Swinton profit falls after paying out for restructuring and technology upgrade
High-street broker Swinton has reported a 28% drop in pre-tax profit before in 2016 after facing a big restructuring bill and a write-down in the value of its old IT systems as it invested in new technology.
Swinton made a profit of £11.5m in the year to 31 December 2016, down from £15.9m in 2015.
Operating profit was down 29% to £14.9m (2015: £21.1m).
Also contributing to the Swinton profit fall was a 16% drop in revenue to £222.8m (2015: £265.4m).
Swinton chief executive Gilles Normand (pictured) said that the results were “in line with expectations”.
The results were hit by a number of one-off charges as the company closed swathes of branches, made hundreds of staff redundant and upgraded its technology to cope with changes in the way customers are buying insurance.
Some 90% of Swinton’s customers now buy insurance over the telephone or online, meaning that a large branch network no longer makes sense.
Swinton now has 111 branches after closing 84 this year and 130 in 2016.
The company paid a £10.7m restructuring charge and was hit with a further £8.3m charge to reflect the reduction in value of its old IT systems. The charges were partly offset by a £6.6m gain on the sale of its Northern Ireland business, Open & Direct.
Swinton expects to spend £45m in total in upgrading its technology and digital capabilities.
Swinton said it made “substantial progress” during 2016 to improve and modernise its business.
Swinton chief executive Gilles Normand said: “Although conditions in the general insurance market remain challenging, we continue to make substantial investments to modernise and improve our business, thereby making it easier for customers to interact with us.”
He added: “We are building a solid platform for the future in order to address the challenges that we and the wider insurance broker community face. Our current trading is in line with expectations and we would like to thank our colleagues for their continued hard work and contribution throughout the year.”