Where's the growth at Towergate?

Towergate’s first half results have shown an improvement on last year’s, with overall loss before tax dipping to £25.1m (H1 2011: £25.5m) and operating profit increasing 5% to £80.6m (H1 2011: £76.7m).

The firm prefers to use operating profit/EBITDA rather than results before tax to judge its performance, because it argues that this eliminates non-cash charges to the profit and loss account and gives a better picture of its true performance.

But however you slice it, this improvement has mainly come from cost-cutting, not from increases to revenue. Towergate’s H1 2012 revenue was £219.5m, compared to £219.3m in H1 2011.

The best-performing Towergate businesses in the first half were Towergate Underwriting and Paymentshield. Towergate Underwriting managed revenue increases of 7% to £42.5m, and Paymentshield’s revenues increased by 8% to £33.3m.

But things were not quite as rosy in Towergate Retail, where revenues dropped 2% to £129.6m (H1 2011: £132.3m).

Towergate-owned Broker Network also had trouble in the first half, with revenues falling 14% to £8.9m (H1 2011: £10.3m) and operating earnings falling 17% to £5.4m (H1 2011: £6.5m).

These results do mark a distinct upturn for Towergate, but there is still a lot to be done. Towergate group chief executive Mark Hodges said he sees the reduction in expenses as the first signs of a “significant change agenda,” but where is the overall growth going to come from?