Consolidator still confident despite £10m headline loss
Trying to make sense of Giles latest financial performance feels like treading over well-trampled old ground.
While the bottom line shows a £10.7m loss, consolidators insist analysts should be singing from the EBITDA hymn sheet for a fairer reflection of performance.
Giles says it is an acquisitive business which invests in growth. As a result, there are huge restructuring costs, large interest payments on debt and greater depreciation as the business grows year on year.
The idea is, that when the brakes are finally put on the consolidation, and all the restructuring is complete, the balance sheet will not carry those heavy hits.
Secondly, Giles will have a strategy of paying back their bank debts and also rewarding its private equity backers Charterhouse.
A float when the stock market picks up could reap huge capiltal for both Giles and Chartherhouse.
Giles could use some of that to pay back its debts.
It seems very unlikely that Giles is going to have any problems servicing its debt in the near future, although only Chris Giles and a few others know what its banking covenants are and how long it has to repay back its debts.
Will it all pan out as he wants? If Giles can see itself through the downturn and sell in a bull market there is no reason why not. But that's a big if.
As an aside, Towergate chief executive Andy Homer has told Insurance Times its management has stopped and ‘put their foot on the ball’, and are now looking at organic growth and a steady period restructuring without the usual huge consideration of large acquisitions.
The shaky economy has put stress on all the consolidator models, and some, like Towergate, see it as a good time to slow down a little and refocus. Perhaps Giles will do the same.
