APRIL : 2016 results Implementation of growth leve
Post# of 301275
Lyon, 8 March 2017
APRIL: 2016 results
Implementation of growth levers
Stable current EBIT targeted for 2017
- Sales up 7.9%, reflecting the return to growth in our brokerage business
- Current EBIT of €65.4m, in line with expectations
- Net income of €20.1m, impacted by the reorganisation of international operations
- Solid financial structure, with €188.9m in adjusted net cash at 31 December
- Proposed dividend of €0.26 per share, a sign of confidence in the Group's outlook
APRIL CEO Emmanuel Morandini made the following comments: "The results for 2016 show that we are moving in the right direction: we posted strong sales momentum in our brokerage business, including in the health insurance market, and the impacts of the National Interbranch Agreement (ANI) are now largely behind us. In accordance with its core values, the Group will continue to serve customers through segmentation, innovation and digitised relationship management. At the same time, APRIL will continue to invest in initiatives aimed at streamlining and automating processes, achieving productivity gains and optimising cost structures. The Group confirms its commitment to reducing loss-making operations, by reorganising or withdrawing from certain countries, if necessary. Finally, we will strive to expand our expertise into selected countries, including through targeted acquisitions. The transformation initiatives implemented over the last eighteen months are now bearing fruit. We are confident in the Group's ability to stabilise its results in 2017, before gradually improving its financial performance."
| Group (IFRS - €m) | 2016 | 2015 | Change |
| Consolidated sales | 861.2 | 798.0 | +7.9% |
| Gross margin 1 | 420.6 | 409.4 | +2.7% |
| Financial income | 16.4 | 15.4 | +6.6% |
| Current EBIT | 65.4 | 73.1 | -10.6% |
| EBIT | 42.1 | 71.3 | -40.9% |
| Net income (Group share) | 20.1 | 42.1 | -52.3% |
| Dividend per share (€) | 0.26 | 0.26 | - |
| Group (IFRS - €m) | 2016 | 2015 | Change |
| Shareholders' equity (Group share) | 614.5 | 605.7 | +1.5% |
| Financial debt % of shareholders' equity | 6.5 1.06% | 2.8 0.46% | +134.0% |
| Adjusted net cash [2] | 188.9 | 193.2 | -2.2% |
The Board of Directors met on 8 March 2017 to approve APRIL's statutory and consolidated financial statements. The statutory auditors are currently completing their certification of the financial statements.
Group
APRIL posted 2016 consolidated sales of €861.2m, up 7.9% from 2015 as reported and up 7.4% like-for-like [3] . Like-for-like sales exclude the impact of a -€3.6m exchange rate fluctuation and a €7.4m consolidation gain. Insurance premiums increased 15.7% like-for-like to €375.4m. Brokerage commissions amounted to €485.8m, up 1.8% like-for-like, reflecting growth in Property & Casualty (up 3.7%) and Health & Personal Protection (up 0.6%).
Health & Personal Protection posted sales up 4.3% as reported and up 3.0% like-for-like. Property & Casualty stepped up its growth, with sales up 14.0 % as reported and up 15.0% like-for-like.
Thanks to strong sales momentum, the gross margin rose 2.7% to €420.6m, up €6.5m to €359.4m in brokerage and up €4.7m to €61.2m in our risk-carrying business. Underlying sales momentum was positive for both divisions (Health & Personal Protection and Property & Casualty).
Net financial income amounted to €16.4m, up €1.0m. This includes €3.3m in capital gains on the sale of financial assets and €0.1m in currency gains, compared with €0.8m and €1.1m respectively in 2015. Adjusted for these items, net financial income would come to €13.0m, down €0.5m, marked by prolonged low interest rates that impacted the Group's return on cash and financial assets.
Current EBIT amounted to €65.4m, down 10.6% compared to 2015, in line with forecasts announced during the year. It was marked by the negative impact on the Group's individual health insurance business of the extension of group private health insurance. The Group also continued its investments aimed at supporting sales momentum and better meeting customer expectations, as well as its ongoing initiatives to optimise its cost structure.
Non-current operating expenses amounted to €23.3m, slightly above expectations. As previously announced, they mostly result from the late 2016 reorganisation of the Group's operations in the United States and Switzerland (-€16.5m). As a reminder, the majority of these expenses comes from taking intangible assets to profit and loss account and therefore had no impact on Group cash. EBIT thus amounted to €42.1m, down €29.2m.
After a tax charge of €22.2m, consolidated net income (Group share) amounted to €20.1m, versus €42.1m in 2015.
Health & Personal Protection
| Health & Personal Protection (IFRS - €m) | 2016 | 2015 | Change | |
| Consolidated sales | 527.7 | 505.7 | +4.3% +3.0% LFL 3 | |
| Gross margin | 260.3 | 256.4 | +1.5% | |
| Financial income | 11.5 | 11.1 | +3.5% | |
| Current EBIT | 71.9 | 77.3 | -6.9% |
The Health & Personal Protection division reported a 4.3% increase in sales comprising a 2.7% increase in brokerage commissions as reported (up 0.6% like-for-like) and a 6.8% increase in premiums.
