Oval suspends acquisition drive as economic conditions bite

Oval is to put its acquisition drive on hold due to current economic conditions, its chief executive Phillip Hodson has said as the broker unveiled its financial results for the year ended 31 May 2008.

Group turnover increased by 41% from £60 million to £85 million, while underlying EBITDA before one-off costs increased by 54% from £11.7 million to £18 million.

On an annualised basis – including the full-year impact of companies acquired during the last accounting year – group revenues were in excess of £100 million.

Hodson said: “In response to the economic shifts in the current market that have been especially evident over the last two months, and the fact that we made eleven acquisitions in the last financial year, the decision has been made to take a short summer pause in our acquisition process.”

Oval's result follows the news the sale talks with Midlands broker, Perkins Slade, had collapsed after months of negotiations.It also comes just weeks after Towergate chief, Andy Homer, said the company would be scaling back its own acquisition drive following aborted talks with private equity giant, Candover.

Hodson added: “Following our most recent acquisitions of Bartholomew and James in April and Independent Insurance Brokers in May, we currently have eight companies in the acquisition pipeline with whom we are keen to continue dialogue, as and when market trends and economic conditions become clearer.”

John May, executive director of investment trust Caledonia, which backs Oval added: “Caledonia is delighted with the progress of Oval and the performance of our investment in the company. As a long-term shareholder we were pleased to have invested a further £9m in Oval during the year to back management and help fund Oval's acquisition programme.

“We remain very supportive of this strategy of growth of the business both through acquisition, after a sensible period of reflection on background market conditions, and organically.”