Steadfast Group Limited (SDF) Earnings Call Transcript & Summary

Good morning, everybody. Firstly, sorry about the delay, but I was saying to a bit like a football match. You've got to wait until the umpire bounces the ball to start the game, and it's 10:00, and we are in a virtual Board meeting. So there'll be people online. On behalf of the Steadfast Group Board, I am pleased to welcome you to the Steadfast Group 2024 Hybrid Annual General Meeting. As we are in Sydney, I would like to acknowledge the Gadigal people of the Eora nation and pay my respect to their elders past and present. 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 our Managing Director and CEO, Robert Kelly, AM. All of your executive directors are present today. Vicki Allen, Andrew Bloore. I'm sorry, I should have said, nonexecutive directors, Vicki Allen, Andrew Bloore, Joan Cleary, Gai McGrath, and Greg Rynenberg, sitting in the front there. Company Second, Duncan Ramsay is also here. Also attending the meeting is David Kells, relationship partner of KPMG, our auditor for the FY '24 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. Also we have here is a senior executive of Steadfast sitting in the front row. So after the meeting, if you have any questions, please don't hesitate to talk to these people over here, who I must admit do an absolutely amazing job for Steadfast and its shareholders. The meeting will proceed as follows: I will provide an opening address, and will then 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. On behalf of my fellow Board directors, I'm pleased to report another record underlying net profit after tax for the year ended 30th of June '24, making it the 11th consecutive increase since listing in 2013. The group has continued its track record of strong performance since listing in 2013. And as a result, shareholders have experienced consistent growth in fully franked dividends and an increase in the share price from $1.15 to $5.50 at the close of business last night. The market capitalization of Steadfast is now approximately $6 billion compared to $535 million immediately after listing. In summary, for the year ended 30th of June 2024, the group delivered a 21.8% increase in underlying NPAT, net profit after tax, to $252.2 million and underlying earnings per share increased by 16.2% to 23.4% per share. Statutory net profit, which includes nontrading items, was $228 million compared to $189.2 million for FY '23. Details of the nontrading items are included in the directors' report on Page 46 of our 2024 annual report. The Board paid on 24th of September 2024, a fully franked final dividend of $0.1035 per share. Total dividends for FY '24 were $0.171 per share, fully franked, up 14% on FY '23 dividend and representing a payout ratio of 75% of underlying net profit after tax. The group continues to adopt a conservative approach to capital management to support its growth by acquisition. At 30th of June '24, the group gearing ratio was 20.2%, which excludes premium funding. The gearing ratio of 20.2% is well within the Board mandated group maximum gearing ratio of 30%. We consider a low level of gearing is sensible giving inflation and current uncertainties around the world. During FY '24, Steadfast continued its disciplined approach to acquiring broker and underwriting agency businesses, completing 48 earnings accretive investments for a total outlay of $457.8 million, including the acquisition of ISU Group, a network of independent agencies in United States of America, and the underwriting agency, Sure Insurance. We are on track to complete $300 million of acquisitions in Australia and internationally in FY '25, all funded by debt and free cash flow. We are mindful of the potential impact on Steadfast's strategy if the Treasury Laws Amendment (Mergers and Acquisitions) Bill 2024, (M&A bill) which the Federal Government has recently introduced into parliament is legislated. We will continue to work constructively with the ACCC on future acquisitions in Australia. Steadfast Group is committed to strong and effective corporate governance that is underpinned by our ethical and responsible culture. I am proud to say that despite misleading recent media reports, Steadfast has a demonstrated record of leadership in the Australian financial services governance and better outcomes for customers. Recent examples include: Steadfast was supportive of the 2019 Hayne Royal Commission recommendations to improve client outcomes and using fairness as a guiding principle. These recommendations align with Steadfast's ethos, offering and processes, including Steadfast's market-leading policy wordings, triage and the Steadfast Client Trading Platform that support strong client outcomes with non-volume-based remuneration and fixed commissions for all products. In anticipation of the Hayne Royal Commission outcome for insurance brokers, in 2020, Steadfast relinquished volume-based incentives paid by our insurance partners. In 2021, Steadfast acquired Goldseal to further strengthen Steadfast's capabilities in compliance, training, customer experience and HR management within our compliance and customer experience division. Steadfast's code of conduct was strengthened in 2021 and focuses on reasonable customer expectation in terms of transparency, delivery of product and appropriate advice. In late 2021, Steadfast began a review of strata insurance practices in Australia which was a rapidly growing class of insurance business as a result of rising popularity and development of multi-owned properties across the country. The rise in the need for strata insurance has increased competition for business, especially amongst insurance brokers, insurers through their appointed underwriting agencies and strata managers. Steadfast identified a number of concerns. Strata managers commonly receive rebates from brokers of broker commissions and simultaneously brokers often charge fees to owners' corporations. Both of these practice can be confusing and controversial. There was a need for improved transparency of remuneration between the brokers and the Strata managers and the owners' corporation committees. Affordability and availability of strata insurance were problematic for some segments of the strata insurance industry. By early 2022, being conscious of these concerns, steadfast engaged John Trowbridge, the well-respected actuary and consultant, to undertake an independent review of strata insurance practices. Following the release of the Trowbridge fifth and final review report in June 2023, Steadfast immediately began an internal review in accordance with Trowbridge recommendations and commenced implementing many of the recommendations. With full support from steadfast, the Trowbridge reports were made available to Federal, State and Territory Governments and to regulators. The New South Wales Minister for Better Regulation and Fair Trading has already acted on issues raised by the Trowbridge reports. And after undertaking a review, including industry consultation, arranged the Strata Managing Agents Legislation Amendment Act 2024 to improve disclosures to owners' corporations. Steadfast fully supported this process and the legislation. From an industry point of view, Steadfast continues to contribute to and adhere to corporate governance principles as set out by the ASX Corporate Governance Council. Details of our governance and risk management frameworks are available on our investor website. In response to the media reporting on 9th of September 2024, Steadfast Group issued a statement to the ASX on 9th of September 2024, and our Managing Director and CEO, Robert Kelly, and General Counsel, Chris Sargent, also attended a Senate Select Committee hearing on the Impact of Climate Risk on insurance premiums and availability. And that occurred on 9th of October '24. Both of these matters, both the 9th of September release and Robert's attendance at the hearing, both included responses to the misleading nature of many of the allegations -- material allegations. Following the release on 9th of September 2024, the Steadfast Board requested a detailed internal review of existing customer protocols in Steadfast subsidiary businesses with significant strata insurance portfolios. The ongoing review is led by senior group executives who are relatively new to Steadfast and therefore, bring a fresh perspective and the team also includes an external consultant. The objectives of the review includes: Confirm or establish appropriate disclosure of related entities per transaction. Confirm appropriateness of existing client partnership models. Analysis of risk and compliance culture, including executive engagement. Appropriateness of internal processes and procedures to ensure consistent compliance with policies and procedures. Review of preferred supplier panels for potential conflicts of interest. Review of Steadfast Network membership agreement to assess if any conditions require upgrading. Today, we have not found any evidence of channeling of incentives between Steadfast related entities. We have not found evidence of deliberate actions or inactions relating to non-compliance with regulatory or legislative obligations. Actions underway include: updating Steadfast minimum standards taking into account the context of the independent review of Strata Insurance practices and associated recommendations in the Strata Community Association Best Practice Strata Insurance Disclosure Guide. Simplifying fee and commission disclosures to meet reasonable community and customer expectations. Developing a comprehensive Group Conflicts of Interest Policy and Framework separate from the Group Code of Conduct review and Subsidiary CEO, Delegated Authority. Expanding of Steadfast's internal audit and governance functions. And due to the perceived conflict of Steadfast Group's 2.1% shareholding in Johns Lyng Group, which is not a major shareholding. And Robert Kelly's JLG, Johns Lyng Board position, Steadfast divested its 2.1% shareholding in JLG, and Robert did not offer himself for reelection to the JLG Board. This year, the Board undertook independent benchmarking of senior executives' remuneration against our peer group, which has changed as Steadfast moved from the ASX 200 Index to the ASX 100 Index. The independent report noted some of our senior executives' packages needed to be adjusted as they did not meet our remuneration policy objectives. In particular, the fixed remuneration of the CEO and Managing Director which was well below the Group policy of keeping its senior executive at close to 75% -- 75th percentile. Our remuneration policy takes into account individual performance, market conditions, retention of our quality team, global competition for key staff and encouragement to continue to outperform without increasing the risk profile of the group. Our short- and long-term incentives are aligned to the growth in shareholder value and hurdle metrics are reviewed and determined annually. The Board is very conscious of a need for an orderly transition of the Managing Director and CEO and me, your Chair. Steadfast has in the past two years made new appointments to both the Board of Directors and the executive management team, which have created a wider pool of candidates for succession plan from within the group. Pleasingly, Steadfast's success has enabled it to hire a number of young high-caliber executives who bring additional skills to the Group. On 15th of November 2023, we welcomed Andrew Bloore to the Steadfast Group Board and he is standing for election this year. Andrew, who is an experienced ASX director has 35 years working in the Australian superannuation administration, insurance and technology sectors. On behalf of the Board, I would like to thank our highly experienced and hard-working Managing Director, Robert Kelly and the Steadfast team for delivering another record result for our shareholders as well as continuing to provide quality products and services to our network brokers and other stakeholders. And its leadership for industry change to help ensure fair and better outcomes for customers and the proactive approach to the recent -- proactive approach to the response to the recent media allegations. Our continuing growth would not have been possible without our Steadfast Network brokers, Steadfast Underwriting Agencies, our complementary businesses and the loyalty of their clients. In line with our succession planning and after 11 years as Nonexecutive Director, the Board sadly announces that David Liddy AM retired from the Steadfast Board on 31st of October '24. That's yesterday. Unfortunately, and it was in line with our succession planning for renewal of the Board. Unfortunately, David cannot be here with us in person today. However, on behalf of the Board and management, I would like to extend my sincere appreciation to David for a significant contribution to the Board as Deputy Chair and as a Nonexecutive Director and through the success of the Steadfast Group since the ASX listing in 2013. His banking, finance and listed company CEO experience has been invaluable. I extend my gratitude to my fellow Board directors who continue to be focused on driving increased shareholder value, challenging and supporting the Steadfast team and continuous improvements in risk management and guidance. Finally, the Board and management appreciates the enormous support it received from its shareholders, particularly in providing additional capital to grow revenue and profits. I will now hand over to Robert to provide his address, including an update on the unaudited FY '25 Q1 net profit, the outlook for the full year and details of the New South Wales legislation and M&A Bill recently introduced into Federal Parliament. So thank you.

