Oval plans to pay off debt in three years

Broking group Oval plans to pay off all its debt within the next three years, according to managing director Jeff Herdman.

Oval’s interest payable for the financial year to 31 May 2010 fell 27% to £4.8m from £6.6m the previous year, according to a Companies House filing.

“The main driver [of the fall in interest payments] has been to reduce debt overall,” Herdman said. “Oval aims to become debt-free within the next three years and, as a natural consequence of that, interest payments will go down.”

As previously reported, the 2009/10 financial year was a tough one for Oval. The firm made a £2.5m loss on the sale of its office in Clevedon, Somerset, back to its original owners. But the company believes its subsequent purchase of Gloucester broker JL Fisher, which it says has similar levels of profitability and turnover to the discarded unit, will make up for the loss.

“Although the [£2.5m] goodwill write-off has a material impact on the 2010 accounts, the overall impact on the group and the South West region is neutral in terms of cash and profitability,” the Companies House filing said.

Exceptional charges of £4.3m – comprising the £2.5m Clevedon loss, £1.2m of restructuring charges and a £564,000 write-off of pre-2007 profit share and commission income – helped push Oval to a pre-tax loss of £3.5m for the year to 31 May 2010. This compares with a loss of £360,000 for the previous financial year.

The company's earnings before interest, tax, depreciation, amortisation and exceptional items fell 12% to £16.5m from £18.7m.

The results were also hit by the effects of the global recession. Turnover, net of direct costs, fell 7% to £83.6m from £90m. This was partially offset by a £4m reduction in underlying costs. Staff numbers fell by 92 to1,231 between May 2009 and May 2010.