to us was Mr. 20%, used to use to drive them crazy. They have -- one thing they hated about you was the drive for profit. Thank you for what you've helped in this business.

Forgive my emotion, but obviously, it's intimate relationship.

Okay. Obviously, it's an emotional time for all of us with Steve leaving. So we are normal people. So we express emotions, that's the way we are. Okay. The final dividend, up 14% to $0.195 from $0.171 last year, okay. We managed to get you a 14% increase on the half year 1, which was terrific. We've opened up the DRP this year to give a discount. We don't do that very often. The reason we've done that is to allow the retail investors the opportunity to make some margin on the shares. Sometimes the retail investors forgotten by ASX 100 companies. We don't forget the retail investor. The reason we've opened the DRP up with a discount this time is to recognize their support from day 1 and to acknowledge this is a segue for them to hopefully make some money out of their shares. Next dividend date, 3rd of September, dividend record date the 4th of September, DRP date is the 5th of September, and payment date, which is the exciting part, is the 26th of September 2025. So in saying that, I'll hand back to you, David. Thank you.

[Operator Instructions] And our first question today comes from Julian Braganza from Goldman Sachs.

Congrats, Stephen, again on a very successful career with Steadfast. Great, great to have worked with you over the last few years as well. Just my first question in terms of margins, looking into FY '26. I'd just be interested in any commentary you may have just on how we should be thinking about that into next year, just given some of the initiatives that you've taken, particularly on the cost line?

Thank you, Julian. On the margins, the -- obviously, with the moderating revenue, we're trying to match that with a moderate expense base, which allows us to maintain the margins. We are consciously going to invest a little bit further offshore, so that will also be part of our plan. We've got some investments we want to do to really build out that capability, which will bring the fruits back into the future years, '27, '28. So I think maintaining margins is probably the [indiscernible].

Okay. Great. And just by division between broking and agency, any color there just on margins, just given the investments you're making, particularly on systems in the agency side of the business?

Maintaining margin, particularly in broking. The agencies maintain they have just a little bit further investments they want to do on some systems, there could be a little bit of a small decline there, but still obviously an uplift in the total profit for the group.

I think, Julian, the MGAs can operate sometimes at a higher margin than the insurance brokers can. Sometimes to expand an MGA doesn't necessarily mean you have to expand the FTEs because FTEs are a major cost in an MGA. So you would expect to have a higher margin out of the MGA network than you may have out in the broking network.

I can just add to that on the broking side, too. We have a really diverse portfolio of brokers across the Australasian network who operate at considerably different margins. So despite us having a really strong average EBITA, there's still lies plenty of opportunity in those businesses that are performing at a subpar level. So -- which is why we've appointed Rhiannon Toohey into that CFO role to continue on driving subsidiary performance initiatives going forward.

I mean, Tim, you did rather expertly in the amalgamation of QIB. How many did you actually put together into the QIB?

Yes. So we completed 18 acquisitions over the 5 years. And with that same view that every one of those businesses was quite different, but we took a considered approach to not only maintaining and growing that top line, but improving the margin. Most of the margin uplift opportunity doesn't sit within areas of discretionary spending, which is where people often start in that discussion. I think we find that focusing too much on that can have a negative impact on the culture of the business. I think there's still a large attrition rate. Look, not large probably compared to most industries, but let's say, 10% to 15% of staff turnover each year in broking businesses. There's an opportunity to utilize that natural attrition to our advantage as we bring in new technologies that drive more efficiency as a result. So I think that's how it needs to be done across our business. We bring together our 68 subsidiaries. We have serious conversations to them regarding the need to control expenses and have that focus. So they're on board of this. We've been doing that for a couple of years now aware of the moderating market conditions. So I think we're slightly ahead of the curve there to protect us any further into next year.

You did well for Victoria and New South Wales. So you went to Queensland.

That's right. Yes.

Our next caller is Andrew Buncombe from Macquarie.

Congratulations, Stephen, on an exceptional career. I might send you off with my first question, if that's okay?

You're not going to ask me about the premium rates, Andrew? You're not going to ask about the premium rates?

No, I know the answer to that already.

Thank you, Andrew.