Thank you, Frank, and good morning, everybody, and thank you for coming. It's -- we're very tight up here. So if somebody disappears, please run around and get them back up. There's about that much space between us. And if it gets boring, maybe one of the directors could throw themselves down there perhaps -- and just get everybody lined up. You'll do that? Its Queensland that they always want to -- make a show. Look, I'm pleased to report that FY '24 continues our year-on-year record of accretive growth since we listed in 2013. It's an easy statement to make, but it's not an easy benchmark to keep up with. In FY '24, we delivered underlying revenue increases of 18.9% and to $1.7 billion, and our underlying earnings before interest, tax and amortization increased by 22.7% to $528.5 million. These are pretty wonderful numbers in a difficult market where everything is competitive, and you've got to keep fighting to get what you can get. But basically, they are a consequence of our continued strategic execution of the proven business model that we developed back in the 2012, before we took it to the market. The depth and strength of our executive team, our strong trading performance on our equity-owned businesses and our accretive view on acquisitions. So I just should pause on that. We try to make -- we do, as part of our mantra, make sure that if we do an acquisition, it's EPS accretive on day 1. And that's not easy -- always easy to do in a market. So the increasing cost of insurance has helped us. And then our focus on organic growth within the businesses has been outstanding over the last couple of years. Our strong track record clearly demonstrates the success of our business model we developed back in 2012 as over. In FY '24, Steadfast, the Australasian Network brokers gross written premium hit $13 billion. That's an incredible position to be in, okay? It's a 12% increase. And it puts us into a world stage. We were recently voted on the number 17th largest insurance distribution network in the world. If you had taken me back to 1996, when we started again, started this business, we were struggling to survive. So for an Australian company to bring together people and to actually get on to a world stage, I think it's absolutely one. So once again, this growth was driven by increased sales volumes over the year and the premium rate increases, which our strategic partners continue to drive to get acceptable returns for the capital they deploy. Both organic and strong acquisition growth resulted in the excellent EBITDA growth of 19.6% from the equity brokers, reflecting a continuation of reliable performance and in fact, outstanding performance. We've now got 418 brokerages in the network in Australasia, 318 in Australia. Pleasingly, 69 in New Zealand and 31 in Singapore. We all, as a group, Steadfast has equity holding in 68 of the 418 brokerages in the Australian network. Steadfast equity brokers contribute approximately 50% of our sales. So when you look at that $13 billion, then the equity brokers do roughly 50% of that. Our strategy of expanding our business outside Australia, which we started a few years ago, is gaining momentum, albeit in a very careful and considered approach. We commenced our international expansion in 2017 with the acquisition of Unison, now UnisonSteadfast Network, which is just under 300, 294 brokerages across 110 countries. We own 60% of UnisonSteadfast, and it gives us a complete footprint around the world. In October 2023, after many years of analyzing the North American market, particularly with my position on the Accord Board out of New York. We acquired 100% of ISU group, a network of independent insurance agencies across America established in 1979 and as of June, it had 228 members located across 40 states, generating $7 billion of insurance sales. Pleasingly, ISU Steadfast exceeded the budgeted figure that we bought the business off in FY '24. That profit has gone up in time. That's always handy if you do an acquisition and it exceeds the profit line, keeps our orders very happy down the bottom there. If you want to know where they are, they're the ones that look like accountants sitting up the front here and look very stiff. They're not that stiff, but they a bit. In August this year, we launched the ISU Steadfast brand. That was a rebranding at the behest of actually people who were -- who were part of ISU. They said, "Hey, you've got a great reputation internationally. We want to attach it to us." So Steadfast International division is now ably led by Samantha Hollman sitting down next to our COO there, Nigel Fitzgerald. And she continues to focus on the development of the network capability. I should just remind you that we actually set about putting up an international team together long before we actually made the acquisition and they worked tirelessly when we were sorting out which acquisitions we should do. The potential for some of the small acquisitions that we may be able to do in North America is quite outstanding, and we will look carefully in that market. ISU Steadfast is in a unique position in the agency networks in the U.S. As owned by private equity, most of them have a different model of what we do and in the short term, they're trying to get a game. Our game is a long game. And so we want sustained growth, working with business partners in the model that's been successful in Australia. And so since acquiring Steadfast ISU, we've seen a number of members increase. There were some sales in the first 12 months of people that are committed to sell. And so when you take the net, we gained 13 new members in the first 12 months of owning it. And that's pretty outstanding. We've got 220 members across the U.S. Our expansion into the U.S. market presents us with the opportunity to deliver our strategy, our unique business model and operate in a market 12.5x larger than Australia. We're also looking to expand our London office. What ISU has done for us has put pressure on our London office for inbound business into the U.K. market. So we're looking to expand in the wholesale side, not in a big way, but our London office, and that we hopefully be able to announce something pretty soon on that. So expanding the network over the past three years has paid good dividends for us. In FY '24, $1.4 billion of GWP was transmitted through our client trading platform, which is the auto rating system, which allows a contestable platform. And that was an increase of 20% over the FY '23 year. Steadfast Technologies in our Australasian network is market leading with solutions in a whole range of excellent outcomes for brokers and their clients. Brokers continue to be attracted to the efficacy that it creates, the ease of obtaining the best terms, a tailored policy wording, the wide market access to insurers and of course, SCTP platform is in great demand by insurers and want to come into it. In addition, we provide an extensive range of products, which are market-leading aim to produce more certainty at the time of claim when the consumer wants to see whether the policy works or not. So to protect the consumer, each insurer pays the same commission rate to get access to -- for the class of business in the platform. Steadfast continually improves the product offering on the client trading platform. This year, we added additional insurers for motor -- private motor, home, landlords, residential strata and fleet. It's interesting on the residential strata. There's a lot of new players coming into that and they're savvy technically wise, and we can connect them in very, very quickly into the client trading platform. Currently, there's 219 brokers using our INSIGHT back office system with over 7,100 users. I mean that by any test, that's an amazing position to have in an Australian and New Zealand position. INSIGHT migration programs continue with the Steadfast team supporting the migration of brokers to INSIGHT. There are currently an additional 11 brokers that have committed to migrate and ongoing discussions with a further 15 in the network, that's our current book of people who want to get on. And turning to our Steadfast underwriting agencies. They continue to produce a strong result with sustained organic growth, generating $2.3 billion in FY '24 and with a profit uplift of 13.4% over the FY '23 year, outstanding. GWP growth from increased volumes and continued increases in premiums by insurers has led to underlying EBITDA growth of just under 19%, 18.9%. During the year, we continue to invest in anticipation of the changes in the regulatory environment for underwriting agencies from 1 of July in 2025, CPS230. The insurers are operating on 234 at the moment. Therefore, slip into 230, we've been gearing up to make sure we comply with that. We currently have 29 agencies offering over 100 niche products, the entire market. The next point I'm going to make is very important. 