Financial performance reflects continued momentum despite challenging market conditions and with ongoing investment in people, operations and technology.
- Revenue increased by 45% to £434m from £299m in 2015.
- EBITDA, the Group's preferred measure of profitability, increased 82% to £103m from £57m in 2015.
- The EBITDA margin increased to 24% (2015: 19%) with significant investment in people, operations and systems balanced with strong cost control.
- The Group delivered underlying organic revenue growth of 8% (2015: 5%).
Acquisition structure, financing and non-recurring items
As anticipated the structure, integration and related financing profile of the acquisition of RKH Holdings Limited (RKH), completed in April 2015, and other transactions continue to be reflected in the Group's income statement in accordance with IFRS accounting requirements.
As a result, the Group will report an IFRS accounting loss of £38m for 2016. The accounting loss under IFRS specifically reflects:
- £76m (2015: £30m) in respect of the deferred consideration payable to RKH employee shareholders.
- £38m (2015: £23m) for depreciation and amortisation.
- £37m (2015: £23m) of loan interest and similar items.
- £26m (2015: nil) gain in fair value change for movement in liquidity put option.
12 month period of focused integration and consolidation to deliver robust and resilient structure and operations and a platform for a differentiated global offering,
- Strong progress made on operational integration in the UK, including rationalisation of London locations, embedding of business-specific support services and systems integration.
- From 1 October 2016, the Group fully aligned its management structure to three pillars: Howden, being retail broking; RKH Group, being specialty and reinsurance broking; and DUAL, the Group's MGA operations.
- Core support services delivered through a single consolidated service company, Hyperion Services, from 1 October 2016.
Building a platform for talent
With restructuring undertaken to ensure a flat and empowered management structure in all Group operations, to deliver appropriate support services, and to protect Hyperion's entrepreneurial culture, the enlarged Group continues to attract talented individuals. This is evidenced in the appointment, during the year, of a number of well-regarded, senior market experts, as well as experienced and respected practitioners from outside of the industry.
Those joining the Group in the 12 month period to 30 September 2016 include:
- Lyn Grobler as Chief Information Officer, Hyperion.
- Goh Chye Huat as Chief Executive Officer, South East Asia, Howden.
- Richard Clapham as Chief Executive Officer, Europe, DUAL.
- Stephen Manning as Chief Operating Officer, DUAL.
- Mark Hudson as Chief Financial Officer, DUAL.
The Group's commitment to broad employee ownership saw the launch of a D and E share programme and the completion of its third employee share offer. More than 20% of Group employees now own shares in Hyperion and its subsidiaries.
Selective strategic acquisitions and start-ups
Hyperion continues to seek strategic partnerships, to make acquisitions, and to launch operations where likeminded businesses and people will bring specialist expertise to the Group, give geographic reach in key territories, and make a difference to clients.
- In December 2015 the Group acquired 75% of Chelsea Risk Management Inc., a marine insurance agency based in San Francisco which specialises in coverage for ports, terminals and logistics operators, bringing Marine capability to DUAL's US operations.
- In March 2016 the Group acquired 100% of PMG Financial Services Limited, the UK's largest independent specialist surety broker, positioning itself to become a leading participant in the surety market.
- In April 2016 the Group expanded its Iberoamerican retail broking operations with the launch of Howden Portugal.
- In September 2016 the Group completed the acquisition of a majority stake in Euroassekuranz Versicherungsmakler AG, Germany's leading independent retail insurance broker to mid-market clients, forming a strategic partnership connecting the niche specialisms of Howden in Germany — Financial Lines and Marine — with those of Euroassekuranz — Industrial, Commercial and Real Estate.
David Howden, Chief Executive Officer, commented:
"The effort to shape, support and position the significantly larger Hyperion Group for the future has been a key focus for the Group in 2016. We are now structured, with our three arms of Howden, RKH and DUAL, to harness the expertise and agility of the Group to deliver the best for our clients, partners, employees and shareholders, and to take Hyperion to the next level.
Against the backdrop of political events of the last six months, the value of the natural hedge provided by our balanced model and geographic and product diversification is clearer than ever.
We are well positioned in the face of external factors and our differentiated platform and employee-ownership model make Hyperion a unique place to work. I am delighted that we continue to attract some of the brightest talent from inside and outside the industry.
I have long said that it is the quality of our people that make this Group stand out — they are the ones who deliver the organic growth that is the foundation of the business — and I am delighted that we are now the eighth largest employee-owned company in the UK with more than 700 employee shareholders in the Group and its subsidiaries."
Dominic Collins, Chairman, said:
"Integrating the Hyperion and RKH Groups quickly and efficiently to allow our businesses to continue to deliver growth and profitability has been critical. I am pleased that the significant efforts of those involved have allowed the Group to deliver a strong underlying performance whilst we continue to invest in the platform for the future, and my thanks go to all our employees for their efforts."