PSC earnings soar on UK contribution, organic growth

PSC Insurance Group today reported stronger-than-expected earnings for the six months to December, fuelled by contributions from its UK and Australia acquisitions as well as organic growth across all business segments.

The business has subsequently raised its full-year guidance, with underlying earnings before interest, tax, depreciation and amortisation (EBITDA) now projected at $87-92 million from $84-89 million previously.

Underlying net profit after tax before amortisation (NPATA) has also been revised upwards, to $57-61 million from $54-58 million.

PSC says first-half underlying EBITDA rose 42% to $40.7 million from a year earlier, underlying NPATA 61% to $27.6 million and statutory net profit 21% to $16.6 million.

“These are very pleasing results and all areas of the group have performed well,” PSC said. “Insurance prices have remained favourable which, with good client growth count, has led to strong organic growth across all areas.”

The Melbourne-based broking group says the December half demonstrated the “growing strength” of its multi-region business model in the key markets of Australia, the UK as well as New Zealand and Hong Kong.

“It’s been a very good six months,” MD Tony Robinson said in this morning’s earnings call. “The contribution that we’re getting out of the UK – we think that’s got lots of room to continue to grow.”

In the UK, growth was led by Paragon and the continuing successful roll-out of PSC UK Insurance Brokers, which includes Absolute, Abaco and Trust brokerages. PSC UK Insurance Brokers commenced on January 1.

The UK business division increased its underlying revenue to $63.1 million from $45.1 million a year earlier and reported EBITDA to $19.3 million from $9.8 million.

UK EBITDA improved materially by $8.8 million during the period, with acquisitions contributing $4 million to the growth.

In Australia and New Zealand the broking franchise continues to grow and strengthen as client numbers increased, PSC says.

The Australia Distribution business division grew its underlying revenue to $47.4 million from $41 million and the Australia Agency segment to $8.4 million from $7 million.

Based on the first-half figures, the UK business accounts for 52% of underlying revenue.

PSC has invested significantly in the UK, buying complementary businesses that fit its growth model such as Paragon and Carroll Insurance Group.

It has also made a number of strategic acquisitions at home, such as the purchase of Alliance Insurance for $24.5 million last year. In New Zealand the business acquired broker Montage General Insurance.

Mr Robinson says “the inclusion of Alliance and the people in Alliance in the group has made PSC a better business”.

“Overall we’re in as good a spot we’ve ever been I think in terms of our strength, the capability of the business and the spread of earnings,” Mr Robinson said.

He says PSC is still on the lookout for potential acquisitions and sees some “great opportunities” possibly in the next 12 months.