45% of our sales are done by our competitors. That's people competing against our own brokers and using our own Steadfast underwriting agencies to do business. Of the 29 agencies, the entire market is available to our competitors. There is no exclusive use of Steadfast underwriting agencies by the Steadfast Group. It's an option for people to do. Now I'd like to just quickly address the media reports in which Steadfast operating structure was misleadingly portrayed in a number of areas. Without going into chapter and verse, the cutting and editing was not an accurate view of how we operate, now for the 3 decades in the Australian insurance industry, how we've driven what we want to achieve. Steadfast brokers always operate in a transparent way to get the best terms and conditions for their clients. Just on that point, there is a miscalculated view by some people that the cheapest policy is the best policy for the client. This is my 54th year in this industry, and I have tell you this from a practicing broker as I was, okay, the cheapest policy is not always the best solution for the consumer. However, there's always something to be gained in any journey you take in your business life, and this crossroad of the media events allowed us to reflect and review and opened up opportunities for clarification for us. I'm grateful for the Chair of the ACCC and entering into meaningful interactions between steadfast and the ACCC. This will allow the facts of how we operate to be transparent with the ACCC. Further, I guess, maybe realize that the insurance industry has been slow in educating the consumer, in educating the public regulators and the government instrumentalities on how and what insurance brokers do and how they work to get a fair outcome for their clients on advice, not on price. As a result of media attention, I was requested to -- as Frank said a minute ago, to attend the Select Committee hearing on climate risk and insurance premiums and the availability in Parliament House on the 9th of October, covering the topics of pricing of the climate change events on insurance and its inflationary effect on base product pricing as well as clarification of a number of matters that were raised in the recent media reports. I'm actually thankful for the questions raised by the senators and our ability to put forward the exact process of pricing so that words like gouging would not be necessary in describing the need for base price increases. I must say that the questions that they put to me were intelligent. They were detailed, and I felt that they were interested in the answer, and I thought it was a very good interaction. So looking at now what we did with the Trowbridge report. Steadfast continues to support a competitive and transparent fair marketplace. Steadfast decided in '21, '22 to appoint John Trowbridge to do an independent review of Strata insurance, in particular, the transparency between brokers, managers and owners' corporations on the remuneration flow. His fifth and final report was delivered in June '23, last year. And I'm often asked what Steadfast did about the implications contained within the report of some opaque structures that we had in strata assets we own. And so for the record, I can confirm we increased clarity on who gets what in the remuneration process and any perceived conflict of interest that may exist in Steadfast companies doing business with other Steadfast companies. The Senate hearing also gave me the opportunity to publicly display the following facts about strata insurance in the Australian market. You may reflect on comments that I've made about us that we dictate, we monopolize, we force prices up. Well, the Australian strata count of the number of registered insurance schemes in Australia. These are the strata clients. These are the strata says that 69.5% of all strata plans in Australia are ensured by non-Steadfast underwriting agencies. 86% of I've intermediated strata business in Australia, that's the business that strata buy through insurance brokers, okay, is placed by non-Steadfast equity brokers. These statistics clearly show Steadfast position in strata Insurance in Australia. As can be seen, this is a highly competitive market. All of our brokers, all of our underwriting agencies compete for business often against one another. There are no rules in this organization. If somebody can take business from another Steadfast broker, that's a Steadfast broker or an underwriting agency, do it. Competition is the DNA of business. In New South Wales, brokers are required by law to obtain a minimum of 3 quotes. Pricing and policy items are determined by insurers remember, even though we're an underwriting agency, the insurers dictate the price and the product line. In FY '24, strata accounted for 9% of Steadfast's gross written premium, as sales, of which the split was pretty simple. Steadfast equity brokers did 6% of the 9%. They should do a fair amount because they specialize in some of them. And the nonequity brokers did 3% of the Steadfast network's GWP. Further, we conducted a detailed analysis of Steadfast equity brokers GWP compared against the APRA insurance data. In other words, what APRA reports on by various classes, house, car, sort of -- fire, liability, professional indemnity. In our pack in Slide 18, indicates that all general insurance lines Steadfast equity brokers place do not exceed more than 10% of the GWP that APRA reports that the Australian market put through. Looking at regulatory positions, the two main potential regulatory impacts for Steadfast are first, the New South -- as Frank alluded, the New South Wales Strata Management's Legislation Amendment Act 2024. We were invited to have input on that. And I'm very pleased to say that some of our input was adopted. This clarifies when the strata manager must inform the Owners Corporation Committee of any remuneration they receive for any services they arrange on behalf of the strata plan. One would hope that legislation such as this, which keeps consumers informed, will probably move perhaps around other states and territories basically because of its efficiency and its transparency. Now the Federal Government's Treasury Laws Amendment Mergers and Acquisitions Reform Bill of 2024. If this Bill, it will -- if the bill is passed, it will align Australia with other international jurisdictions. People are running around going the sky is falling. It's not. This is the way everybody operates around the world. You have to go to operating structures like the ACCC and tell them about your mergers, or acquisitions. This actually puts us in line with international law around the world. So for mergers and acquisitions, making a transparent and transparent to advise of various levels of acquisition. We continue to work with the ACCC on the impact of this legislation. Okay. So I think this is growing Australia up. I think the treasurer looked around the world and said, where are gaps, and this is one that puts us on the same level as everybody. I'm pleased to say that -- and getting towards the end of this. I suppose listening to me talk. So I promise I'll wrap it up pretty quick. First quarter of FY '25 was strong and in line with our budget. Our first FY '25 unaudited underlying revenue is 14% up from the first quarter '24. First quarter FY '25, unaudited underlying EBITDA is up 18%, up from the first quarter of 2024. First quarter unaudited underlying NPAT is up 23.3%, again, comparing to PCP '24. Our vision is to grow shareholder value by running and owning market-leading networks, underwriting agencies, groups in our chosen geographies. Steadfast Group is well positioned, continue to execute its disciplined strategy of producing reliable organic acquisitions growth in Australia and now moving more into the international markets. This, together with the benefit of acquisitions made in FY '24 and other initiatives enables Steadfast to reaffirm the FY '25 guidance of underlying EBITDA of between $590 million and $600 million, underlying NPAT of between $290 million and $300 million, and underlying NPATA of between $340 million and $350 million. Our underlying diluted earnings per share NPAT growth is -- our guidance is between 12% to 16%. There's a few key assumptions underpinning this guidance, and they've been detailed in our annual report on Page 50 to 51. Again, to get off -- the get down, I'd like to thank so much, our employees, our Board of Directors, our network brokers, the underwriting agencies, our complementary business, very importantly, our clients, our strategic partners for the contribution to the FY '24 result. And then lastly, thank you to all our shareholders for your ongoing support. It's well appreciated. We look forward to continuing with you as our stakeholders to maintain our strong track record. So thank you very much, everybody, and thanks for putting up with me for a little while.

