First profit in six years attributed to asset sale to parent company
Software house Insurecom saw its turnover soar by 41% in 2006. But the company only made a profit by virtue of a £3m asset sale.
Turnover rocketed to £3.7m, up from £2.6m in the previous year. Pre-tax profit was £0.35m – its first reported profit for six years - compared to a loss of £4.75m in 2005.
But, according documents filed with Companies House, the software house received a £3m boost from the sale of intellectual property assets to its parent Insurecom (Bermuda).
Chief executive Phillip Walter admitted that Insurecom would have made a loss if it were not for the income from the sale.
He said the intellectual property assets related to development costs that “should not have been picked up by the UK business”.
“It is internal accounting between departments. It is tidying up the accounts,” he told Insurance Times.
He insisted that Insurecom would make a profit in 2007. “I am playing a long-term game. We are gearing up for 2007/08. We have significantly more advantages [than our competitors]. We are growing faster than anyone else. We have no debt on our books.”
Insurecom claims to have a market share of 17% -18%.
He claimed he was satisfied with the company’s expenses, saying that its profitability would not come from cost cutting.
Administrative expenses were £197,000 in 2006, compared to £459,000 in 2005.
Walter said: “We are happy with our expenses. In fact we want to hire more people.”
In the last quarter of 2006, Insurecom launched its flagship solution for large brokers, agencyPlus, which the company said required “considerable debt-free investment” during the previous two years.
Insurecom also completed a programme of operational investment in team expansion and application development.
Walter said: “We are very encouraged by our 2006 results, in particular the robust sales growth we have seen since the launch of agencyPlus, which is creating strong interest among leading intermediaries.
He added: “Our strategy remains to offer a solution fit for large brokers in a consolidating market over the long term.”
