SSP Group (“SSP”, “the Group”), the market-leading provider of business IT systems and services to the general insurance industry, has published headline results for the 12 months to 31 March 2013.
Laurence Walker, Chief Executive of SSP Group, said: “We have delivered another strong set of results despite a sluggish marketplace, maintaining our profitability and high levels of recurring revenue. The outlook for the industry remains positive despite the slow recovery of the UK economy. We won a number of significant contracts across all of our divisions, as well as securing sizeable contract extensions with large customers.
“Overall we have matured significantly over the last couple of years, having integrated a number of acquisitions and invested in new digital products and data services. We now have a first class portfolio of quality products and increasing recurring revenues. The business is well positioned for organic growth and we are expanding internationally.”
SSP delivered another solid performance this year, building on the increase in profits of previous years, despite the economies in several of its markets continuing to be fragile. This resulted in an EBITDA before exceptional costs of £18.2m, up from £17.9m. Notably recurring revenues improved to £56.0m from £54.8m.
The Group has seen a change in momentum coming into the current financial year with some meaningful growth, which is giving it further confidence about the prospects for the business. Over the last few years SSP has consolidated and integrated its acquisitions in order to improve the efficiency and effectiveness of the Group.
SSP is now in a much stronger position to take advantage of the developments and changes, both domestically and internationally, in the insurance market. The continued investment in a reduced number of core products is beginning to show results, with these chosen products now well proven and established in its respective markets.
SSP has continued to invest in its products, control costs, and has reorganised the management and reporting structures to better match its markets and products. The management team has seen a number of senior level appointments and a change to the divisional reporting structure.
For continuing operations, revenues were £70.7m (2012: £71.7m) with an EBITDA before exceptional costs of £18.2m (2012: £17.9m). Recurring revenues were £56.0m (2012: £54.8m).
Margins, efficiency and execution have been a key area of focus in FY13 and the Group has invested heavily in development methods, analysis and resource management tools.
SSP has invested in its product set and infrastructure to ensure that it can exploit the numerous opportunities from the digitalisation of the insurance industry. There are many examples of customers taking advantage of these newer technologies, including the market changing telematics solution, SoteriaDrive.
Cash increased during the year to £16.7m (2012: £12.8m) through a combination of a good trading performance and effective treasury management. Senior debt has continued to be repaid and now stands at £67.0m (2012: £71.5m).
The Group has invested £5m over the year in developing its products and services including £2m on its strategic product roadmap.
SSP won a number of sizeable contracts during the year across all of its divisions as well as winning significant contract extensions with existing large customers.
The UK general insurance market is currently estimated to be worth £46.0bn and although growth is predicted to be flat in both commercial and personal lines, insurers are looking to grow through the introduction of new propositions and products, thereby providing further opportunities for SSP. The Group is well placed to capitalise on these developments.
The Insurer Division was most affected by the economic slowdown with sluggish procurement processes and a sense of caution displayed by its large corporate clients. SSP has worked with several large insurers to find joint value release strategies. In the coming financial year the Group expects to report good growth in this area.
The Insurer Division continues to operate globally with subsidiaries in South Africa, Australia, New Zealand and the US. A new large SSP Select Insurance customer came on board towards the end of the period and SSP is the preferred supplier for several new opportunities. Overall, the division has finished the year in a strong position with a positive outlook moving into FY14.
The Broker Divisions have seen good progress in key initiatives such as real time pricing, the migration to SSP Pure Broking from the legacy product ElectraM3, and in enhanced data provision and enrichment services. The division has also seen a strong increase in recurring revenue streams, driven by new SSP Select Contact Centre contract wins and demand from IFAs for its Swift product.
The insurance market is undergoing a period of rapid change, driven by consumer expectations, disruptive technologies and regulation. SSP’s customers are continuing to look for opportunities to reduce risk and cost whilst seeking different ways to generate further growth. All of these create opportunities for SSP as customers focus on the use of technology to help drive innovation and efficiencies, particularly when they update their legacy systems in order to remain competitive.
Digitalisation and mobile distribution are fundamentally changing the way the industry interacts with consumers who are now demanding real time transactions and price comparisons over any device at any time. SSP is well placed to ensure its customers gain the maximum benefit from the adoption of these newer technologies.
In addition to disruptive technologies, the insurance industry increasingly recognises that the management and interpretation of data provides competitive advantage in developing new propositions and enhancing customer service.
Regulation is also driving change across global insurance markets with European regulation on gender, FCA regulation on referrals for accident claimants and the increase in fraud cases in the personal insurance sector, all providing increased opportunities for SSP.
The market dynamics are also evolving rapidly, with broker consolidation and new entrants, whilst pricing transparency is now paramount.
The Group’s ability to operate across the entire insurance value chain, from consumers through to insurers, means SSP is uniquely positioned to benefit from a whole market view of consumer behaviour and data.
SSP has a first class portfolio of quality products, increasing recurring revenues and is well positioned for organic growth both in its home market and its key international markets.
The overseas businesses in Africa and Asia Pacific, together with the business in the US, continue to provide important strategic capability for the Group. The international nature of the business also gives the Group exposure to markets that are experiencing different growth characteristics and provides an important additional revenue stream.
The Group plans to continue to invest in and develop its international operations as there are considerable opportunities in the Asia Pac region and across Africa.
Based on the Group’s position, product portfolio and growing international reach, the Board is looking forward to the coming year with increasing confidence.