Run rate EBITDA of operating entities £50.0m, 42% up on previous year
Run rate income grows by 25% to £139m
Run rate GWP approaching £800m
18 acquisitions in 2019
“GRP has again enjoyed an excellent year of strong and sustainable growth. We are now one of the UK’s leading SME focussed insurance intermediary groups with national scale and coverage.
Our track record of outstanding growth is underpinned by a proven M&A and organic growth strategy supported by a unique data led platform and high-performance culture.” Peter Cullum, Chairman.
Mike Bruce, GRP Group MD, said the “outstanding results have been fuelled by a combination of organic and acquisitive growth, (GRP has completed 53 acquisitions since its establishment) plus benefits accruing from GRP’s major focus on integration.”
Mr Bruce said: “Integration has delivered tangible benefits internally and for our insurer partners.” He cited in particular GRP’s new data warehouse which consolidates information from individual businesses systems alongside external data to provide valuable feedback to insurers as well as to the Group’s businesses.
“We now provide our insurer partners with leading edge data analytics giving new insight into how particular books of business are performing, and identifying development opportunities for new products that benefit our clients,” he said.
Retail division
Mr Bruce said the pace of acquisitions in the retail division had risen in 2019, with a 45% increase in the number of deals compared to the previous year, many being sourced by GRP’s regional hubs. “Our hubs have identified and onboarded some real gems, supported by our capital, while rapid integration sets them on an immediate path to accelerate their growth.”
MGA division
Mr Bruce said the Group’s MGA division now generates premium income in excess of £120m. Two acquisitions (Camberford and U-Sure) in 2018 have been supplemented by four further deals in 2019, putting the business into the higher tier of UK MGAs. “Our MGA strategy is to selectively acquire quality specialist MGAs which focus on attractive niche markets, while delivering steady growth, via better penetration of our brokers and distribution networks and improved product and pricing.”
Specialty division
On GRP’s specialty broking business, Mr Bruce said the merger of Lonmar and Ropner had shown significant benefits. “Cost synergies and a consolidated leadership team has created a leaner and highly efficient business with further headroom for growth this year.
Report and Accounts
In its Report and Accounts for the financial year ended 31 March 2019, GRP has reported a 48% increase in turnover to £112.1m (2017-18: £75.9m). Operating profit has risen 173% to £27.8m (2017-18: £10.2m), driven by acquisitions and strong organic growth in GRP’s trading businesses.
A number of acquisitions were completed towards the end of the 2018-19 financial year, and as a result have only partially impacted the annual accounts. The effect of this, and the technical accounting treatment of GRP’s financing costs, amortisation of goodwill, central finance and M&A costs resulted in a loss before tax of £17.9m (2017-18: £20.1m).
At the date of filing the Report and Accounts for the year ended 31 March 2019, GRP has seen its run-rate income grow to £139m (FY 2017-18: £111m), a 25% increase, while the equivalent EBITDA from the Group’s operating entities, the industry standard measure of profitability for acquisitive businesses such as GRP, jumped to £50.0m (FY 2017-18: £35.3m).
Outlook
Looking to the future, Mr Bruce said: “We remain fully focused on growth through acquisition and integration of regional brokers, MGAs, portfolios and teams, and high-quality third-party financing remains in place to support GRP’s capital base and to invest in further expansion.”
“We accelerated the number of deals completed in FY 2018-19 from the previous year, and the trend has continued during the new financial year, with 13 since the end of March. Our model, which empowers our hub businesses to leverage their local and market relationships to deliver local ‘spoke’ acquisitions, means that our pipeline is stronger than ever, underlining the continuing attraction to broking entrepreneurs of GRP’s owner-driver philosophy.”
“Our customer focused culture has yielded strong results evidenced by excellent organic growth and a market leading Net Promoter Score (“NPS”) score of +58. We continue to develop our product range to optimise customer outcomes and have, for example, invested in Health and Safety Click, which provides market leading risk management advice to our clients.”
Chairman’s comment
Peter Cullum, GRP’s Chairman, said: “GRP has continued to set the pace during the course of 2018, maintaining our strong track record on acquisitions and delivering the fruits of our investment in integration.”
“Our focused approach has delivered a further 42% increase in run rate EBITDA, and GWP nearing £800m means we have become one of UK’s largest independent commercial brokers in only six years trading.”
He added: “Providing our clients with effective risk solutions and great service is at the heart of our model. We buy quality businesses with strong retention rates and good underwriting results, and then enhance their proposition through access to Group products, insurer relationships, technology and operational support. As a Group we now look after the insurances of over 300,000 clients, and I was particularly pleased that the result of our recent client satisfaction survey of 80,000 commercial clients delivered a strong result, with an excellent NPS score of +58.”
“Our 2018-19 results attest to GRP’s strength in depth across all three operating divisions and I am confident that our experienced management team, supported by our 1,600 employees, will sustain this growth during the next phase.”