TIDMPROG
RNS Number : 0280A
Pro Global Insurance Solutions PLC
24 September 2015
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Half Yearly Report
Pro Global Insurance Solutions plc
Unaudited interim results for the six months ended 30 June
2015
Pro Global Insurance Solutions plc (the "Company" or "Pro")
today announces unaudited interim results for the six months ended
30 June 2015.
Pro is a specialist outsourcing and consulting service provider
to the global insurance and reinsurance industry.
Highlights of interim results
-- Delivery of "Client First" strategy on track
-- An increase of 7% in revenue over the same period in 2014
-- A reduction of 7% in expenses over the same period in 2014
Group result from continuing operations is a profit of GBP0.4
million which compares to a loss of GBP1.2 million in H1 2014.
The key strategic goals of Pro's "Client First" strategy, as an
independent services company, are:
-- To be the number one specialist service provider addressing
complex operational needs of global insurers and reinsurers;
and
-- To achieve annual revenue of GBP60 million at a sustainable
net margin of 15% in the medium term.
While 2014 was a year of transition, Pro views 2015 as a year of
investment in growth and future value creation. The Pro brand, as
an independent service entity, is gaining recognition in the market
attracting new clients and talent. The Company is currently
pursuing some significant opportunities.
Pro is well positioned to capture opportunities created by
ongoing change in the global insurance and reinsurance markets,
driven by regulatory, capital, and pricing pressures. Pro invests
in innovation and solving client's problems of the future, e.g.,
Pro's STRIPE reinsurance trading platform is gaining increasing
recognition in the market.
Pro also announces appointment of Andrew Donnelly, previously
Group Financial Controller, as Interim CFO based in the UK. Andrew
Donnelly succeeds Paul Mooney, who as the CFO has led Pro's finance
function since demerger and has put in place an effective
succession plan.
Artur Niemczewski, CEO of Pro Global Insurance Solutions Plc,
commented: "The Pro team has a single-minded focus on delivering
the "Client First" strategy. We drive profitable growth, improve
efficiencies, and lift Pro's position in the market. Today's
results are a positive step on that journey."
Enquiries:
Artur Niemczewski, Chief Executive Officer, Pro Global
Insurance Solutions plc 020 7068 8123
Guy Wiehahn, Peel Hunt (nominated adviser and broker) 020 7418 8900
__________________________________________________________________________
Notes to Editors
About Pro plc
Pro plc is a specialist in the provision of operational
outsourcing and consulting services, focusing solely on the global
insurance and reinsurance industry. Our mission is to create value
for our clients at each stage of their operations, by enabling them
to focus on what they do best and helping them improve their
operations. Our core purpose is to be the trusted delivery partner
for the operations that matter to our clients.
Pro plc operates across the entire spectrum of client needs,
from market entry to exit; from live to legacy business. We are
best known for our ability to manage the operations that matter
most to our clients and have been involved with some of the biggest
and most complex assignments in the market. Examples include a cost
reduction programme for a global reinsurer through centralisation
of its operations from 15 to 2 locations and the management of over
25 legacy portfolios with collective liabilities in excess of
$5bn.
We add value in four main areas:
-- Risk, Audit and Compliance: internal and external audits
including peer reviews and cover holder audits; providing risk
management and compliance frameworks to ensure compliance within a
changing regulatory environment
-- Operational consulting: helping improve the efficiency and
effectiveness of client operations and manage major change
-- Technical outsourcing: providing underwriting, claims and
technical accounting support to complement internal teams; client
sectors include risk carriers, brokers and MGAs
-- Legacy solutions: managing discontinued business through
outsourcing or consulting to extract maximum value and enable
clients to focus on core business activities; client sectors
include risk carriers and brokers
Our people are industry practitioners with many years of
experience of running often complex reinsurance and insurance
operations. As experienced professionals, we can be trusted to use
our initiative, blending easily with our clients' ways of working
and becoming effectively an extension of their teams.
