Gallagher holds fast despite First City cost

Gallagher insisted underlying earnings were strong last year, despite a one-off charge for the integration costs of the First City acquisition.

The £4.5m charge to integrate First City, which was bought in March last year, caused pre-tax profits to fall from £8.3m to £6.4m, according to accounts on Companies House.

But a Gallagher spokesman said that adjusted earnings before interest, depreciation and amortisation (EBITDA) - the preferred accounting metric of consolidators - increased from £6.3m to £8.4m.

Turnover increased 27% to £68.4m prompting the spokesman to add that the firm had displayed strong growth.

He said that the deal to buy First City in March last year, which included the costs of integration, was below the £20m that had previously been widely reported.

Gallagher booked in revenues of £13.2m for the nine months of activity in 2010 from First City. Gallagher’s 2011 accounts are likely to show a significant uplift in turnover as £97m acquisition of Heath Lambert will be included in the accounts.

Elsewhere, Gallagher is on the search for additional capacity providers for its managing general agency business. The consolidator currently has a capacity arrangement with Inter Hanover, which is a core to its capacity structures.

A source suggested Aviva was in the frame to provide additional capacity to Gallagher.