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29 Mar 2019 | 09:30

Chesnara profits slump as choppy markets hurt investment return

Chesnara reported a slump in annual profits after swinging to a negative investment return amid a challenging economic backdrop in 2018. For 2018, pre-tax profits more than halved to £42.5m from £89.6m a year earlier as the company swung to an income loss of £12,872 from £0.8m the prior year. The company reported economic losses of £15.5m compare to a corresponding profit of £30.9m in 2017. 'Equity markets developed negatively during the fourth quarter resulting in a negative investment return for the full year,' the company said. In particular, the UK business remains a robust source of cash, with additional potential to take management actions to enhance the core cash if required. Movestic now has the scale to continue contributing to the cash position. Scildon has surplus capital and despite the negative cash emerging during the period, is also expected to be cash generative, in the absence of adverse economic conditions. We recognise that current new business profits from Scildon are not sufficient. However, the fact that we have recorded a modest profit calculated on a suitably stringent basis of assessment, means we retain our view that Scildon has the potential to create meaningful new business profits. 2019 will be a critical year regarding the delivery of material change to improve profits. From an investment markets perspective equity markets have generally risen since the end of the year, and spreads on bonds have narrowed. Both of these factors are positive drivers of Economic Value for the group.

At 9:30am: (LON:CSN) Chesnara PLC share price was -1.75p at 380.25p

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