Broker defends results in acquisitive year, saying adjusted pre-tax profits hit £3.5m

Giles’ holding company made a £10.7m loss after tax for the first seven months of last year.

The broker’s huge consolidation costs are revealed in the latest figures, with amortisation and administrative expenses across the group totalling £27.7m. Interest payments and similar charges were £13.5m against total net debt of £201m.

But managing director Chris Giles said the financial performance proved the consolidation model still worked.

Consolidators point to earnings before, interest, taxes and depreciation and amortisation (EBITDA) as a better measure of their financial performance.

The consolidator’s holding company, DMWSL 585 Limited, reported a turnover of £30m and operating profit of £2.3m.

A spokesman for Giles said adjusted pre-tax profits – which excluded amortisation, loan-note interest and non-recurrings or one-off charges – came to £3.5m.

“In a year when there is a major transaction, and when a company is acquisitive, there will be charges in the group and other company accounts which need to be taken into consideration when reading the accounts.

“What is important to look at is the underlying numbers which for Giles are not only profitable but also show strong growth.”

Giles Insurance Brokers Limited – the part of the group which only includes the broking side – posted a £4.2m pre-tax loss for the full year to August 2008.

Giles defended the results saying its pre-tax profits for Giles Insurance Brokers would hit the £5m mark, excluding the restructuring and integration costs of the new businesses bought following the Charterhouse buy-out of Giles in March last year.

Elsewhere in the group, the underwriting agency Ink reported turnover of £2.6m against a pre-tax profit of £966,000 for the year ended in August 2008.

Giles has been on an acquisition spree since being acquired by Charterhouse Capital Partners in March last year – at the end of 2008 chief executive Chris Giles told Insurance Times that he had a £300m war chest to spend on acquisitions.

The group plans to smash the £1bn gross written premium barrier and become a top ten broker in the UK.

Chris Giles said his expansion plans would focus on brokers that had young, ambitious management teams. His long-term goal was to float the business.

Some of Giles’ acquisitions included in the report are: Shephard Holdings Limited (£8.5m) on 4 April, 2008; Carrick Neill & Co (£7.8m) on 24 June; Henley Risk Management (£4m) on 1 August and Robinson Leslie (£1.9m) on 7 March.