APRIL: First half 2016 results

Transcription

1 Thursday 8 September 2016 APRIL: First half 2016 results Encouraging business trends: - Consolidated sales of 430.2m, up 7.1% in reported data and like for like 1 - Gross margin 2 of 211.7m, up 2.0% Results down, as previously announced: - Current EBIT of 37.1m, down 15.2% - Net income of 26.1m, down 4.3% Decline anticipated in current EBIT for 2016 confirmed, towards the lower end of the range Strong financial structure The APRIL Group recorded encouraging business dynamics momentum and achieved an acceptable performance during the first half of 2016 under market conditions that remained challenging in France and abroad. This performance was driven by our teams initiatives and efforts to strengthen our position in specific segments such as broker distribution or partnerships and key accounts. In addition, we are pursuing our policy of carefully targeted acquisitions, particularly abroad, in order to promote the exportation of our expertise and growth in specific business lines. We are focusing on the priorities we defined just a year ago; we continue to adapt our business models and remain therefore cautious regarding the second half of Group Chairman and CEO Bruno Rousset stated, following the publication of APRIL's first half 2016 results. Group (IFRS - m) H H Change 2015 Consolidated sales % Gross margin % Net financial income % 15.4 Current EBIT % 73.1 EBIT % 71.3 Net income (Group share) % 42.1 Shareholders' equity (Group share) Financial debt Adjusted net cash The Board of Directors approved APRIL's half-year financial statements on Thursday 8 September The statutory auditors have conducted a limited review of these financial statements. 1

2 Group APRIL, an international insurance services group, posted first half 2016 consolidated sales of 430.2m, up 7.1% from the first half of 2015, driven by strong growth in insurance premiums and reflecting the start of a recovery in brokerage commissions trends. Thanks to this positive sales momentum, Group gross margin rose by 4.1m, or 2.0%. This increase was mainly due to the development of the insurance business, but was also supported by an expected slight growth in brokerage gross margin driven by the P&C, mobility and assistance businesses, albeit hampered by a decline mostly due to health insurance in France. Net financial income came to 6.7m, down 2.4m from first half 2015, including 2.0m due to changes in currency gains and losses. Current EBIT amounted to 37.1m, down 6.6m or 15.2% compared to After non-recurring items mainly related to our exit from Russia, first half EBIT came to 37.4m, down 15.4% from first half Corporate income tax for the first half is estimated at 11.3m, representing an effective rate of 30.2%. This rate is partly determined by the end in 2016 of an exceptional 10.7% contribution, which reduced the statutory rate for the French subsidiaries from 38% in 2015 to around 34%. Consequently, consolidated net income (Group share) amounted to 26.1m, down 4.3% from first half Pro forma or like-for-like sales at constant consolidation scope and exchange rates, adjusted for acquisitions, disposals and changes in consolidation method, as well as exchange rate fluctuations, calculated on the basis of the prior year accounts converted using the exchange rate for the current year. 2 Gross margin allows a comparison between the various brokerage business models and the insurance businesses and shows the contribution of each business to Group value-added: - With regard to brokerage, gross margin is the difference between (i) commissions recognised under sales and (ii) commissions paid to intermediaries recognised under purchases and external expenses. - With regard to risk carrying operations, gross margin is the sum of the underwriting result and the financial result. 3 Adjusted net cash = Cash and cash equivalents - current bank loans and overdrafts + deposit accounts registered in the name of APRIL (classified under Financial investments on the balance sheet) 2

3 Health & Personal Protection Health & Personal Protection (IFRS - m) H H Change 2015 Consolidated sales % Gross margin % Net financial income % 11.1 Current EBIT % 77.3 EBIT % 73.5 The Health & Personal Protection division reported a 2.1% increase in sales resulting from a 4.8% increase in premiums and a slight 0.3% rise in commissions. On a like-for-like basis, commissions were down 1.7%. The increase in health insurance premiums was the result of strong portfolio development, both in individual self-employed and expatriate insurance and in group insurance (health and personal protection). This growth was partly curtailed by the run-off of a number of mortgage insurance portfolios a business line where APRIL is gradually resuming underwriting. As explained in previous releases, the like-for-like reduction in brokerage commissions is due to the extension of corporate group private health insurance which came into force on 1 January The strong performances in loan, group health (including sale of cover extensions) and individual selfemployed health insurance do not offset the decline in individual employee health insurance. For the same reasons, gross margin for that division decreased. It is worth noting that the change in gross margin for the period includes positive contributions from recently acquired Avilog and GlobalHealth. Net financial income fell by 1.8m, including 1.5m due to changes in currency gains and losses. Current EBIT as at 30 June 2016 amounted to 37.6m, down 16.4%. The expected decline in current EBIT was mostly due to changes in the health insurance market. In a context of persistently challenging market conditions in France and abroad, the Group is streamlining its organisational structure and continues to invest in order to strengthen its positioning in the SME market whilst optimising its policy and claims handling. These investments naturally affect the division s profitability. Property & Casualty Property & Casualty (IFRS - m) H H Change 2015 Consolidated sales % Gross margin % Net financial income % 3.6 Current EBIT % 5.7 EBIT % 7.6 3

