$94m goodwill impairment charge in Q2 '09 creates net loss of £88.1m
Crawford & Company’s UK arm has reported a 25% increase in turnover to £94.1m for the year ending 31 October 2008, from the £75.2m it reported in 2007. Operating profits increased 17% in 2008 to £12m, up from £10.3m.
The 2008 UK figures were released following the firm’s global Q2 ’09 results, which showed consolidated revenues before reimbursements decreased to $249.7m from the $263.3m reported in the second quarter of 2008.
The claims management solutions provider blamed the plunge in revenue on the negative effect of foreign currency movements. It also reported a Q2 ’09 net loss of $88.1m – which included a preliminary non-cash goodwill impairment charge of $94m – compared with net income of $7.9m in the second quarter of 2008.
“Our second-quarter operating results continue to be reflective of current global economic conditions,” Crawford & Company’s chief executive, Jeffrey T Bowman, said. “While our reported consolidated revenues and earnings are down year-over-year due primarily to the previously mentioned goodwill impairment charge, defined benefit pension expense increase, and negative impact of a stronger US dollar in 2009, there are several encouraging areas within our business.”
The firm’s US property and casualty revenues were up by 6.5% to $54.5m from the $51.2m it reported in the second quarter last year. “Performance … was enhanced by incremental catastrophe-related business due to severe weather in the 2009 six-month period,” Bowman explained.
Crawford & Company’s legal settlement administration business saw revenues jump 32.5% to $25.9m, from the $19.6m it reported last year. The firm said this was as a result of several major bankruptcy and securities class action administration projects it was awarded.
The Broadspire business, which handles workers’ compensation claims, saw its revenues down by 7.6% to $73.1m from the $79.1m it made last year. Crawford said this decline was primarily because of fewer workers’ compensation claim referrals as a result of lower US employment levels.
Bowman added: “Before the impairment charge, our operating results for the 2009 second quarter showed improvement over our first-quarter results, even as the global economy remained weak. We remain committed to … improving operating performance and market share expansion, and are focusing significant attention on our cost base across the entire organisation to ensure we are operating as efficiently as possible.”