Thank you, Robert. We will now proceed with the formal business of the meeting. I propose to take the notice of 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 holders or shareholder, company representatives may vote. I declare the polls open. Lumi Holdings Limited and Link Marketing Services are the returning officers for the meeting. Shareholders attending the meeting online will be able to cast their vote by simply selecting 1 of the voting options. Your vote is automatically recorded. There is no need to press or submit or enter button -- submit or enter -- push the enter button. You can change your vote up until the time I declare voting closed. 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. Once voting opens, shareholders attending the meeting in person will be presented with the list of today's resolutions and their voting keypad. Use the trackball to highlight the resolution you wish to vote on and press the green square to confirm. The resolution text will appear, bring up the voting options by pressing the green buttons. Obviously, this doesn't apply to people in this room. Press 1 for vote -- press 1 to vote for the item, 2 for against and 3 for abstain. To move on the next item, press the green square or to return to the full list dividers press the red triangle. Questions can be asked using a microphone in the room or through the online platform. If you are a shareholder in the room and wish to ask a question, there are 2 members of staff holding roaming microphones. Please put up your hand at the appropriate time if you wish to ask a question about a particular resolution. If you are participating online through the virtual meeting website, and wish to ask a question, you can either type your question or ask it through audio.[Operator Instructions] I'm glad on that -- I'm glad I'm here and not doing this. [Operator Instructions] 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 is set out in the notice of the 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 that voting exclusions set out in the AGM notice of the 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 director's report and the auditor's report for the financial year ended 30th of June 2024, as set out in the company's 2024 annual report. These documents have been made available to shareholders. There is no vote on this item of business. Duncan, are there any questions online?