4 In Property & Casualty, the 15.9% increase in reported sales was driven by strong growth in premiums (up 36.0%) and a 1.9% increase in brokerage commissions (up 5.8% like for like 1 ). The sharp increase in premiums was mainly due to the expansion of the P&C and legal protection portfolios. Meanwhile, Commissions were lifted by a significant increase in wholesale brokerage, particularly in substandard motor insurance, two-wheeled vehicle insurance and the professional range. Moreover, and despite the current situation regarding security, travel insurance also grew. Gross margin underlines a sound performance, with an increase of 9.0% to 81.0m, mostly driven by the wholesale brokerage and risk carrying businesses. Strengthened by these positive trends and the slight improvement in current EBIT generated by our agency network, EBIT for this division continued to increase during the first half to 5.1m, despite the 0.5m fall in currency gains and the continued restructuring of the assistance business. Financial position As at 30 June 2016, APRIL s balance sheet remains strong. Financial debt amounting to 6.3m mainly consists of debt contracted in relation to the Group s acquisition policy, plus a negligible amount of bank debt. Shareholders equity stood at 619.5m, up 13.8m from 31 December Group net cash, adjusted for deposit accounts held in relation to the Company's cash management policy, amounted to 209.9m, up 16.7m from the previous balance sheet date. Highlights and outlook The Group continues to follow its roadmap with regard to the growth levers and priorities defined in 2015 for the coming years: - Lever 1: Broker distribution At the beginning of the year, following the extension of corporate group private health insurance, our business units specialising in wholesale brokerage in individual and SME health insurance were merged in order to strengthen the Group s positioning in the professional market, one of the three priority targets of our segmentation strategy, together with seniors and premium customers. As at 30 June 2016, the number of active brokers had increased by over 2% and the volume of new business increased by 10%, in line with the targets set by APRIL in relation to its network development strategy. Highlights of the first half included the roll-out of the Business Partner strategy, increased support for new brokers and new loyalty enhancement initiatives. During the second half, the Group plans to launch major innovations in services for its broker partners. 4

5 - Lever 2: Partnerships and key accounts Following the first partnerships signed in 2015 in France and abroad, the first half of 2016 remained dynamic with the Group taking part in a number of tenders. APRIL therefore signed 5 new partnerships and partnership extensions with major banks and insurance companies. These partnerships cover third-party account management or product line extension in APRIL s various core businesses: individual and group health and personal protection, loan insurance, P&C, travel insurance and assistance. We hope to be able to announce new successes in the near future. The Group is also focusing on the roll-out and development of the partnerships already signed. - Lever 3: Direct distribution The Group has two objectives in this area: Profitability: sales momentum is satisfactory in our AMA agency network: margins have improved, but the main challenge remains customer loyalty, where APRIL is pursuing its action plans. Concerning direct corporate brokerage, a new management team was recently appointed. The customer experience has been simplified and is undergoing digitalisation. New solutions will be launched soon. Digital technologies: APRIL continues to digitalise its services and processes in order to create a unique and increasingly tailored customer experience. A number of digital customer processes have been reviewed, a prospects database is currently being set up and a dedicated team is working on smart data in order to further refine segmentation. These efforts help to generate more specific leads and improve the conversion rate. - Lever 4: International Expansion: In line with its defined priority growth levers, APRIL strengthened its wholesale brokerage business in international health insurance with the acquisition of GlobalHealth in Asia and began to expand its recognised expertise in loan insurance abroad via the acquisition of Bamado, which owns Italian-based Brokeronline and Webclaim (impact on second-half financial statements). Our teams are actively monitoring the market for potential acquisitions in line with the priorities established. Profitability: APRIL has discontinued its assistance operations in Russia in May. The Group remains focused on restoring the profitability of its loss-making operations and will continue to restructure as necessary in order to achieve that objective. Some sites and structures are therefore subject to specific action plans and are being closely monitored. For 2016, the Group had anticipated a decline in its current EBIT that could range between 8% and 12%. At this stage, APRIL believes this reduction will probably be towards the lower end of the results range. Bruno Rousset, Chairman and CEO, Emmanuel Morandini, Deputy CEO and Marc Le Doze, Group CFO, will be holding a conference call in French with live slideshow on Thursday 8 September at 6.30 pm (French Time). A replay of the call will be available as of the following day on (Investors section). 5

