Hyperion could make loss for next two years on RKH costs

Hyperion is likely to make a statutory accounting loss for the next two years because of costs relating to its 2015 acquisition of UK broker RK Harrison (RKH), according to the broker’s chief financial officer Oliver Corbett.

But he added that the losses did not reflect the underlying performance of the broking group.

And chief executive David Howden said that Hyperion’s statutory results for the year to September 30 2015, which showed a £81.4m loss, were “almost irrelevant” for measuring Hyperion’s performance given the number of acquisitions and related costs during the year.

Further losses

Speaking to Insurance Times about Hyperion’s 2015 results, Corbett said that because the RKH acquisition included deferred payments to RKH’s shareholders, the acquisition costs would continue to affect the results until April 2017.

He said: “The next two lots of statutory accounts from the group are almost bound to produce a loss as the RKH consideration is forced through the profit and loss account.

But he added: “It bears no relation to the underlying trading performance of the business.”

Despite the loss, Hyperion reported a strong increase in underlying profitability in 2015. Earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 31% to £56.7m as revenues jumped 50% to £299m.

But Howden said even these results hide part of the picture as they only include five months of figures for RKH and nine months of results for German broker Schouten Sicherheit International. He said that had a full year of numbers for the recent acquisitions been included, Hyperion would have reported EBITDA of £105m and revenue of £388m.

He said: “That is the way we are looking at the business because looking at it on a statutory basis, considering the number of acquisitions we did, doesn’t paint a true picture.”

Future focus

Hyperion’s main focus is now making the group work as one following the acquisitions. But Howden added that this did not mean a halt in acquisitions.

He said: “The group continues to look at how it is going to position itself in two key areas: What products we want to be in and have expertise in, and distribution in certain countries.”