Yes, Chair, there are 86 shareholders online at last count. We have questions from one shareholder and multiple questions from another shareholder. So what I suggest we do, Chair, is I'll deal with the single shareholder question first. Then we'll get on to the multiple questions from the other shareholder. So the first question, Chair, is in your recent announcement, you indicated that you provided information to the ABC on 29 August 2024. Why did the pause in trading wait until 9 September? The pause in trading on the 29 August could then have occurred before the story was aired by ABC, therefore, have less effect on the stock price, which at this point still is nowhere near recovered from the $6.35 price pre the pause in trading.

I think everyone knows that the media reported on the morning of 9th of September some of the allegations. The Board immediately met that afternoon and decided to issue a release to the market. I had it in front of me, but I'll pick it up in a minute. And we released that to the market and updated number of the points raised in the allegations that were actually aired that night. The communication on the 29th of August, was to the media and company concerned. And it was a response to some questions from the reporter and clarification of the matter. So at that point in time, the Board and the management were not aware of the allegations. They only become aware of the allegations after the media report on the Monday morning and the program being aired on Monday evening.

Chair, the next questions from a shareholder, I would say 6 or so different topic areas with multiple sub questions in each area. So I'm not sure how you want to deal with this aspect. We could do it one by one or I could try and fairly summarize the gist.

I think we should answer them one by one, Duncan.

So I'll do it one by one, Chair. So first question is why did our CEO, Robert Kelly suddenly resigned from the Board of Johns Lyng on September 27 after 7 years of service without any explanation.

The fact is that Robert decided that he wanted to spend more time on Steadfast and particularly on our expansions of our international operations. He did -- he made his contribution to JLG and decided to not offer himself for reelection.

I was actually up for reelection, I would have had to commit for 3 years at that stage. And we had a lot of work to do in our overseas acquisitions, and it was a decision at that time that there was -- it was the appropriate time to say, well, I put in 7.5 years. And I think that was a fairly big effort from mine. Because it was a developing company and an expanding company. And I think it needs directors on it that can afford to give full time for what they're doing. And my full time has to come to Steadfast.

