Steadfast had sold its small holding in building services provider Johns Lyng Group while a review of subsidiary businesses with significant strata portfolios is ongoing, chairman Frank O’Halloran told the annual general meeting this morning.

The company divested its 2.1% stake due to the perceived conflict, and Steadfast CEO Robert Kelly has decided not to seek re-election as a non-executive director to the Johns Lyng board, he said.

Mr O’Halloran said a strata subsidiary review has found no evidence to date of incentives being channelled between Steadfast-related entities or of non-compliance with regulatory or legislative obligations.

An initial internal review was launched after consultant John Trowbridge last year completed an industry-wide strata inquiry commissioned by Steadfast.

“The ongoing review is led by senior group executives who are relatively new to Steadfast and therefore bring a fresh perspective, and includes an external consultant,” Mr O’Halloran told the meeting.

Actions under way include simplifying fee and commission disclosures to meet reasonable community and customer expectations, and expanding internal audit and governance functions.

The company is updating minimum standards, taking into account the Trowbridge findings and associated recommendations in the Strata Community Association best practice disclosure guide, and it is developing a comprehensive group conflicts of interest policy and policy framework, he said.

A Four Corners program on September 9 targeted Steadfast with allegations around a lack of transparency on related-party dealings and remuneration, and over its market reach.  

Mr Kelly said the program was not an accurate view and Steadfast has increased clarity “on who gets what” in response to the inquiry it commissioned. Mr Trowbridge’s final report was released last year.

“Steadfast brokers have and always will operate in a transparent way to get the best terms and conditions for their clients,” Mr Kelly said. “However, there is always something to be gained on any journey you take in your business life and this crossroad of events allowed us to reflect, review and opened up opportunities for clarification.”

Mr Kelly said 69.5% of all strata plans in Australia are insured by non-Steadfast underwriting agencies, 86% of intermediated strata is placed by non-Steadfast equity brokers, and it is a highly competitive market.

“All of our brokers and underwriting agencies compete for business, often against each other,” he said.

He said an ABC description of Steadfast as a “major” Johns Lyng shareholder was “a ridiculous” statement given it owned 2.1%, but it made sense to bring the capital back to Steadfast as it pursues expansion opportunities in other parts of the world.

A Steadfast shareholder asked today about succession planning, with Mr Kelly, 77, and Mr O’Halloran, 78, having held the top positions at the company since its 2013 listing.

Mr O’Halloran’s current term runs to next year’s annual meeting, while Mr Kelly has previously said he will not tender a required 12-month notice before December 31 next year.

“It really is up to the full board to make a decision. I will not make a decision in isolation of the board,” Mr O’Halloran said on whether he would look at a further term as chair.  

Earlier, he said the board is “very conscious” of the need for an orderly CEO and chair transition and the company has in the past two years made new appointments to the board and executive management team that have created a wider pool of candidates.

Steadfast today reaffirmed its full-year earnings guidance and said the first quarter had been strong and in line with budget. 

Unaudited underlying figures show revenue for the quarter was up 14%, earnings before interest, tax and amortisation rose 18% and net profit after tax rose 23.3%.

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