Pro plc is a global company, operating from offices in London,
New York, Hamburg, Zurich, and Buenos Aires, supported by
operational centres in Gloucester (UK), York (US) and Sundern
(Germany). Our local knowledge and global expertise ensures we
provide a cost-efficient, round the clock service to support our
clients' operations wherever they might be.
Pro plc comprises Pro Insurance Solutions Ltd, Pro IS Inc., the
Chiltington Group and STRIPE as well as Assekuranz Service-und
Sachverständigengesellschaft mbH, a leading German disability
claims management company. Pro plc also owns 33% of Asta, the
leading Lloyd's turnkey managing agency.
Pro plc is listed on the AIM market.
For more information, visit our website:
www.pro-global.com/investor-relations
Pro Global Insurance Solutions plc
Interim Report 30 June 2015
Interim results
Condensed consolidated income statement
Condensed consolidated statement of comprehensive income
Condensed consolidated statement of financial position
Condensed consolidated statement of changes in equity
Condensed consolidated statement of cash flows
Notes to the condensed consolidated financial statements
1. General information
2. Significant accounting policies
3. Critical accounting judgements and estimates
4. Change in accounting policy
5. Segmental information
6. Earnings per share
7. Assets and liabilities classified as held for sale
8. Cash (used in)/generated from continuing operations
9. Related party transactions
10. Contingent liabilities
11. Events after reporting period
Independent review report to Pro Global Insurance Solutions
plc
Pro Global Insurance Solutions plc Company information
Interim results
Pro Global Insurance Solutions plc (the "Company" or "Pro") is a
specialist outsourcing and consulting service provider addressing
complex operational needs of global insurers and reinsurers;.
-- Following its demerger from Tawa in April 2014, Pro outlined
its "Client First" strategy, as an independent services company and
set about implementing that strategy.
Since the launch of the strategy Pro has:
-- Defined and launched Pro client's value proposition, aiming
to enhance Pro's reputation and market position;
-- Organised the business into two principal activities
(consulting and outsourcing) and four client-centric business
lines;
a. Risk audit and compliance (consulting)
b. Operational consulting
c. Technical outsourcing
d. Legacy solutions (outsourcing)
-- Focused Pro's sales activities on expanding its client base
and broadening existing relationships, seeking long-term
high-margin revenue sources. This is evidenced by a strong and more
diverse pipeline; and
-- Addressed Pro's costs to ensure an appropriate alignment of
costs with revenues and repositioning internal resources onto
revenue-generating client activities. This is evidenced by the
reduction Pro's direct expenses, while maintaining the run rate of
operating overheads, i.e., reinvesting overhead savings into
business development
While 2014 was a year of transition, Pro views 2015 as a year of
investment in growth and future value creation. The Pro brand, as
an independent service entity, is gaining recognition in the market
attracting new clients and talent.
Pro is well positioned to capture opportunities created by
ongoing change in the global insurance and reinsurance markets,
driven by regulatory, capital, and pricing pressures. Pro invests
in innovation and solving client problems of the future, e.g.,
Pro's STRIPE reinsurance trading platform is gaining increasing
recognition in the market
The business is facing the risk of declining legacy revenues
from existing clients but Pro is pursuing alternative strategies to
replenish those revenues.
Pro is actively investing in the US platform where we see a vast
market for Pro's service proposition and promising 'green shoots'
in opportunities to deliver underwriting support and claims
services, especially to London Market insurers operating in the
US.
The Pro team continues its single-minded focus on delivering the
"Client First" strategy and transforming Pro into a successful
standalone service business.
Interim results (continued)
Group results show a GBP90 thousand operating profit for the
interim period compared to an operating loss of GBP1.6 million in
the 1(st) half of 2014. Total profit for the group was GBP0.4
million compared to GBP2.9 million profit in the comparative
period. The 2014 comparative included GBP4.0 million profit from
discontinued operations.
