Broker fought ‘difficult’ environment to post 11% rise in pre-tax profit

Leeds-based Henderson Insurance Brokers is close to completing two new acquisitions and has its sights set on a large deal in 2011.

Chief executive Joe Henderson said the company would announce two strategic bolt-on acquisitions in the New Year and will spend the next six to nine months on a “large acquisition” in either a new region or close to one of Henderson’s 11 current offices.

Henderson has held “preliminary talks” with two targets, including a business in the South.

The growth push comes as Henderson posted an 11% rise in pre-tax profit to £1.84m in its annual results for the year ending 30th April.

Revenue rose 12% on the previous year to £17.4m and the broker’s operating profit was £1.76m, up 52%.

The broker said a reduction in interest rates had impacted the company’s non-broking earnings but it enjoyed positive cash flow as shareholder’s funds increased by 21% following a divided payment.

Henderson said that in the “difficult” commercial environment, while client retention was high, the business had suffered due to a number of businesses going into liquidation combined with reductions in turnover.

“Nevertheless acquisition of new clients has been maintained at high level and this combined with the maturing of some of the younger businesses, has enabled us to maintain profitability,” he said.

Henderson, which last year received a £4.5m loan from Lloyds TSB, spent the bulk of it on two acquisitions.

In March, it paid £1m for Leeds-based firm Denney O’Hara, its most recent deal. Last year, it spent £2m on Watford-based UK Credit. Henderson wants to increase gross written premiums from £150m to £200m.

“Going forward we are under no illusions that how difficult the market place is,” Henderson added.

“Nevertheless our investment in complimentary businesses, which has been done from cash flow in previous years, is how bearing fruit and all the complimentary subsidiary companies are growing very significantly.”