There was a question on the 2.1% too, wasn't there Duncan?

Yes, that's right, Chair. Maybe I'll just keep going down the order...

We can't hear you.

Maybe I'll keep going down...

Can we turn it up?

So the follow-on question...

We can't hear him.

Chair, the follow-on question is, was it because of conflicts of interest with Johns Lyng being the largest player in Australia's strata management industry through its -- just says Brown & Duggan, I think it means Bright & Duggan division?

I think that's getting into detail. I'll leave Robert to add.

Yes. I mean they're not the largest player. I mean I've just got off the Board. I can tell you, they're not the largest player, okay? There's 2 other players in the industry. The inference that there was a conflict of interest, I never saw that. But if you look at the fact that I was up for reelection. We had a lot of work to do internationally. My efforts should go into this company and the fact that there was any window that went around about it, I think it was an appropriate time to actually get off the Board without creating havoc. We had a really good woman coming into the Board, who was clever and smart. And I thought it was an appropriate time. And then to have somebody say on public television that we have a major -- we're a major shareholder in a company we own 2.1% was a ridiculous statement. And I thought -- we've supported that company. We've made a lot of money out of the initial $5 million investment we made on it. It was time to bring the capital in and deploy it in our company and our ever-expanding opportunities overseas. So I can only answer it that way.

All right, Duncan.

The follow-on question was Mr. Kelly and Steadfast influential in persuading Johns Lyng to move into that business in 2019?

Into the -- are we talking about the...

Bright & Duggan strata management industry.

In a public company, I can assure you that if you're a nonexecutive director, you have very little to do with the actual operations of the company. That's given to an incredibly powerful executive team who go and seek opportunities and bring them through to you. The impact of me being on the Board had nothing to do with Johns Lyng getting into the strata management area.

The follow-on question is which Mr. Kelly has partially answered but I'll ask it in full. What is the history of our investment in 5 million shares in Johns Lyng? And given it was only a 2% stake in the business, how did give us an entitlement to a Board seat?

I think the -- we bought the investment in Johns Lyng before I was asked to join the Board. My joining the Board was as a result of my experience in the insurance industry and I guess they ask, they asked me to come in after we had bought the shares. There was no deal done that if you buy the shares, you'll get a Board seat. I reflected on that -- I reflected on that with Frank. And Frank said to me, if you've got some capacity and you want to do it, it will give you experience in a smaller ASX company. And so I accepted the Board seat. I think I was an active director on that. And I think some of the information I have about the general insurance industry, probably in some ways -- a little ways helped Johns Lyng. But -- and then again, I reiterate I saw very little for us having such a minority shareholding, having quadrupled our money and keeping it in Johns Lyng when we've got great aspirations in other parts of the world that we can deploy that money in. Pretty -- to me, it seemed logical to bring that to the Board, and I got support of the Board to do that.

The follow-on Johns Lyng question is whose idea was it for Robert Kelly to quit the Johns Lyng Board? And is it correct. He was facing an uphill battle to get reelected at the Johns Lyng AGM on November 13, when his latest 3-year term was due to expire.

I can answer that. Robert did not want to go for reelection. A decision was well made before the notice of the meeting was prepared by JLG. So it wasn't a decision that JLG made. It was a decision that Robert Kelly made.

I made it well before circumstances have gone. My wife might have had a bit to do with it as well, who said, "What are you doing?

The last Johns Lyng related question is, please fully explain the relationship between Steadfast and Johns Lyng.

That's pretty simple to explain. There isn't any. There never has been. The only relationship was we were a [indiscernible] investor in it and I was on their board. There was nothing that transpired between them and us whatsoever.

I think it's just fair to say, and correct me if I'm wrong, Robert, that for example, CHU has a panel of claims people they deal with, and JLG was on that panel. But a whole panel is reviewed by QBE, who is the underwriter. And I don't know how much business they receive, but I think it's probably not as much as people would expect.

I know the figures. And that would be Board confidential. And I can tell you, it is a percentile point difference that they do of the Bright & Duggan work. In fact, I've often wondered why they do so little work in that area. In terms of the CHU asset that we own and them getting on the Board, they had to go through -- on the panels, they had to go through a series of issues to get on there. They didn't get on straight away. They had to keep applying to get on. The diligence that CHU applies to allowing builders to come on to a panel is quite extreme. In fact, I think draconian in some ways, but they assist on doing it. And the way we operate our businesses is that the executives that run those businesses make those decisions. I'm also sad to say that last year, I got a notation from CHU to say that Johns Lyng hadn't performed well in parts of New South Wales and now we're knocking them off the CHU panel in parts of New South Wales until they got their system back up and operating. I'm pretty sure that they've got it up and operating to the satisfaction of CHU. So they'll have to apply to try and get back on.

The next theme of questions is about Board succession planning. There are 2 questions. First question, the tag team of Chair, Frank O'Halloran and CEO, Robert Kelly, has been in place at the top of this company for the past 11 years since the 2013 float. How old are they both? And what is the plan in terms of who will retire first?

So I think probably I should answer it as Robert is younger than me.

Much.

To answer the question, I'm 78 years of age and still young, hopefully. And Robert is 76.

77 now, Frank.

You are catching up to me.

Yes, I've topped up. That's not hidden, by the way, for the person who answer the question. It's documented everywhere we are, including in the annual reports.

So just read out the questions to make sure we answer it.

How old are they both? And what is the plan in terms of who will retire first?

It's a good question.

Good question.

