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Tawa hit with $27mn half-year loss from KX Re

The impact of selling KX Re to Catalina has pushed Tawa plc, the legacy-to-live firm backed by billionaires Francois Pinault and Lakshmi Mittal, to a $27mn group loss for the half-year.

Tawa recognised a final accounting loss of $21.3mn for the sale, which closed in April, according to its results announcement on 20 September.

Stripping out KX Re, the group posted an improved half-year operating loss of $5.7mn, compared to the $6.5mn loss reported in the prior period.

Tawa noted that the KX Re sale allowed it to deleverage the platform, and finalised a cash-on-cash return of $46.6mn since the group bought the entity in 2007.

KX Re was one of Tawa's more mature run-off assets, with exposure to pre-1985 US asbestos liabilities.

The sale also included subsidiary OX Re, which had certain tax assets remaining after the majority of its business was schemed.

London-listed Tawa's net tangible assets have continued to shrink, dropping by 17 percent to $128.3mn over the half-year.

The decrease, mainly due to KX Re, is more than the entire reduction for the full 2012 financial year, when net tangible assets dropped by 11 percent.

The run-off segment as a whole produced a $1.8mn loss for the half-year, which was little changed from $1.7mn in mid-2012. This was mainly due to a sharp rise in expenses, which more than doubled to $3.8mn.

However, Tawa's services business picked up, posting a pre-tax profit of $1.7mn compared to $0.6mn in the prior year.

This was driven by a 36 percent rise in revenue to $18.6mn, which outpaced a 16 percent expansion in costs to $17.6mn.

Tawa's main UK consulting and outsourcing subsidiary Pro produced a profit, while European run-off consultancy Chiltington broke even.

And Tawa's one-third share in Lloyd's third party management services company Asta produced a profit of $1.3mn, up from a $0.8mn loss in mid-2012.

The group's corporate segment - which includes corporate costs, group overheads and acquisition and incubator costs - reported a pre-tax loss of $27.5mn due to KX Re. This was triple the loss recorded in the same period of 2011.

Tawa CEO Gilles Erulin remained upbeat, commenting: "The interim results provide indications that turnaround effects are bearing fruit. The same is true for our incubator investments, especially Lodestar Marine."

Tawa attempted a strategic sale last year in a search for new backers, but ended the process after failing to find a bidder prepared to meet its valuation of the company.

AIM-listed Tawa has seen its share price fall from 44p at the beginning of the year to close at 20p on 20 September.

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