Acquisitions are a crucial part of Charles Taylor’s (CTR) growth strategy, and the group has recently used its deal-making nous to shore up its position in the third-party administration and insurance technology markets. However, as these businesses are often asset-light and dependent on their staff, they require higher levels of amortisation. Thus, the insurance services provider has once again delivered what looks like an awful set of results on the statutory level, but the underlying picture is far better. Adjusted pre-tax profits were up 10 per cent, while the arrival of a deferred tax bill pushed adjusted EPS down 11 per cent to 10.2p.
Recent acquisitions performed well in the period, but they are only part of the story. Roughly 80 per cent of revenue growth was organic, and the group is continuing to bring in new work. The most significant of these was a three-year contract with the London Market Group to provide a delegated authority solution to Lloyd’s, as well as related company insurance markets. The contract has the option for an extension of up to seven years, and chief executive David Marock points out it could be valuable in introducing the company to potential insurance technology customers. “Our software will be visible to our entire target market,” he said.
Analyst Peel Hunt is forecasting adjusted pre-tax profits of £17.9m in 2018, giving EPS of 21.7p, rising to £20.3m and 24.6p in 2019 (from £15.4m and 24.6p in 2017).
| CHARLES TAYLOR (CTR) | ||||
| ORD PRICE: | 270p | MARKET VALUE: | £209m | |
| TOUCH: | 270-272p | 12-MONTH HIGH: | 319p | LOW: 230p |
| DIVIDEND YIELD: | 4.1% | PE RATIO: | 48 | |
| NET ASSET VALUE: | 122p* | NET DEBT: | 51% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 102 | 4.77 | 7.08 | 3.31 |
| 2018 | 123 | 0.22 | -0.38 | 3.48 |
| % change | +21 | -95 | -105 | +5 |
| Ex-div: | 11 Oct | |||
| Payment: | 09 Nov | |||
| *Includes intangible assets of £126m, or 163p a share | ||||