It really is up to the full Board to make a decision. I will not make a decision in isolation of the Board. And in respect of Robert's position, it's up to the full Board to decide on who his replacement will be, and I will not make a decision without consultation with the Board.

It's like if you're playing in a football team, okay? You've got the coach and you've got the support team behind you. and then they look at how you perform all the time. So in a public situation when you're appointed by the Board as a CEO, you have a group of coaches behind you that look at everything you do and are very strong willed and know what they do. So I would suggest to you that at any time they think that it's time for me to go, they'll be very fair and very easy to tap me on the shoulder and say, please put your Zimmer frame over to the side there and come and have a talk to us if you can.

So Duncan, just to add to that, the reason why we've got a number of new hires in terms of senior executive positions and already have a number of high-quality people in our organization is that I recognize, Robert recognizes that over time, you need to keep on building the team, you need to bring in new people to a team to be successful. You just can't continue to be a team that relies on the existing team. You can just have a look at a huge number of analogies in the sporting world where the team hangs on to their key players for too long and all they do is start to gradually fall down the ladder. So we're very, very conscious of the need to -- that Robert and I will need to go at some point in time. But I cannot answer your question about who goes first. That's really up to the Board.

Chair, the next question is about you in particular. Is Frank O'Halloran planning to stand for another 3-year term at the 2025 AGM? And what is he doing to manage CEO succession as our founder, Robert Kelly, will surely have to retire at some point?

I committed to the shareholders 2 years ago now that I would -- the question was asked, would you be staying the full 3-year period? And I said yes. And the answer is -- will I continue is again up to the Board, and it's up to you, the shareholders because if I did decide to stand again next year, then the shareholders have an opportunity to say yes or no.

And I've publicly committed that I would not resign before the 31st of December 2025. I have a year notice that I have to give, which I would abide by. And as I've got a substantial investment in Steadfast Group Limited, I'm pretty sure that when I do go over the next -- whenever that whoever comes in will be better than me because I want to protect my investment.

All right. Duncan, any others?

Still plenty of questions, Chair. The next theme of questions is about one single question on Four Corners. Does the Chair agree that in hindsight, it was a mistake for the CEO to agree to an on-camera interview with Four Corners, which didn't go well for us.

I think I'll answer it indirectly. Robert Kelly, is one of the few people we meet in an industry that is passionate as he is about customers. Robert has been focused on transparency and fairness with these customers ever since I've been on this Board and prior to that in terms of me being on the QBE CEO -- being CEO of QBE. Robert quite rightly came to the Board in '21 and said to the Board that I'm concerned that after the Hayne Royal Commission, that there's a need for more transparency in the Strata market. He recommended that we appoint someone to carry out an independent review. We decided on John Trowbridge, who, as everyone knows, used to be the Chief Executive of APRA. So Robert put his neck out and decided at his time that we started to get more transparency and fairness for customers in the insurance industry, not just Strata. Robert has been -- as I probably explained earlier, Robert has been passionate about that for some time. He decided to do the interview because he wanted to make sure that the message got -- his passion and his message got across to the public. Unfortunately, as we've said here, that there are a number of misleading accusations. There are a lot more information, for example, that we supplied on the 29th of August at their request that was not included in the program that you saw. So I think Robert can answer that question himself, but I think that Robert's passion for the industry and for getting fairness and transparency to customers is still there, and we realized that we would not prefer not to have the Four Corners, but it certainly made regulators and others to start to listen to Robert and his passion and to take action and to strength.

I think the situation we were left with was people were -- the ABC was asking questions about us by all around the market. And so we asked would they give us a set of questions and they refused to give us a set of questions to ask. So we opened ourselves up knowing that we could answer the questions clearly and succinctly when they were put to us not -- and realizing that they probably would play around with what they did, but it was dreadful how they put one of my answers to a different question to another person's question. It was disgraceful in my view.

What's next question, Duncan?

Chair, another question about Four Corners. There's basically on this laptop screen, 6 lines of statements and then a question at the end.

Read them out.

The whole 6 ones.

Yes.

I watched the Four Corners program and was shocked by the 11% slumpy costs in our share price from which it is yet to recover. One of the most puzzling aspects was the public position of our CEO, Robert Kelly, that he wanted more transparency and disclosure for the benefit of strata consumers, yet we then participated in schemes such as Resolute Property Protect, Collective Insurance Brokers and Coverforce Insurance Brokers, which were seemingly designed to share with strata management firms earnings on broker fees, which are not required to be disclosed as opposed to formal broker commissions. Mr. Kelly himself said clearly in the program that the purpose of Resolute, for example, was to channel funds to strata managers and that it was wrong that this wasn't always disclosed to end consumers. Could the Chair please provide his perspective on why our words in favor of consumer transparency in this matter seemingly do not match our deeds.

I think I've pretty well covered. the whole matter with the media report. And I think to go into detail on that question, I'm more than happy to talk to the shareholder after the meeting if necessary.

Chair, the next questions are probably more relevant to a particular resolution. We could deal with them now or on the particular resolution?

Let's deal with them on the particular resolutions.

Certainly.

And now we're back to the accounts. Are there any questions on the financial statements?

Mr. Chairman, [ Alan Golden ] I'm a shareholder. Two questions, and let's go a bit shorter, but on a couple of the things that you talked about. The fact that the share price fell from $6.35 to $5.32 on the next day that you resumed trading is now at $5.50. Today, we've heard a lot of defense, a lot of change of what's been happening. Why haven't you been doing that publicly? There doesn't seem to have been a lot of work in the public sphere that has gone and helped take our share price back up to what it was.

