Consolidated EBITDA increased by 2% to $5.2 million as the Company's non-insurance business generated its first full year of positive EBITDA at $746,000 vs. an EBITDA loss of ($523,000) in 2011. EBITDA for the Company's insurance business decreased by 20% to $4.47 million directly related to the Company's accelerated investment in organic insurance growth.
Consolidated profit after taxes increased by 47% to $4.15 million. In addition to those factors impacting the consolidated profit before taxes, the increase in profits after tax was also impacted by the recognition in the year of a deferred income tax asset associated with prior period operating losses in the Company's U.S. operations of $2.2 million.
Fourth Quarter consolidated results:
Consolidated revenue increased by 7% to $9.4 million compared to the same period in the prior year. Consolidated revenue growth was the aggregate of a 3% decrease in the insurance segment revenues and the 30% increase in the Company's non-insurance segment revenues. With the exception of an increase in data publishing revenue, the factors influencing both the insurance and non-insurance segment for the year as a whole were consistent with those impacting the fourth quarter.
For the quarter, profit before taxes decreased by 80% as a result of (i) the Company's increased investment in organic U.S. and U.K. insurance policyholder growth, (ii) a reduction in insurance company profit share and (iii) increased amortisation expenses related to the deployment of both its internal ERP systems and the first phase of PetPoint Enterprise during 2012. Consolidated EBITDA decreased by 34% to 982,000.
Consolidated profit after tax decreased by 37% for the quarter as the decrease in consolidated profits before taxes was moderated by the recognition in the quarter of a deferred income tax asset associated with prior period operating losses in the Company's U.S. operations of $654,000. While the Company determined at June 30 that it had a total tax asset available of approximately $2.2 million to recognize for 2012, under IFRS, the Company was required to split the recognition of the asset over the last three quarters of the year.
Insurance segment results:
---------------------------------------------------------------------------- For the year ended For the quarter ended---------------------------------------------------------------------------- Dec 31 Dec 31 Change Dec 31 Dec 31 Change($'000) 2012 2011 % 2012 2011 %----------------------------------------------------------------------------Revenue 22,722 22,278 2% 5,674 5,879 (3%)EBITDA(1) 4,466 5,614 (20%) 858 1,485 (42%)Profit before taxes 3,243 4,890 (34%) 568 1,309 (57%)Profit after taxes 5,173 4,511 15% 1,012 1,245 (19%)----------------------------------------------------------------------------(1) EBITDA, a non IFRS accounting measure, is profit before amortisation anddepreciation, interest and income taxes.
The insurance segment results were influenced by the following:
Full year 2012
-- A 4% increase in US core commission revenues driven in large part by the Company's accelerated investment its 24PetWatch gift of insurance program which is distributed through PetPoint to pet adopters adopting dogs and cats through the U.S. animal welfare community. During the year, an additional 71,827 24PetWatch gift policies were issued at a total incremental cost of $669,000, a 41% increase vs. the prior year.-- A 5% decline in UK core commission revenues. The Company continued to accelerate its investment in new Policyholder acquisition in the UK principally through its on-going engagement of aggregator websites as a source for new policy acquisition. During the year, the average policy count increased by 12% while the average premium per policy declined by 16%. While initially resulting in a decline in U.K. core commissions, the less expensive, less coverage policies are expected to have a positive impact on the loss ratios. During the year, an additional $319,000 was invested in the one-time payments made to aggregator sites upon successful policy acquisition compared to that invested last year.-- The U.S. and the U.K. core calendar year loss ratios for policies underwritten by Praetorian and QBE (Europe), in aggregate, were 50% for 2012 as compared to 49.4% for 2011. As a result, $0 was recorded in the current year with respect to the Company's participation in its programs underwriting results as compared to $124,000 in the prior year.-- A 52% increase in amortization related primarily to the deployment of the Company's internal ERP system in April 2012.-- The recognition of a deferred tax asset of $2.2-million related to the Company's U.S. operations.