The increase in insurance premiums was driven by growth in the individual (seniors and self-employed) and expatriate Health & Personal Protection portfolios. It also reflects the growth in group private health insurance portfolios generated by partnerships set up to meet the demand created by the extension of group private health insurance.
The increase in brokerage commissions mainly stems from strong performances in loan, group health and personal protection insurance, which helped offset the expected decline in our individual employee health insurance portfolios.
The Health & Personal Protection gross margin increased 1.5% to €260.3m, mainly due to the division's integration of GlobalHealth and Bamado, the impact of which was partially offset by the decline in individual employee health insurance portfolios.
The division's current EBIT amounted to €71.9m, down 6.9% compared to the previous year. This decline is attributable to changes in the health insurance market, as well as investments made in order to streamline our organisation, sustain growth momentum and optimise policy and claims handling.
Property & Casualty
| Property & Casualty (IFRS - €m) | 2016 | 2015 | Change | |
| Consolidated sales | 336.0 | 294.8 | +14.0% +15.0% LFL 3 | |
| Gross margin | 160.3 | 153.0 | +4.7% | |
| Financial income | 4.0 | 3.6 | +12.8% | |
| Current EBIT | 4.6 | 5.7 | -18.6% |
In the Property & Casualty division, the strong growth in premiums was driven by the expansion of the legal protection business and by corporate and affinity member operations, strongly protected by reinsurance arrangements.
Commissions , which posted like-for-like growth for the second year in a row, were fueled by the expansion of wholesale brokerage, specifically in motor insurance, two-wheeled vehicle insurance and the professional range. The APRIL Mon Assurance agency network posted portfolio growth, particularly in P&C, and continued to implement action plans to enhance customer loyalty. In addition, despite a challenging macro-economic environment in some countries, travel insurance sales increased slightly, particularly in the US and Latin America.
The increase in the gross margin was mainly driven by strong performances in P&C wholesale brokerage in France.
The Property & Casualty division posted current EBIT of €4.6m, down from €5.7m in 2015, impacted by investments made to drive growth momentum and optimise policy and claims handling, as well as a lower performance in Latin America that triggered the restructuring undergone at the end of the year.
Financial position
At 31 December 2016, APRIL showed a healthy financial structure:
- €614.5m in consolidated shareholders' equity (Group share), up €8.8m over 2015,
- Financial debt of €6.5m, i.e. 1.1% of shareholders' equity (Group share), mainly comprising commitments made as part of the Group's acquisition policy (earnouts and commitments to buy back minority interests),
- Group net cash , adjusted for deposit accounts held in relation to the Company's cash management policy, amounted to €188.9m, versus €193.2m in 2015.
Dividend
For 2016, a dividend of €0.26 per share will be proposed by the Group at the Annual General Meeting, representing a total of €10.6m, identical to that of 2015. This divergence from APRIL's dividend payout policy reflects the Group's desire to offset the impact of non-current non-cash expenses, which weighed heavily on 2016 net income. It also bears witness to the Group's confidence in its short and medium-term outlook.
Challenges and outlook
Thanks to the actions carried out in 2015 and 2016 and which will continue this year, the Group aims to stabilise its current EBIT in 2017.
"More than ever, our teams are fully committed to the four growth levers (brokerage, partnerships and key accounts, digitalisation and direct distribution, international) and the underlying theme is to focus all our actions on our clients, in order to make insurance easier for them. The Group will continue to draw on its ability to innovate and develop client-inspired products, its renowned policy and claims handling, its hyper segmented approach allowing for tailored offers, its teams of specialists who care about building close relationships and trust with all of our clients. The decentralised organisation of the Group allows for flexibility and agility, which are key advantages in our ever-changing world. All those advantages shall bring APRIL back to sustainable growth" Bruno Rousset, APRIL Chairman, stated.
Upcoming releases:
- 2016 Annual results presentation: 9 March 2017 at 9.30 am in Paris
- Q1 2017 sales: 25 April 2017 after market close
- Shareholder Annual General Meeting: 4 May 2017, in Lyon
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.
The 2016 results presentation will be audiocast live in French on Thursday 9 March at 9.30am on www.april.com and a replay will be available from 2pm on the same day.
Contacts:
Analysts and investors Guillaume Cerezo: +33 (0)4 72 36 49 31 / +33 (0)6 20 26 06 24 - guillaume.cerezo@april.com
Press Samantha Druon: +33(0)4 72 00 46 56 - samantha.druon@insign.fr
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 €861m in 2016. Its 3,860 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 www.april.com (Investors section).
