Division incurs £16.6m loss on Lark sale and writes off £24m of Bollington goodwill

GUK Broking Services swung to a £34m loss after tax in 2012 following the sale of stakes in subsidiaries Lark and Bollington.

The company, which houses French insurer Groupama’s UK broking assets, was also hit by a fall in revenues because of tough economic conditions in the UK.

The loss is a stark contrast to the £5.7m profit GUK made in 2011.

Sale losses

GUK sold Lark to its management on 6 August 2012, making a loss of £16.6m on the sale, the company’s 2012 accounts reveal.

In addition, GUK completely wrote off Bollington’s £24m of goodwill after selling 51% of the broker to management on 15 March 2013.

GUK wrote off the goodwill based on the sale value of the 51% stake.

GUK’s total depreciation, amortisation and goodwill impairment charges, including the Bollington write-off, came to £29.5m for 2012 (2011: £5.6m).

This, together with the £16.6m loss on the Lark sale and other running costs, wiped out the £56.3m of revenue GUK earned during the year.

Falling revenue

GUK’s £56.3m revenue was down 15% on the £66.1m it earned in 2011, including discontinued operations.

Excluding discontinued operations, total revenue fell 6% to £41.8m (2011: £44.4m) and commissions and fees revenue was down 2.5% to £41.6m (2011: £42.7m).

GUK said in a statement: “The general economic situation in the UK continues to challenge broking income through competitive renewal conditions and limited new business opportunities.

“Low interest rates have also impacted investment income, although the lower interest rates have reduced the interest payable on loans from Groupama.

“Nonetheless, and in spite of the economic climate, the directors are pleased to report that the group has only incurred a relatively small reduction in broking income from its continuing operations.”

Keeping Carole Nash

Groupama said it expects to keep its remaining 49% shareholding in Bollington for at least three years.

The French insurance group plans to keep full ownership of brokers Carole Nash and Mastercover “for the foreseeable future”.

Carole Nash made a £3.9m profit in 2012, down 9% on the £4.3m it made in 2011.

GUK was a sister company to UK insurer Groupama Insurance Company Limited, which is now owned by Ageas UK.