Towergate reported earnings before interest, tax, depreciation and amortisation (EBITDA) of £2.8m in the first quarter of 2016, down 48.9% on the £5.5m it reported in last year’s first quarter.
Adjusted EBITDA, which excludes exceptional costs, was down 20.6% to £13.6m (Q1 2015: £17.2m).
Total revenue fell by 6.9% to £76.8m (Q1 2015: 82.5m).
Revenue and EBITDA fell across all of Towergate’s three divisions (see table below for breakdown). The results exclude Broker Network , most of which was sold to Towergate’s majority owner Highbridge Principal Strategies in March as part of a plan to inject more cash into Towergate.
Towergate Q1 2016 revenue breakdown
|Revenue (£m)||Q1 2016||Q1 2015||change (%)|
Towergate Q1 2016 adjusted EBITDA breakdown
|EBITDA (£m)||Q1 2016||Q1 2015||change (%)|
The broking group is continuing work to turn the business around following its financial rescue and the appointment of a new management team last year.
Despite the weaker results, Towergate chief executive David Ross said: “Our underlying performance is ahead of expectations and we are making solid progress towards fixing the infrastructure and legacy issues of our business.”
Towergate revealed that it is now targeting annual cost savings of £30m, up from the original target of £23m, and that the company is more than half-way there with £16m of annual savings delivered so far in its cost cutting programme.
The broking group said that cost savings to date had allowed it to hire more than 30 sales staff.
Towergate also said that it had made “significant progress” on solving its historic problems in finance and IT.
It recently established what it calls a Legacy Resolution Unit, headed by former chief risk officer Sarah Dalgarno, to tackle its historic problems.
Ross said: “We are making solid progress towards fixing the infrastructure and legacy issues of our business whilst ensuring we rebuild and grow a Towergate of which we can all be proud.
“There’s plenty more to do and our focus remains on making sustainable improvements over time.”
He added: “Just this week, we announced the appointment of Paul Longhurst to Towergate London Market and further hires to create a new speciality underwriting capability, entering a space we’ve never played in before. We see this as a key opportunity for the company going forward. These appointments demonstrate a continuing flow of new talent joining a stabilising workforce and building foundations for growth.”