Appendix 1: Summary consolidated income statement
| (IFRS - €m) | 2016 | 2015 |
| Sales | 861.2 | 798.0 |
| Net financial income (excluding financing cost) | 16.4 | 15.4 |
| Total income from ordinary activities | 877.6 | 813.4 |
| Insurance underwriting expenses | (302.8) | (255.1) |
| Income or expenses net of ceded reinsurance | (24.9) | (24.7) |
| Other purchases and external expenses | (110.9) | (105.3) |
| Retrocession of commissions | (126.3) | (120.9) |
| Tax | (24.5) | (24.5) |
| Staff costs | (201.0) | (190.4) |
| Depreciation allowance | (17.3) | (15.4) |
| Provisions (net of reversals) | (2.8) | (0.5) |
| Other current operating income and expenses | (1.6) | (3.5) |
| Current EBIT | 65.4 | 73.1 |
| Changes in goodwill | - | (1.6) |
| Non-current income and expenses | (23.2) | (0.2) |
| EBIT | 42.1 | 71.3 |
| Financing cost | (0.0) | (0.0) |
| Share of companies integrated on an equity basis | (0.1) | (0.1) |
| Corporate income tax | (22.2) | (29.1) |
| Net income from continuing operations | 19.8 | 42.1 |
| Net income/(loss) from discontinued operations after tax | (0.0) | (0.0) |
| Consolidated net income | 19.8 | 42.1 |
| Minority interests | (0.3) | 0.0 |
| Net income (Group share) | 20.1 | 42.1 |
| Earnings per share (in €) | 0.50 | 1.04 |
Appendix 2: Summary consolidated balance sheet
| (IFRS - €m) | 31 December 2016 | 31 December 2015 |
| Intangible assets | 281.6 | 278.5 |
| Goodwill | 217.0 | 220.1 |
| Tangible assets | 11.5 | 12.1 |
| Financial investments | 655.2 | 655.6 |
| Reinsurers' share of underwriting provisions and financial liabilities | 215.0 | 206.9 |
| Other non-current assets | 23.3 | 24.0 |
| Total non-current assets | 1,186.6 | 1,177.1 |
| Receivables from insurance and accepted reinsurance operations | 96.8 | 79.1 |
| Receivables from ceded reinsurance operations | 42.1 | 63.5 |
| Trade receivables | 226.7 | 199.2 |
| Cash and cash equivalents | 99.5 | 101.8 |
| Other current assets | 40.8 | 40.6 |
| Total current assets | 505.8 | 484.1 |
| TOTAL ASSETS | 1,692.5 | 1,661.2 |
| Shareholders' equity (Group share) | 614.5 | 605.7 |
| Minority interests | 0.3 | 0.9 |
| Total shareholders' equity | 614.8 | 606.6 |
| Underwriting provisions for insurance policies | 478.3 | 475.8 |
| Provisions for contingencies and charges | 29.9 | 26.9 |
| Deferred tax liabilities | 7.0 | 9.7 |
| Financial debt | 6.5 | 2.8 |
| Total non-current liabilities | 521.7 | 515.2 |
| Current bank loans and overdrafts | 11.5 | 18.4 |
| Payables from insurance and accepted reinsurance operations | 46.7 | 43.1 |
| Payables from ceded reinsurance operations | 79.9 | 101.3 |
| Operating liabilities | 301.9 | 268.2 |
| Other current liabilities | 115.9 | 108.5 |
| Total current liabilities | 555.9 | 539.5 |
| TOTAL EQUITY AND LIABILITIES | 1,692.5 | 1,661.2 |
Appendix 3: Summary consolidated cash flow statement
| (IFRS - €m) | 2016 | 2015 |
| Net income (Group share) | 20.1 | 42.1 |
| Net income/(loss) from discontinued operations | (0.0) | (0.0) |
| Minority interest in consolidated companies' net income | (0.3) | 0.0 |
| Net income from continuing operations | 19.8 | 42.1 |
| Cash flow | 44.0 | 24.5 |
| Change in operating working capital | (3.9) | 7.6 |
| Operating cash flow from discontinued operations | (0.0) | 0.0 |
| Net cash flow from operating activities | 40.1 | 32.1 |
| Net investment in tangible and intangible assets | (22.4) | (25.2) |
| Net investment in financial assets | 2.3 | 27.9 |
| Net cash flow from acquisition/disposal of consolidated companies | (4.1) | (3.3) |
| Investment in equity-accounted companies | - | (0.2) |
| Investment cash flow from discontinued operations | - | - |
| Net cash flow from investing activities | (24.2) | (0.8) |
| Capital increase linked to exercise of stock options | - | - |
| Capital increase linked to minority interests in consolidated companies | 0.1 | 0.0 |
| Purchase and sale of own shares | 0.0 | 0.1 |
| Dividends paid out | (10.9) | (17.7) |
| Net change in borrowings | (0.3) | (0.1) |
| Financing cash flow from discontinued operations | - | - |
| Net cash flow from financing activities | (11.1) | (17.7) |
| Impact of foreign exchange rates changes | (0.3) | 0.1 |
| Change in net cash and cash equivalents | 4.5 | 13.8 |
1 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. [2] 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)
[3] Proforma or like-for-like sales, at constant exchange rates and consolidation scope, adjusted for acquisitions, disposals and changes in consolidation method, as well as exchange rate fluctuations, calculated on the basis of the prior year financial statements converted using the exchange rate for the current year.
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