Earnings drop 7% in 2011 but turnover continues to rise

Philiip Hodson Oval

Oval halved its post-tax loss to £3m in 2011 (2010:£6.2m), according to latest accounts for the year ending in May.

Oval was helped by increasing turnover £97.1m (2010: £95.7m) and the fact that exceptional costs were only £882,000 compared to £4.2m last year.

The preferred financial metric of consolidators, earnings before interest tax depreciation and amortisation (EBITDA), was down 7% to £15.3m (2010:£16.5m).

Chief executive Philip Hodson said: “The business faced a tough environment in 2010/2011. As a result headline performance was behind from the previous year…much of the reduction in pre-exceptional EBITDA can be attributed to two factors - a continuation of the trend of falling premiums down 5% in 2010/2011, and the impact of the difficulties in some sectors of the economy, particularly construction, on offices reliant on those sectors.”

Hodson praised the strong growth in the employee benefits and wealth management division, before adding: “Our insurance broking division, which accounts for around 80% of our turnover, has had the most challenges having undergone 8 years of declining rates and 3 years of economic malaise.

“Despite these two major challenges the team has continued to win more and more business and its client retention rates are truly market leading in the retail sector.”

The net book value of the business (intangible fixed assets) is £123m. Shareholders’ funds is £38m. Net debt is £39.7m.