News Column

Charles Taylor To Review Dividend Policy After "Resilient" Half Year

August 29, 2014

Samuel Agini

LONDON (Alliance News) - Charles Taylor PLC Friday reported flat first-half pretax profit, as results were hurt by the strength of sterling as well as a benign claims environment, meaning its adjusting services unit had fewer to handle.

But strong performances at its management services and insurance support services units helped to make up the difference.

In a statement, Charles Taylor, which provides professional services to clients in the insurance market, said its pretax profit for the six months ended June 30 was flat on the corresponding period last year at GBP4.1 million. At constant exchange rates, pretax profit increased to GBP4.5 million. Revenue inched up to GBP56.8 million from GBP56.1 million, though the company's results showed the figure would have increased to GBP59.3 million at constant exchange rates. Administrative expenses increased to GBP50.4 million from GBP49.4 million.

Chief Executive David Marock told Alliance News the impact of foreign exchange on the result was not a cause for concern.

"While there is an impact we're quite pleased the impact is not enormous. It's quite muted. We think that's a reflection of the organisation's resilience," he said.

With the interim dividend kept flat at 3.25 pence per share, Marock also said the board will review dividend payments at the end of the year. Charles Taylor's full-year dividend has been flat for four consecutive years since being re-based in 2010.

"[The dividend policy is] certainly something which will be under consideration at the end of the year," Marock told Alliance News. He said an important factor, besides overall results, that will play a role in the dividend decision will be the performance of Charles Taylor's adjusting services unit, where first half operating profit fell to GBP1.4 million from GBP3.6 million due to the reduced number of claims to process.

According to Munich Re NatCatSERVICE statistics cited by Charles Taylor, insured losses in dollars from natural catastrophes in the first half are 32% down on the 10 year average.

"The volumes of loss adjusting work would be expected to increase considerably once there is a return to a more normal claims environment," Marock said in the company's statement.

Management services, under which Charles Taylor manages mutuals such as The Standard Club, a provider of protection and indemnity insurance to shipping, reported a GBP900,000 increase in operating profit to GBP3.1 million.

Insurance support services reported a GBP900,000 increase in operating profit to GBP1.1 million.

"We've just been running the business tighter as well, particularly in insurance support services, which has helped margins," Marock told Alliance News.

Charles Taylor's overall core professional services business' operating profit fell to GBP5.6 million from GBP6.0 million but would have remained flat at constant exchange rates. Charles Taylor's insurers in run-off business, not part of its professional services business, reported no operating profit as revenue fell to GBP2.0 million from GBP2.5 million.

"Our professional services businesses have delivered a result in line with the prior year. This was a result of the strong performance of management services and insurance support services and despite the impact of the benign claims environment on our adjusting services business and the strength of sterling. The insurers in run-off business performed satisfactorily," Marock said in the company's statement.

Marock said current trading within Charles Taylor's core business is steady, adding that the company continues to invest in people, offices and systems to support growth.

Looking ahead, Marock said: "The insurance support services business has had a strong start to year and continues to trade well. Our insurers in run-off business is performing satisfactorily."

Marock told Alliance News that Charles Taylor may consider further bolt-on acquisitions, following its deal for non-life insurance support service business KnowledgeCenter in 2013 and the purchase of Knowles Loss Adjusters, a UK loss adjusting business focused on UK and Ireland property and casualty claims, in May 2014.

"We'll continue to look at neat bolt on acquisitions if we can find them but our focus remains on growing the core business organically," Marock said.

Charles Taylor shares were Friday quoted up 2.3% at 225.00p.

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Source: Alliance News

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