Broker blames acquisition delays and restructuring costs on poor performance.
Shares in listed broker Culver nosedived this week as the company unveiled a loss for 2007 and warned of further pain in 2008.
The Welsh broking and financial services group reported a pre-tax loss of £614,000 for the year ended 31 December 2007. Fee and commission income for the year was over £2.9m.
Shares in Culver plunged over 30% to 175p from 265p on the news.
Culver blamed the losses on a delay in completing two key acquisitions and the cost of restructuring the group.
The company acquired Lloyd’s broker LPH Pitman and aviation specialist AMS Corporate Risks in February. At the time it warned of significant losses for 2007.
Chairman Richard Read said: “This is not what I had hoped for at the half year when I reported to shareholders that the outcome for the full year would depend crucially on the speed at which new producers begin to book income.
He added: “The speed was not what we had anticipated. This is in no small part due to significant challenges encountered, and later overcome, in closing the key acquisitions to give the group access to the Lloyd’s market.
“The delay in concluding these transactions coupled with the costs of restructuring the group for its future have weighed heavily on these results.”
Read said the broking business had now been substantially refocused as a specialist broker. It is divided into a retail arm and a Lloyd’s wholesale and speciality business.
He said the business was not expected to produce an attractive economic return until the end of the 2008 trading year. “While I remain confident that in due course the benefits of this strategy will be recognised by shareholders, there may remain some pain to bear over the year to come,” said Read.
Culver’s broking division reported a 43% increase in pre-tax profit for the year to £383,000. This was despite a 13% fall in turnover to £2.3m, due in part to the loss of staff in 2006 and the extension of policy renewal dates.
Read said the retail division had seen growth in the first quarter of 2008 and was close to budget.
The wholesale and speciality business had performed below expectation in the quarter owing to a slowdown in professional risks activity.
Culver’s share price has tumbled in the last six months from a high of 475p, wiping more than half the value off the company. Its market capitalisation is currently £0.4m..
