The Ardonagh Group posts 170% increase in pro forma losses for H1 2022

The Ardonagh Group reported a 170% increase in pro forma losses across H1 2022, with this figure reaching £111.9m as at 30 June 2022, compared to £41.3m for 2021’s H1, according to its half-year financial results, published yesterday (17 August 2022).

This increase in losses reflected an uptick in the broker’s operating profit and also included £14.6m of interest expense, as well as foreign exchange fluctuation costs of £67.6m, according to the group’s report to investors.

Operating profit for the first six months of 2022 reached £72.3m, rising by £16.1m year-on-year.

Ardonagh also achieved an adjusted earnings before interest, taxes, depreciation and amortisation (ebitda) figure of £186m for the six months to 30 June 2022.

This figure represents a 21% increase compared to the equivalent period last year, when the broker’s adjusted ebitda sat at £153.3m.

Ardonagh’s adjusted ebitda figure is defined by the group as “ebitda after adding back discontinued operations, restructuring costs, transformational hires, business transformation costs, legacy costs and other costs, acquisition and financing costs, profit/loss on disposal of businesses or investments, share of operating profit/loss from associate, reduction/increase in the value of contingent consideration, as applicable”. 

Its income also rose by 37% to £595m in 2022’s H1 – up from £433.2m in H1 2021. 

Pro forma explained

These financial results were reported as pro forma – meaning they represented the financial performance of the broker adjusted to include the results of the group that existed before 1 June 2022 that was owned by The Ardonagh Group Limited (TAGL), until it ceased to exist on 31 May 2022.

TAGL was merged into Tara Topco – a newly created company that received equity investments from the backers of Ardonagh – on 31 May 2022.

Ardonagh Group Holdings, which was previously known as Ardonagh New Midco 2 until 5 July 2022, then acquired Ardonagh New Midco 3 Limited and the group of companies previously owned by TAGL on 1 June 2022.

Accordingly, Ardonagh Group activities were thereafter overseen by Ardonagh Group Holdings as an indirect subsidiary of Tara Topco – this means that the financial results released yesterday represent the first consolidated financial statements for the group headed by Ardonagh Group Holdings.

This also means that there is no comparative information for previous years – explaining the use of pro forma figures.

A statement from the broker explained that pro forma figures were presented “as if the group was a continuation of the group that existed before 1 June 2022” and “represents the sum of the reported results of the group from 1 June 2022 and previously reported results of TAGL’s group from the first day of the prior calendar year”.

Ardonagh added: “Therefore, to facilitate comparison, pro forma Ardonagh current and prior period information is presented on a like-for-like reported basis, save for the effect on the income statement arising from the fair value accounting on the 1 June acquisition.”

Organic growth

Ardonagh Group chief executive David Ross said: “These results reflect the strength of our business model, with presence across multiple product lines, industries and geographies providing natural resilience and opportunity.

“In particular, our organic growth shows what happens when independent businesses are connected through a shared vision of client focus and innovation and with the support of long-term backers.”

Ardonagh reported that organic growth across the group reached 7% in the first half of 2022 – its specialty division recorded organic growth of 12%, while Ardonagh International exceeded 10% organic growth.

Ardonagh Specialty and International together contributed 44% to the group’s income in H1 2022, compared with 31% the previous year.