Charles Taylor adjusting profit drops 29% on lower claims

Profits in Charles Taylor’s core loss adjusting business fell 29% in the first half of 2012 because of a drop in large and complex energy insurance claims across the industry.

Operating segment profit for the adjusting services business was £2.7m in the first half of 2012, compared with £3.8m in the same period last year.

The profit slump came despite a 1% increase in adjusting revenues to £25.4m (H1 2011: £25.1m).

The company said the lower number of large and complex energy losses across the insurance market had led to a fall in the number of high-value instructions in its energy business.

The company also invested in new senior adjusting staff and opened a new office.

The loss adjusting business accounted for 49% of Charles Taylor’s first-half 2012 professional services revenues.

Group-wide, Charles Taylor’s profit increased 46% to £3.8m (H1 2011: £2.6m). The improvement was mainly caused by a drop in amortisation charges for customer relationship related intangible assets to £600,000 (H1 2011: 900,000) and the non-recurrence of one-off costs.

In the first half of 2011, the company paid a one-off chief executive transition charge of £700,000 and suffered a £300,000 loss on the disposal of its Crescendo Holdings engineering consultancy joint venture.

Excluding customer relationship amortisation charges and the one-off costs, profit before tax was almost flat at £4.4m (H1 2011: 4.5m).

Charles Taylor’s non-executive chairman Rupert Robson said: “Charles Taylor has continued to make steady progress in the first half of 2012, although the subdued energy claims environment has affected the performance of our adjusting services business.

“We have taken steps to strengthen the Group’s capabilities to create the right conditions for future growth. Our initiative to reduce debt continues to make headway.”

Net debt increased slightly in the second half to £34.2m (year-end 2011: £34m). However the company said this was caused by the payment of year-end dividends. Compared with the position at 30 June 2011, the net debt position has reduced by £4.4m. “The underlying trend is downwards,” the company said.