(MORE TO FOLLOW) Dow Jones Newswires
September 24, 2015 02:00 ET (06:00 GMT)
Since the demerger in 2014, Pro has focused on implementing its
long-term "Client First" growth strategy and has already begun to
see encouraging results. The 2015 results show revenue growth of 7%
with strong growth in consultancy revenue, up 60% on the same
period in 2014. New outsourcing revenue of GBP0.5 million has been
offset by the natural decline in revenue from the closed books of
business which continue to run off, resulting in net 4% decline.
Gross margins have improved across all business lines from 32% in
H1 2014 to 44% primarily as a result of the restructuring completed
in 2014 combined with higher levels of utilisation of client facing
employees.
Operating overheads remain flat year on year. This reflects the
restructuring savings from 2014 reinvested in business development
in the US and Germany.
In January 2012, Pro acquired a 33% interest in Asta, the
leading turnkey managing agency Services Company in Lloyd's. Asta
continues to perform strongly with Pro's share of their results
contributing GBP0.6 million and GBP0.7 million to the Group results
in the six month periods to 30 June 2015 and 30 June 2014
respectively. Asta paid its dividends of GBP0.2 million (for Pro's
33% share) in 2015 and re-purchased GBP1 million of preference
shares reducing Pro's holding to GBP5.5 million at the end of
2014.
Condensed consolidated income statement
For the period ended 30 June 2015
Condensed consolidated statement of comprehensive income
For the period ended 30 June 2015
Condensed consolidated statement of financial position
As at 30 June 2015
Condensed consolidated statement of changes in equity
As at 30 June 2015
Condensed consolidated statement of cash flows
For the period ended 30 June 2015
Major non-cash transactions
On 26 March 2014 the Company's share premium of GBP57.5 million
was cancelled and the nominal value of 113,375,177 ordinary shares
was reduced from 10 pence to 2 pence.
On 3 April 2014 the Company made a non-cash distribution,
dividend in specie, of GBP50.3 million.
Notes to the condensed consolidated financial statements
For the period ended 30 June 2015
1. General information
The interim consolidated financial statements do not constitute
statutory accounts as defined in section 434 of the Companies Act
2006 and should be read in conjunction with the Group's
consolidated financial statements for the year ended 31 December
2014. A copy of the statutory accounts for that year has been
delivered to the Registrar of Companies. The auditors' report on
those accounts was not qualified, did not include a reference to
any matters to which the auditors draw attention by way of emphasis
without qualifying the report, and did not contain any statements
under section 498(2) or 498(3) of the Companies Act 2006.
The Directors have considered the position of the Group's assets
compared to the liabilities. In addition they have assessed the
Group's liquidity with regard to expected future cash flows. They
have also considered the performance of the business, as discussed
in the interim results. In light of these reviews the Directors
have concluded that it is appropriate to adopt the going concern
basis in preparing the interim report.
The interim results have been reviewed by the Group's auditors,
Mazars LLP, and their review report is set out on page 15.
2. Significant accounting policies
a. Basis of accounting
The financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRSs") adopted for
use in the European Union. The financial statements also comply
with those parts of the Companies Act 2006 applicable to companies
reporting under IFRS.
The Directors have, at the time of approving the financial
statements, a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable
future. Thus they continue to adopt the going concern basis of
accounting in preparing the financial statements. Further detail is
contained in the report of the Directors.
The financial statements are presented in thousands of pounds
sterling, rounded to the nearest thousand, the accounting policies
set out below have been applied consistently to all periods
presented in these consolidated financial statements.
b. Basis of consolidation
These financial statements consolidate all the enterprises over
which the Group exercises control either directly or indirectly
(its subsidiaries). Control is achieved where the Company has the
power to govern the financial and operating policies of an entity
so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the
year are included in the consolidated profit or loss from the
effective date of acquisition or up to the effective date of
disposal. Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used
into line with those used by the Group. All intra-Group
transactions, balances, income and expenses are eliminated on
consolidation.
