16% increase in turnover helps loss adjuster offset pension scheme costs
The UK division of loss adjuster GAB Robins returned to profit in 2009 despite facing continued costs from its closed defined benefit pension scheme.
UK chief executive Kieran Rigby described the return to profitability as a culmination of the changes made since he joined the company in December 2005. Management bought the company from private equity firm Brera Capital Partners in April 2009.
GAB Robins Holdings UK, which consolidates the loss adjuster’s main UK operations with the GAB Robins Aviation business, made a profit after tax and minority interests of £1.9m for the year ended 31 December 2009, compared with a loss of £1.2m for 2008.
The profit was driven in part by a 16% increase in turnover to £51m from £43.9m, and was helped by the fact that the value of work in progress fell by only £557,459 during 2009, compared with £2m in 2008. Operating profit rose 531% to £4.2m from £672,242.
The profit after tax came despite a 152% rise in pension costs to £1.1m from £424,000 in 2008. While the interest cost associated with the pension fell to £5.95m from £6.22m, expected return on plan assets fell to £4.9m from £5.8m. The company’s pension deficit grew to £24.2m from £23.6m.
Rigby said the 2009 result follows big changes at the company, including alterations to the structure and team, the expansion of services offered and greater investment in people. “The top line has improved and we have managed the expenses tightly. We are in a very competitive market but we’re certainly more sophisticated in how we approach pricing,” he said.
The company’s main UK operating unit, GAB Robins UK, moved to a profit of £479,784 from a loss of £2.3m. GAB Robins Aviation’s profit jumped 61% to £959,617 from £594,287.
Rigby sees the profitability as sustainable. “Month on month we have had profit before tax in our business [in 2010]. I would be pretty horrified if that haemorrhaged in the final quarter. We expect to get comfortably over the line at the end of the year.”
He adds: “I would expect the UK business to be ahead of last year, but I don’t think aviation is going to perform as well as last year – it was quite extraordinary.”