Charles Taylor off to satisfactory start after watershed 2011

published 23 March 2012

Insurance consultancy firm Charles Taylor Consulting is putting its January profits warning behind it, with Chairman Rupert Robson claiming that the new Chief Executive's strategy is already delivering results.

"2011 was a watershed year for Charles Taylor. We welcomed David Marock, our new Group Chief Executive Officer, to the business in July and he has made an immediate, positive impact. David initiated a thorough business review and planning process to identify and capture profitable growth by building on the group's strong fundamentals. The new strategy is already delivering benefits," Robson claimed.

Despite the company lowering profits guidance back in January the 2011 outcome was still a tad lower than the market had been expecting. Adjusted profit before in 2011 slipped to £9.2m from £14.6m; the market had been expecting profits of around £9.5m.

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The group said the fall-off was largely as a result of the non-reoccurrence of the large run-off profits generated in 2010 from insurance funds closed to new business.

Statutory profit before tax, which includes non-recurring costs such as customer relationships amortisation of £1.8m (2010: £2.1m), virtually halved to £6.4m from £12.5m in 2010.

Total revenue rose to £102.5m in 2011 from £99.1m the year before, ahead of market expectations of £101.03m. Management Services revenue grew to £39.4m from £38.2m in 2010, Adjusting Services revenue climbed to £50m from £47m but Insurance Support Services revenue fell to £12m from £12.7m the year before.

Despite the 3% increase in revenue on the Management Services business, the unit's operating profit fell to £6.4m from £7.0m. In contrast, the Adjusting Services business grew operating profit by 25% to £5.7m (2010: £4.6m). The Insurance Support Services again made an operating loss but at £0.3m it was a slightly thicker loss than the year before (£0.2m). This was principally due to the non-life run off servicing business not being successful in winning new business.

Adjusted earnings per share of 19.86p were down from 22.00p in 2010 but ahead of market expectations of 19.76p.

Despite the profit slide, the board has recommended a sharply increased final dividend of 6.75p, up from 4.46p a year earlier. That takes the full year pay-out to 10p which, not coincidentally, is the same as the previous year's full year dividend and bang in line with market expectations.

Net debt at the end of 2011 was £34.0m, compared to £36.3m at the previous year end and £38.6m at the half year. This figure includes £2.4m borrowed in the year to finance the acquisition of Alico Isle of Man Limited, which is expected to be repaid in 2012. Free cash flow for the year was £7.9m compared to £10.9m in 2010.

"Less cash was released from the closed life assurance business this year and our initiative to drive down debt did not commence until the second half. The initiative had an immediate, positive impact on second half cash flow," Robson said.

Trading in 2012 has so far been satisfactory. "I firmly believe that the group is well positioned to achieve long term organic growth from our core professional services businesses and to make shorter term opportunistic gains from the acquisition of offshore life insurance companies in run-off," declared Chief Executive David Marock.

"While our full organic growth potential will take time to be realised, we have already started to implement many of our strategic initiatives and I am excited about the group's prospects for 2012 and beyond," Marock said.