3. Critical accounting judgements and estimates
The judgements and estimates made by management which are
relevant and have a significant effect on the condensed
consolidated financial statements are consistent with those
disclosed in the Group's consolidated financial statements for the
year ended 31 December 2014.
Accounting Judgements
QX Reinsurance Company Limited ("QX Re")
QX Re was not transferred as part of the demerger. However, the
economic rights and therefore the exposure to and rights to
variable returns relating to this entity are no longer held by Pro.
As a result, at 30 June 2015, it is management's view that Pro does
not control QX Re and it has not been consolidated.
Accounting Estimates
Provisions for future liabilities or work in progress accruals
for future revenue are only accrued on the basis that the asset or
liability is certain. The values that are included are calculated
based on the information that is available and an assessment of the
likely outcome.
4. Change in accounting policy
Following the demerger the Group's revenues, profits and cash
flows are primarily generated in pounds sterling, and are expected
to remain principally denominated in sterling for the foreseeable
future. Historically the Group presented its consolidated financial
statements in US dollars. During the period the Group changed the
currency in which it presents its financial statements from US
dollars to pounds sterling, in order to better reflect the
underlying performance of the Group.
A change in the presentation currency is considered a change in
accounting policy and has been accounted for retrospectively.
Financial information included in the financial statements for the
periods ended 30 June 2013 and 31 December 2013 previously reported
in US dollars have been restated into pounds sterling using the
following procedures:
-- assets and liabilities were translated into pounds sterling
at the closing rates of exchange on the relevant reporting
dates;
-- income and expenditure were translated at the average rates
of exchange prevailing for the relevant periods; and
-- the translation reserve was recalculated from accumulated
gains and losses using average rates of exchange prevailing for the
relevant periods.
Following consideration by the Directors, with effect from 1
January 2015 the accounting policy for depreciation has been
amended to the following: Computer equipment - 3 years, Office
equipment - 4 years and Furniture - 10 years. This change in
accounting policy resulted in a credit of GBP0.2 million in the
2015 interim accounts. No adjustment has been made to prior year
results as the impact is deemed to be immaterial.
5. Segmental information
The Group's revenue is generated in a number of countries,
United Kingdom, United States, Europe and Latin America, with the
activities divided into two key segments.
Outsourcing
Outsourcing is provided within the reinsurance and insurance
industry with services provided through the Company's legacy
solutions product to books of business that are in run-off. The
technical outsourcing product provides outsourcing services to both
start up and established operators.
Consultancy
Consultancy services are provided within the reinsurance and
insurance industry to provide services in two key areas:
-- Risk, audit and compliance; and
-- Change management including project management, process
engineering, business analysis and data engineering.
Other
Other includes revenue from STRIPE Global Services Limited, Debt
Purchase and incidental revenue that is generated outside of these
core services by shared services resources.
For management purposes the Group is divided into the four
product groups, although these have been combined into outsourcing
and consultancy as they share the same distribution and margin
styles. The Group is monitored on both a product and territory
split by management, with assets and liabilities being monitored on
a Group basis.
The segments identified, although dependant on clients' demands
which can affected by peak holiday periods, are not materially
impacted by seasonality. The segments have no infrastructure,
assets or liabilities separately identified from the Group.
(a) Segment income and results
The following is an analysis of the Group's revenue and results
by reportable segment.
No adjustments are required for revenue recognition.
5. Segmental information continued
(b) Geographical Information
Revenue is generated in a number of territories; the revenue is
booked within the territory that is providing the resources to
fulfil the contract.
The following is a geographical analysis of the Group's
non-current assets. Non-current assets for this purpose consist of
property, plant and equipment, intangible assets and investments in
associates.
6. Earnings per share
7. Assets and liabilities classified as held for sale
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