Yes. We have just completed the initial review and it's ongoing and we have had an independent person have a look at the interim or the current findings. We were not in a position until today to communicate in detail what we've been doing. But you can be assured that immediately after the Trowbridge final report in May and June '23 that we commenced a process through the team here reviewing each of those recommendations and implementing recommendations where we consider them appropriate. Some of those recommendations will take longer to implement, but we commenced the process immediately after the Trowbridge report was issued.

Great. So we'll start seeing some public comments that can hopefully go and take our share price back up.

I hope so. That's what we're communicating today.

One of the things in the changes that you talked about, you said the simplify fee and commission disclosure. Are you talking about your equity owned -- your 68 equity-owned brokers? Or are you talking about the 480 brokers who use your platform?

We're initially talking about our equity brokers and the team are working on minimum standards that they respect of expected non-equity brokers, and that will take time. But certainly, our focus is on the equity brokers because we control them. We do not control the non-equity brokers.

So for your equity brokers, will that be a policy that's been put into effect immediately? You said it will take longer with the other non-equity ones. So we will see if we're dealing with an equity broker, those new rules will be in effect immediately.

I think probably, Robert, you or the team...

Yes. I might be able to explain it a little bit to you. If you look at when John's report came out back in June last year, he basically said that there were some opaque places that people knew about the transmission of remuneration. Under federal legislation, you give a product disclosure statement about the product in general advice. And then you give a clear and other analysis in what you do of how you get commission, okay? So that was contained within all the documentation. His argument was, I supported this argument. -- hey, if you are going to share commission, maybe it should be up the front. on the documentation flow. And if you just bear with me, that's what Minister [indiscernible] has just done in New South Wales. He said, "Hey, I don't -- I want you, if you are going to do business with a Strata that you, before you offer those services and you get remunerated from somebody else to do that, you go to the Strata and you tell them, I am now going to, let's say, take insurance as an example, I am now going to place your insurance with this insurance broker. He will get 3 quotes for you. We will get 20% commission and he will get between 10% and 20% fee for doing it. So that opaqueness was that it was contained in the legislative documentation flow that you had to do. So -- and I was asked this a couple of times, did I think it pass the pub test? And I said, I think it's gray on the pub test.

No, that's totally untrue. It's black. There is no question. Having been on more than one Strata committee, I can tell you that there's no way the Strata managers used to tell us. It was only when we asked, when we had a breakdown from the broker that you could see what the fees were. So it's nice talking about legislation and documentation. In the real world, there has not been -- there has not been transparency. The whole idea is, hopefully, we're now seeing transparency because of legislation. And hopefully, you'll be taking that transparency even further with your equity brokers and then people who use your network.

We have a code of conduct, and it's incorporated into the code of conduct, which I'm happy to share -- it's on our website. So we put that out. If you want to be part of our network, you have to abide by the code of conduct, and that takes that transparency into account and puts the onus on them to do that.

I think there's a couple of interesting points coming out of this and maybe misunderstanding that the brokers do not control the Strata managers. The Strata's managers are owned independently of Steadfast and with the exception of one company, they are not owned by the brokers. The second thing is that if you look at the Trowbridge report, and I don't know if it's public available.

The Trowbridge report -- yes, it is the Trowbridge report. Yes.

Yes. if you look at [indiscernible] he is not isolating this matter too Steadfast. So it's industry-wide, has been industry-wide. And this is why this man stood up and took it on his own initiative with the help of the Board and said we've got to do something about it. Hopefully, Strata managers will have their own code of conduct and minimum standards, and you will get all the disclosure you need. I've been on Strata [ big ] meeting and I always ask the question. And there's only one of the Strata managers that I've been involved with has decided to not to fully disclose the fees in a proper manner. And they decided to adopt that approach because they were concerned about the same matter that Robert was concerned. But you know as well as I do, trying to get information out of the strata manager hasn't been easy, but let's hope that the steps that Robert took is going to solve this problem going forward. You had a second question. No, that's right. You did ask a second question. You got -- anyone else got some questions on.

There's more. Is there more?

Chair, there's a general question about Mr. Kelly's LTI from last year. There was a 13.75% protest vote against Mr. Kelly's LTI grant at last year's AGM and a 14.5% protest in 2022. Have we made any changes to the structure this year, including to take into account reputation issues after the Four Corners program?

I think we should wait until we see the vote on the LTI in a few moments, which you'll see a massive improvement in the vote for. So let's deal with that one. Remind me, Duncan to pick up the one we get there.

Chair this year, we are seeking shareholder approval in relation to STI. This question is about LTI, long-term incentive. Should I keep going?

Yes.

Also, could the CEO summarize his past LTI grants as to whether they have vested or lapsed?

In relation to past LTI.

Yes, past LTIs, is it?

To the extent that they have been -- the hurdle has been tested, they have all vested.

Next related question is, has Mr. Kelly ever sold any ordinary shares in the company or bought any on market without relying on an incentive scheme to build his equity position in the company?

The vesting of shares is a wonderful thing that you get. And then if you are somebody like me, you have to share that vesting figure with your joint venture partner called the Australian Taxation Office. And they very kindly for all their help to me in running my business life, take half of that. So sometimes if you get, say, 300,000 or 400,000 shares and you're trading at $6, you can divide that by 2 because in the next 6 months, you've got to send it to your joint venture partner, the taxation office.

Chair, the next one is more statement though, maybe a question in relation to the previous questions, please don't say look it up in the annual report and through ASX announcements. It's complicated, and the CEO could actually summarize the situation in 60 seconds.

Point noted. We can do that.

Sorry. Next one is Four Corners based. The Chair has this morning called unspecified aspects of the Four Corners program misleading, which parts were misleading?