6 Contacts: Analysts and investors Sandrine Gallien +33 (0) Press Samantha Druon: +33(0) Upcoming announcements: - 25 October 2016 after market close: Q sales About APRIL Established in 1988, APRIL is an international insurance services group with operations based in 31 countries in Europe, America, Asia, Africa and the Middle East, and the leading wholesale broker in France. Listed on Euronext Paris (Compartment B), the group posted sales of 798m in Its 3,800 staff members design, manage and distribute specialist insurance solutions (health and personal protection, property and casualty, mobility and legal protection) as well as assistance services, for private individuals, professionals and businesses, by pursuing the ambition APRIL set itself from the very beginning: to change the image of insurance and make it easier and more accessible. Driven by a strong entrepreneurial culture, the group bases its development on four values in support of its customers: building trust, pushing boundaries, innovating and keeping things simple. Full regulated information is available on our website at (Investors section). Appendices - Summary consolidated income statement - Summary consolidated balance sheet - Summary consolidated cash flow statement Disclaimer The Board of Directors met on Thursday 8 September 2016 to approve APRIL s half-year financial statements. These statements have been subject to a limited review by the statutory auditors. This release contains forward-looking statements that are based on assessments or assumptions that were reasonable at the date of the release, and which may change or be altered due to, in particular, random events or uncertainties and risks relating to the economic, financial, regulatory and competitive environment, the risks set out in the 2015 Registration Document, and any risks that are unknown or non-material to date that may subsequently occur. The Company undertakes to publish or disclose any adjustments or updates to this information as part of the periodical and permanent information obligation to which all listed companies are subject. 6

7 Appendix 1: Summary consolidated income statement (IFRS m) H H Sales Net financial income (excluding financing cost) Total income from ordinary activities Insurance underwriting expenses (143.6) (128.7) Income or expenses net of ceded reinsurance (18.6) (11.4) Other purchases and external expenses (115.7) (112.1) Tax (13.0) (12.8) Staff costs (101.6) (93.5) Depreciation allowance (8.2) (7.5) Provisions (net of reversals) (0.2) 0.1 Other operating income and expenses 1.0 (1.4) Current EBIT Changes in goodwill Non-current income and expenses EBIT Financing cost (0.0) (0.0) Share of companies integrated on an equity basis (0.0) (0.0) Corporate income tax (11.3) (17.2) Net income from continuing operations Net income/(loss) from discontinued operations after tax (0.0) (0.0) Consolidated net income Minority interests (0.0) (0.3) Net income (Group share) Earnings per share (in ) The presentation of the income statement has changed. Operating income that does not correspond to revenue derived from third parties (capitalised production, provision reversals, etc.) is now deducted from the corresponding expenses. This change has had no impact on current EBIT. 7

8 Appendix 2: Summary consolidated balance sheet (IFRS m) 30 June December 2015 Intangible assets Goodwill Tangible assets Financial investments Reinsurers' share of underwriting provisions and financial liabilities Other non-current assets Total non-current assets 1, ,177.1 Receivables from insurance and accepted reinsurance operations Receivables from ceded reinsurance operations Trade receivables Cash and cash equivalents Other current assets Total current assets TOTAL ASSETS 2, ,661.2 Shareholders' equity (Group share) Minority interests Total shareholders' equity Underwriting provisions for insurance policies Provisions for contingencies and charges Deferred tax liabilities Financial debt Total non-current liabilities Payables from insurance and accepted reinsurance operations Current bank loans and overdrafts Payables from ceded reinsurance operations Operating liabilities Other current liabilities Total current liabilities TOTAL EQUITY AND LIABILITIES 2, ,

9 Appendix 3: Summary consolidated cash flow statement (IFRS m) H H Net income (Group share) Net income/(loss) from discontinued operations (0.0) (0.0) Minority interest in consolidated companies' net income (0.0) (0.3) Net income from continuing operations Cash flow Change in operating working capital (27.3) 15.7 Operating cash flow from discontinued operations (0.0) (0.0) Net cash flow from operating activities Net investment in tangible and intangible assets (11.7) (11.6) Net investment in financial assets Net cash flow from acquisition/disposal of consolidated companies (5.5) (1.0) Investment in equity-accounted companies - - Investment cash flow from discontinued operations - - Net cash flow from investing activities Capital increase linked to exercise of stock options - - Capital increase linked to minority interests in consolidated companies Purchase and sale of own shares 0.0 (0.0) Dividends paid out (10.9) (17.3) Net change in borrowings 0.3 (0.5) Financing cash flow from discontinued operations - - Net cash flow from financing activities (10.5) (17.8) Change in net cash from discontinued operations (0.0) 0.0 Impact of foreign exchange rates changes (0.7) 1.1 Change in net cash and cash equivalents