Towergate cuts loss to £4.7m and grows EBITDA by 4% in 2012

Towergate has slashed its statutory loss after tax to £4.7m in 2012 from £23.5m in 2011.

The broking group has also grown operating profit by 4% to £161m (£155.4m) and boosted revenue by 2% to £438.5m (2011: 428.0m). This was in part driven by the 27 acquisitions Towergate made in 2012.

Towergate reported improvement in revenue and profit across three of its four divisions. But its network division continues to struggle, with a 19% drop in revenue and 24% fall in operating profit.

Chief executive Mark Hodges said: “2012 was a year of real progress for Towergate during which we made significant strides towards our strategic goals.

“We continued to see positive growth in our operating earnings, driven by increased revenues and improved operational efficiency. Our proven ability to source and integrate acquisitions saw us add 27 new businesses in the year.

“Furthermore, the change programme we launched in 2012 contributed to the growth of operating earnings and we will see the benefits increase as these initiatives achieve their full-year impact in 2013.”

Divisional performance

Towergate’s retail broking unit, which makes up the bulk of the group’s business, boosted revenue by 0.5% to £256.8m (2011: £255.6m). Operating profit increased 9% to £80.3m (2011: 73.9m).

The underwriting division’s revenue increased 13% to £87.2m (2011: 76.9m), while operating profit increased 17% to £42.4m (£36.4m).

The Paymentshield mortgage protection division boosted revenues by 7% to £72.2m (2011: £67.5m) and increased operating earnings by 9% to £55.3m.

Network woes

The network division’s revenue dropped 19% to £16.6m (2011: £20.5m), however, and operating profit fell 24% to £10m (2011: £13.1m). The network unit comprises Broker Network and Countrywide, and is the largest broker network in the UK.

The company said in its annual report on the network division’s performance: “With brokers facing ever-increasing complexity – regulatory and financial to name but two aspects – and a bewildering array of product propositions, there is much they can gain from the support services and tailored products offered by our Broker Network and Countrywide businesses.

“We recognise, however, that we must provide tangible evidence of that value-add both to our broker members and our partner insurers and 2012 was a difficult year for the division with operating profits down 24% on 2011.”

Despite continuing network woes, Hodges was sanguine about 2013 for the group.

He said: “We have entered 2013 with confidence; we have the team, business model and strategy in place to enable us to continue to grow profitably within our chosen markets.”