APRIL announces first half 2017 results in line with expectations

Continued business growth:
- Consolidated sales of €457.7m, up 6.4% as reported and 5.4% like-for-like1
- Gross margin2 of €213.1m, up 0.6%
Current EBIT of €38.1m, up 2.7%

Group CEO Emmanuel Morandini stated, following the publication of APRIL’s first half 2017 results: Our first half results are in line with the trends published at the beginning of the year. The Health & Personal Protection and Property & Casualty divisions both posted growth, while historical brokerage activities once again made a significant contribution to earnings.
We are continuing to roll out the action plan and priorities defined in 2015, in order to maintain growth momentum in the long term while optimising our cost structure. Accordingly, we carried out one international acquisition to step up our expansion outside France, while continuing to streamline our existing operations.
The work carried out on our performance drivers and the results we can see today confirm our ability in our capacity to stabilise current EBIT in 2017.

Group

Group (IFRS - €m)	H1 2017	H1 2016	Change	2016
Consolidated sales	457.7	430.2	+6.4%	861.2
Brokerage commissions and fees	257.0	242.4	+6.0%	485.8
Insurance premiums	200.7	187.8	+6.9%	375.4
Gross margin	213.1	211.7	+0.6%	420.6
Financial income	4.5	6.7	-32.3%	16.4
Current EBIT	38.1	37.1	+2.7%	65.4
EBIT	37.7	37.4	+0.6%	42.1
Net income (Group share)	23.9	26.1	-8.6%	20.1

The Board of Directors of APRIL, an international insurance services group, approved the half-year financial statements on Thursday 7 September 2017. The statutory auditors have conducted a limited review of these financial statements. APRIL posted consolidated sales of €457.7m for the first half of 2017, up 6.4% from the same period last year.

Breakdown of the change in sales between 2016 and 2017 – in €m

Consolidated sales as at 30.06.2016	430.2
Impact of exchange rate fluctuations	+1.1
Acquisitions	+3.5
Deconsolidation	-0.4
Like-for-like sales as at 30.06.2016	434.4
Increase in brokerage commissions and fees	+10.4
Increase in insurance premiums	+12.9
Consolidated sales as at 30.06.2017	457.7

Changes in the consolidation scope resulted in a €3.5m increase in Health & Personal Protection commissions, mainly generated by the integration of Bamado in July 2016 and the Public Broker acquisition in May 2017. The positive impact of exchange rate fluctuations, generated primarily in Brazil and Colombia and, to a lesser extent, in Canada, helped to sustain Property & Casualty commissions. Accordingly, Group sales rose 5.4% at constant consolidation scope and exchange rates.

Group gross margin rose by €1.3m (0.6%) to €213.1m. Brokerage gross margin increased by €6.1m to €186.1m, driven equally by the Health & Personal Protection and Property & Casualty divisions. Gross margin of the risk-carrying business (€27.0m) was impacted by the decline in financial income and the underwriting result generated by portfolios run-off.

Net financial income amounted to €4.5m, down €2.2m from first half 2016, including €0.8m due to foreign exchange losses.

Current EBIT amounted to €38.1m, up €1.0m or 2.7% compared to first half 2016.

After minimal non-recurring items, first half EBIT came to €37.7m, up 0.6% from first half 2016.

Corporate income tax for the first half is estimated at €13.5m, representing an effective rate of 35.7%, up from 30.2% in the first half of 2016.

This rise in corporate income tax impacted Consolidated net income (Group share), amounting to €23.9m, down 8.6% from first half 2016.

Health & Personal Protection

Health & Personal Protection (IFRS - €m)	H1 2017	H1 2016	Change
Consolidated sales	282.5	263.5	+7.2% +6.0% LFL
Brokerage commissions and fees	164.6	156.2	+5.4% +3.3% LFL
Insurance premiums	117.9	107.3	+9.9% +9.9% LFL
Gross margin	131.8	130.7	+0.8%
Financial income	2.8	4.1	-31.2%
Current EBIT	37.8	37.6	+0.6%
EBIT	37.5	37.6	-0.3%

The Health & Personal Protection division reported a 7.2% increase in sales (6.0% like-for-like) resulting from a 9.9% increase in premiums and a 5.4% rise in commissions. On a like-for-like basis, commissions increased 3.3%.

Growth in brokerage commissions reflects the strong performances in group health, loan, personal protection and individual health (seniors and self-employed) insurance.

The increase in insurance premiums is linked to a strong development of individual (seniors and self-employed) and group Health & Personal Protection portfolios, which absorbed the expected loss relating to the run-off of some portfolios.