Just in relation to the Slide 7. So in the footnote, it has the number of shares. You can see in the middle of the waterfall, the earnings. You've said 3% acquisitions for '26. If you assume that's at a 10x multiple, it gets you to M&A spend of $90 million. Now that's materially lower than what you've done in previous years. Am I doing that math wrong? What am I missing? Just any color there would be great.

Okay. The actual share count that we put in has just a little bit of things like DRP, et cetera, that we assume may come through and we didn't know quite know what the number will be. The 3% acquisition is a little bit of a run rate from last year, but also, of course, going forward for the acquisitions that we've got. We've mentioned already about Novum that's gone in there, and it's slightly EPS accretive. But again, it's been -- that acquisition is more for the foundation strategic benefit as opposed to what we're looking for, particularly on the bottom line in the first year. It's all about that strategic value. We're not actually putting commentary this year on exactly how much we spend or multiples for a particular commercial reason. And Rob, you might want to talk to that part?

Yes. I'm sick of telling the 300 acquisitions that we've done, the market exactly what we've done, how much we paid and what we made out of them. And so I've believe that now as we enter into our -- head towards our 30th year, but we'll be circumspect about that and keep it to ourselves.

Fair enough. The next question is for you, Robert. In relation to Slide 36, you've been putting this up for a couple of years now. The nonequity GWP segment that you do not believe is available for acquisition. What is the strategy or what's the future around those brokers and their relationship with the group?

Okay. Look, it's a good question. And I think that slide absolutely details out our position. Our $12.5 billion in sales, we do $6.6 billion that we control. That -- the $4.3 billion in the -- the part -- up the top $1.5 billion, we assume we take a very conservative view of some of the businesses there. I mean there are some businesses in that $1.5 billion where they've already done succession. They've got kids that have come into the business being successful and made an opportunity for the business to go ahead. I don't consider them to be potentially wanting succession. Whereas that $4.3 billion on the left-hand side there on page -- on Slide 36, there is no reason why -- and when succession comes or some issue that arises where they may want to take some capital out of the business that they will not come to us and at least ask us to value and put a price on their businesses. So I think if you were to look at this business and say, what is the runway of Steadfast operating in Australia and New Zealand? The runway is $4.3 billion worth of turnover of businesses that are intricately linked into our services. In many cases, our software relied upon our expertise in the myriad of services that we provide into the network, the compliance, auditing, legal, technology, all of the training that we do. So people stick in this network not because they make any money -- more money out of this network, they stick with this network because the word network is just not a phrase that's thrown along, it actually is a network. If you saw the intricate infrastructure that runs this business and the amount of people that run the network services, it would be amazing to anybody to look at and how successful have you been? And when you look at what we do, that's the reason that we're successful. So yes, I think the $4.3 billion is potentially, over a period of time, upcoming available for us to at least have a look at and compete again. For the most part, people will stay. There are some people who've sold outside the business who've rung me and said, I cannot believe how inept the people I've sold to are, how they do not have a network and how their perceived solution for technology doesn't exist.

Is it okay if I ask Tim and Mark a question?

I didn't put them in here, Andrew, just to fill the seats in the boardroom. I put them here to open them up.

Understood. Tim, good to chat. Maybe a question for you. How do you think about balancing? Or how do you balance the need for M&A growth in the businesses that you've run while maintaining profitability in the core?

Yes, it's a great question, Andrew. I think that there's a real need to have a combination of both. I mean the way that our organization is set up in the way that we deliver broker services, obviously, is there to help with that organic growth piece where the inorganic growth is led by a team of M&A professionals. So I think we're quite segmented in our approach. Even though we work quite closely together, we have secular targets around where we'd like to be in those. But yes, just by having a concentrated focus on that teams that are aligned.

Yes. And then maybe a question for Mark, please.

Yes, Andrew, on that further. Are you ever told to go out and try and get people, Tim, to -- do you have a target?

No, not in a particular way. I think it's led generally from the conversations from across the network. I mean we get together, we have our annual convention, we have a number of engagement points throughout the year with our broker network. And they know that we're available when they're ready to talk to us. And so it happens sort of more reactively, I guess, you say, than proactively.