An earnings growth warning at professional services provider Charles Taylor (CTR) has overshadowed news of its latest acquisition, causing the firm to trade 12% lower at 255p.

The company is acquiring a closed book of life assurance business from Zurich's life insurance subsidiary, plus Allied Dunbar International Fund Managers (ADIFM), which manages a collective investment scheme, from Zurich.

The acquisition, worth approximately £4m, will see the company bolster revenue by providing policy administration services. ADIFM's collective investment scheme will also generate fund management revenues and extend its range of professional services.

Charles Taylor will pay approximately £2.5m early next year with the £1.5m balance to be paid in the second half of 2017.

Investors seem far more concerned by Charles Taylor's warning that its earnings growth is expected to be lower in 2017 than previous market expectations. No details were given.

Charles Taylor graph

As of 30 June, the gross assets of ADIFM and the closed book were worth £323m. Charles Taylor estimates the book’s annual revenue is £3.6m with profit at £1.7m.

Broker Liberum analyst Justin Bates says: ‘This looks to be an attractively priced deal at 1.2% of gross assets and estimated price earnings of just 2.4-times.’

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Issue Date: 22 Nov 2016