The division’s gross margin rose 0.8%, throttled by the decreases in financial income and the underwriting result, the latter generated by portfolio run-off.

Net financial income fell by €1.3m, including €0.7m due to foreign exchange losses.

Current EBIT for first half 2017 amounted to €37.8m. This stability compared to first half 2016 confirms that the impact of the extension of group private health insurance to all employees is indeed integrated. Furthermore, the Group continues to optimise its policy and claims handling in a Health & Personal Protection market that remains highly competitive.

Property & Casualty

Property & Casualty (IFRS - €m)	H1 2017	H1 2016	Change
Consolidated sales	176.6	167.8	+5.3% +4.6% LFL
Brokerage commissions and fees	93.3	87.0	+7.3% +6.0% LFL
Insurance premiums	83.3	80.8	+3.1% +3.1% LFL
Gross margin	81.3	81.0	+0.3%
Financial income	1.3	2.1	-39.5%
Current EBIT	5.4	4.7	+14.3%
EBIT	5.3	5.1	+3.7%

The Property & Casualty division posted a 5.3% increase in sales, reflecting strong growth in brokerage commissions, up 7.3% to €93.3m (up 6.0% like-for-like), and a 3.1% increase in premiums to €83.3m. This slight growth in premiums follows the sharp increase recorded during first half 2016 (up 36.0%).

Brokerage commissions were boosted by strong sales momentum in the travel insurance business. Wholesale brokerage remained strong, specifically in two-wheeled vehicle insurance.

Growth in insurance premiums in this core business continued, particularly professional insurance portfolios, in a highly-reinsured risk-carrying model. This growth offsets the expected decline in affinity member operations.

The gross margin is stable thanks to the contribution of the brokerage business, which offset the decrease in financial income impacting the insurance business gross margin.

Through tight control of operating expenses, current EBIT continued to grow in first half 2017, up 14.3% to €5.4m.

Financial position

Group (IFRS - €m)	H1 2017	H1 2016	Change	2016
Shareholders' equity (Group share)	617.9	619.5	-1.7	614.5
Financial debt	35.0	6.3	+28.8	6.5
Adjusted net cash³	193.2	209.9	-16.7	188.9

APRIL’s balance sheet as at 30 June 2017 remains strong.

Shareholders’ equity (Group share) and provisions for contingencies and charges⁴ remain stable compared to 30 June 2016, amounting to €617.9m and €25.4m respectively.

Financial debt of €35.0m includes a €20m bank loan taken out in the second quarter of 2017 in order to take advantage of favourable market conditions. The remainder mainly comprises commitments to buy out minority interests as part of the Group’s external growth policy.

APRIL’s adjusted net cash, including deposit accounts held in relation to the Company’s cash management policy, amounted to €193.2m, down €16.7m from 30 June 2016.

Challenges and outlook
The Group will continue to grow by building on good first-half business performance and by pursuing its action plan via its growth levers and the priorities defined in 2015:

Performance in Broker distribution remains strong. As at 30 June 2017, the number of active brokers had increased by over 3% and the value of new business increased by 15%, in line with the targets set by APRIL under its network development strategy. Highlights of the first half included the extension of the APRIL ON extranet to all brokers and updates to constantly improve user experience.

The Group remains also focused on restoring the profitability of its loss-making operations, by continuing to restructure as necessary in order to achieve this objective. Some sites and structures are subject to dedicated action plans and are being closely monitored.
The APRIL Mon Assurance agency network has therefore been streamlined, with the closure of around ten agencies since the beginning of the year.
The operational merger of all direct corporate brokerage entities as well as target sector repositioning set the scene for a return to breakeven in 2017.
Following the reorganisation of its Polish businesses, APRIL intends to strengthen the ties between its Italian operations and ponder the sale of certain smaller Eastern European subsidiaries.

Lastly, APRIL continues its targeted international expansion via the acquisition of Brazil-based group health specialist Public Broker announced in May. Our teams are mobilised regarding potential acquisitions in line with the Group’s growth levers.

The Group confirms its target to stabilise current EBIT in 2017.

Emmanuel Morandini, CEO, and Emmanuel Maillet, Group CFO, will be holding a conference call in French with live slideshow on Thursday 7 September at 6.30 pm (French Time), available on www.april.com. A replay of the call will be available as of the following day on www.april.com.

Appendices

Sales analysis
Summary consolidated income statement
Summary consolidated balance sheet
Summary consolidated cash flow statement
Gross margin bridge
Adjusted net cash bridge

Half-year financial report availability

The half-year financial report is available to the public as of this day and has been filed on the website of the Autorité des Marchés Financiers. It can be downloaded in French on APRIL’s website at www.april.com and on the AMF website (www.amf-france.org).

Contacts

Analysts and investors
Guillaume Cerezo: +33 (0)4 72 36 49 31 / +33 (0)6 20 26 06 24 – guillaume.cerezo@april.com

Press
Samantha Druon: +33(0)4 72 00 46 56 – samantha.druon@insign.fr

Upcoming announcements

- 24 October 2017 after market close: Q3 2017 sales

About APRIL

Established in 1988, APRIL is an international insurance services group with operations in 31 countries in Europe, North and South America, Asia, Africa and the Middle East, and the leading wholesale broker in France. Listed on Euronext Paris (Compartment B), the group produced a turnover of €861.2 million in 2016. Its 3,800 staff members design, manage and distribute specialised insurance solutions (health and personal protection, property and casualty, mobility and legal protection) as well as assistance services for private individuals, professionals and businesses, while pursuing APRIL's ambition: to make insurance easier and more accessible to everyone. Driven by a strong enterprising ethos, the group aims to offer its customers an insurance experience which is easier, by means of tailored products and services and customised care. Full regulated information is available on our website at www.april.com (Investors section).

Disclaimer

The Board of Directors of APRIL approved the half-year financial statements on Thursday 7 September 2017. The statutory auditors have conducted a limited review of these financial statements. This release contains forward-looking statements that are based on assessments or assumptions that were reasonable at the date of the release, and which may change or be altered due to, in particular, random events or uncertainties and risks relating to the economic, financial, regulatory and competitive environment, the risks set out in the 2016 Registration Document, and any risks that are unknown or non-material to date that may subsequently occur. The Company undertakes to publish or disclose any adjustments or updates to this information as part of the periodical and permanent information obligation to which all listed companies are subject.

¹ Proforma or like-for-like sales, at constant exchange rates and consolidation scope, adjusted for acquisitions, disposals and changes in consolidation method, as well as exchange rate fluctuations, calculated on the basis of the prior year financial statements converted using the exchange rate for the current year.
² Gross margin allows a comparison between the various brokerage business models and the insurance businesses and shows the contribution of each business to Group value-added:
- With regard to brokerage, gross margin is the difference between (i) commissions recognised under sales and (ii) commissions paid to intermediaries recognised under purchases and external expenses.
- With regard to risk carrying operations, gross margin is the sum of the underwriting result and the financial result.
³ Adjusted net cash = Cash and cash equivalents - current bank loans and overdrafts + deposit accounts registered in the name of APRIL (classified under “Financial investments” on the balance sheet)
⁴The company received a notice of audit initiated by the authorities on the Group’s reinsurance operations. At this stage, and as stated in the notes to the half-year financial report, no provision has been recorded in the financial statements for the period ending 30 June 2017.

Appendix 1: Sales analysis

Sales by division

(IFRS – €m)	H1 2017	H1 2016	Change	H1 2016 LFL	Change LFL
Health & Personal Protection	282.5	263.5	+7.2%	266.6	+6.0%
Brokerage commissions and fees	164.6	156.2	+5.4%	159.3	+3.3%
Insurance premiums	117.9	107.3	+9.9%	107.3	+9.9%
Property & Casualty	176.6	167.8	+5.3%	168.9	+4.6%
Brokerage commissions and fees	93.3	87.0	+7.3%	88.1	+6.0%
Insurance premiums	83.3	80.8	+3.1%	80.8	+3.1%
Intra-group eliminations	-1.5	-1.2	-27.7%	-1.2	-27.6%
Consolidated sales	457.7	430.2	+6.4%	434.4	+5.4%

Quarterly sales

(IFRS – €m)	2017	2016	Change	2016 LFL	Change LFL
Q1	227.7	208.4	+9.2%	209.9	+8.5%
Q2	230.0	221.8	+3.7%	224.4	+2.5%
Q3	-	215.1	-	-	-
Q4	-	215.9	-	-	-
Total	-	861.2	-	-	-

Appendix 2: Summary consolidated income statement

(IFRS – €m)	H1 2017	H1 2016
Sales	457.7	430.2
Net financial income (excluding financing cost)	4.5	6.7
Total income from ordinary activities	462.3	436.9
Insurance underwriting expenses Income or expenses net of ceded reinsurance Other purchases and external expenses Tax Staff costs Depreciation allowance Provisions (net of reversals) Other current operating income and expenses	(167.9) (10.6) (124.1) (13.3) (99.9) (8.5) (0.3) 0.4	(143.6) (18.6) (115.7) (13.0) (101.6) (8.2) (0.2) 1.0
Current EBIT	38.1	37.1
Changes in goodwill Non-current income and expenses	- (0.4)	- 0.3
EBIT	37.7	37.4
Financing cost Share of companies integrated on an equity basis Corporate income tax	(0.0) (0.1) (13.5)	(0.0) (0.0) (11.3)
Net income from continuing operations	24.1	26.1
Net income/(loss) from discontinued operations after tax	(0.0)	(0.0)
Consolidated net income	24.1	26.1
Minority interests	0.2	(0.0)
Net income (Group share)	23.9	26.1
Earnings per share (in €)	0.59	0.64

Appendix 3: Summary consolidated balance sheet

(IFRS – €m)	30 June 2017	31 December 2016
Intangible assets Of which goodwill Tangible assets Financial investments Reinsurers' share of underwriting provisions and financial liabilities Other non-current assets	286.5 221.5 11.0 670.4 216.7 20.6	281.6 217.0 11.5 655.2 215.0 23.3
Total non-current assets	1,205.2	1,186.6
Receivables from insurance and accepted reinsurance operations Receivables from ceded reinsurance operations Trade receivables Other current assets Cash and cash equivalents	168.3 41.9 560.6 78.5 111.3	96.8 42.1 226.7 40.8 99.5
Total current assets	960.6	505.8
TOTAL ASSETS	2,165.8	1,692.5
Shareholders' equity (Group share) Minority interests	617.9 0.3	614.5 0.3
Total shareholders' equity	618.1	614.8
Underwriting provisions for insurance policies Provisions for contingencies and charges Deferred tax liabilities Financial debt	591.3 25.4 7.1 35.0	478.3 29.9 7.0 6.5
Total non-current liabilities	658.9	521.7
Current bank loans and overdrafts Payables from insurance and accepted reinsurance operations Payables from ceded reinsurance operations Operating liabilities Other current liabilities	20.0 129.1 96.0 440.1 203.6	11.5 46.7 79.9 301.9 115.9
Total current liabilities	888.8	555.9
TOTAL EQUITY AND LIABILITIES	2,165.8	1,692.5

Appendix 4: Summary consolidated cash flow statement

(IFRS – €m)	H1 2017	H1 2016
Net income (Group share)	23.9	26.1
Net income/(loss) from discontinued operations Minority interest in consolidated companies' net income	(0.0) 0.2	(0.0) (0.0)
Net income from continuing operations	24.1	26.1
Cash flow Change in operating working capital Operating cash flow from discontinued operations	42.0 (16.8) (0.0)	30.9 (27.3) (0.0)
Net cash flow from operating activities	25.3	3.6
Net investment in tangible and intangible assets Net investment in financial assets Net cash flow from acquisition/disposal of consolidated companies Investment in equity-accounted companies Investment cash flow from discontinued operations	(8.7) (13.6) (8.1) - -	(11.7) 40.5 (5.5) - -
Net cash flow from investing activities	(30.4)	23.3
Capital increase linked to exercise of stock options Capital increase linked to minority interests in consolidated companies Purchase and sale of own shares Dividends paid out Net change in borrowings Financing cash flow from discontinued operations	- 0.0 0.1 (10.9) 20.5 -	- 0.1 0.0 (10.9) 0.3 -
Net cash flow from financing activities	9.7	(10.5)
Impact of foreign exchange rates changes	(1.3)	(0.7)
Change in net cash and cash equivalents	3.3	15.7

Appendix 5: Gross margin bridge

(IFRS – €m)	30 June 2017	30 June 2016
Sales	457.7	430.2
Financial income of insurance companies Brokerage commissions paid to intermediaries Insurance underwriting expenses Income or expenses net of ceded reinsurance Other	4.3 (70.6) (167.9) (10.6) 0.1	5.8 (62.2) (143.6) (18.6) 0.1
Gross margin	213.1	211.7
Of which brokerage Of which risk-carrying	186.1 27.0	180.0 31.7

Appendix 6: Adjusted net cash bridge

(IFRS – €m)	30 June 2017	30 June 2016
Cash and cash equivalents	111.3	120.4
Current bank loans and overdrafts	(20.0)	(21.2)
Net cash	91.3	99.2
Term deposits	101.9	110.7
Adjusted net cash	193.2	209.9

7 September 2017