TIDMTAW
RNS Number : 7279Z
Tawa PLC
28 September 2009
Tawa plc
Interim results for the six months ended 30 June 2009
and
Acquisition of PRO
Tawa releases interims showing profitable results and a significant reduction in
gearing
and announces the acquisition of PRO, the leading run-off service provider
Tawa plc ("Tawa" or "the Group") the quoted run-off consolidator, today
announces interim results for the six months ended 30 June 2009 and the
acquisition of the PRO group of companies ("PRO") from Swiss Reinsurance Group
("Swiss Re").
Interim Results Highlights
* Net profits increased by 64% to $2.3million (June 2008: $1.4million)
* $40 million cash extraction from KX Re and reduced gearing with $37.4 million
debt repayment
* Net assets increased by $5.6 million to $220.2 million at 30 June 2009 (December
2008: $214.6 million)
* Net asset value per share $1.95/GBP1.18
* Intangible assets reduced by $5 million
* A final dividend for 2008 of 0.8 cents (0.5 pence) per share was paid in July
2009
The full interim results for the six months ended 30 June 2009 will be sent to
shareholders shortly and will be available on the Company's website at
www.tawaplc.com.
PRO Acquisition Highlights
* Tawa will acquire the PRO group of companies, comprising PRO Insurance Solutions
Limited, PRO Insurance Solutions, Inc and Participant Run-Off (PRO), Iberica,
SLU from Swiss Re, subject to FSA approval
* Total maximum consideration of GBP38 million, comprising initial cash
consideration of GBP4 million and deferred cash consideration of up to GBP12
million dependent on PRO's earnings over the five years to 31 December 2014.
Prior to acquisition, Swiss Re will receive dividends of approximately GBP22
million from the PRO companies. Expected net assets of the PRO group of
companies at acquisition are GBP0.5 million
* As part of the transaction, KX Re, a wholly owned subsidiary of Tawa, will
purchase an estimated GBP7 million of insurance receivables from PRO at the time
of closing
* Consideration will be funded from Tawa's existing cash resources and there will
be no change to the board or senior management of Tawa arising from the
acquisition
* Completion is subject to approval by the FSA
* Founded in 1993, PRO is recognised as one of the leading providers of run-off
management and professional services to the international insurance and
reinsurance industry. It operates from bases in the UK, USA and Spain and
clients include ongoing insurance entities and those in run-off. In 2008, it
generated profits after tax of GBP7 million and disclosed net assets of GBP20
million
* The acquisition of PRO is in line with Tawa's strategy of building up a
portfolio of diversified run-off businesses
The strong positive movement of financial markets and the enhanced liquidity of
the Tawa Group's reinsurance carriers have enabled Tawa to significantly
deleverage its balance sheet during the first half of the year by reducing
goodwill and repaying bank debt within the balance sheet. The acquisition of PRO
will strengthen the Group's revenues from recurring fees and improved stable
cash flows.
Gilles Erulin, Tawa plc Chief Executive, commented: "We look forward to
welcoming the PRO team to the Tawa Group where their invaluable knowledge of the
run-off market and global platform will be of considerable benefit in achieving
our strategic goals. We are also pleased that Swiss Re has confirmed that PRO
will enjoy preferred provider status for servicing its run-off operations. The
deferred consideration element has been agreed between Swiss Re and Tawa to
ensure we work hand in hand to increase the profitability and value of PRO over
the coming years."
Jonathan Isherwood, Member of Executive Board, Global Head of Claims and
Liabilities, Swiss Re, commented: "PRO has been a small but successful part of
Swiss Re since 1996. Today marks an important next step in PRO's development. We
believe that the combination of skills and experience of PRO and Tawa Group will
create the best opportunities for future growth of the business. On a personal
note, we have enjoyed working with the Tawa team during this process and are
confident that we can continue to partner together going forward."
=-ENDS-
Enquiries:
+-----------------------------------------------------------+----------------+
| Gilles Erulin, Chief Executive, Tawa plc | 020 7068 8000 |
+-----------------------------------------------------------+----------------+
| Jason Richards, Swiss Re | +45 33979408 |
+-----------------------------------------------------------+----------------+
| Peter Rigby or Alex Parry, Haggie Financial LLP | 020 7417 8989 |
+-----------------------------------------------------------+----------------+
| James Britton, or Oliver Stratton, KBC Peel Hunt | 020 7418 8900 |
| (Nominated Adviser and Broker) | |
+-----------------------------------------------------------+----------------+
Note for Editors
TAWA
Tawa plc is an investment vehicle formed in 2001 with the purpose of acquiring
or developing assets and business in the run-off segment of the insurance
industry. Tawa is interested in acquiring run-off portfolios of insurance and
reinsurance companies, companies and businesses providing services to the
run-off industry, but also in developing its own products to serve the run-off
market.
By creating a diversified portfolio of businesses at different stages of the
run-off process Tawa intends to be a consolidator of this specific market in the
UK, US, continental Europe, Bermuda, and elsewhere as opportunities arise.
Since its formation, Tawa has acquired CX Reinsurance Company Limited (CX Re),
KX Reinsurance Company Limited (KX Re) and PXRE Reinsurance Company. Its service
companies Tawa Management and Tawa Consulting provide services to these three
companies and to third parties. Tawa also operates as an incubator for new
projects and is currently developing STRIPE, a new claims and post placement
transactions processing platform.
In July 2007 Tawa plc was floated on the AIM market.
Further information can be found on the Company's website: www.tawaplc.com.
PRO
Founded in 1993, PRO is recognised as one of the leading providers of run-off
management and professional services to the international insurance and
reinsurance industry.
PRO became a member of the Swiss Re Group in 1996 and since then it has
experienced steady growth for 12 successive years in terms of income, numbers of
clients and product range. PRO operates in the worldwide (re)insurance markets,
and manages multi-billion dollars of liabilities and assets for more than 60
international clients.
PRO has offices in the UK in London and Gloucester and its associate companies
PRO Iberica and PRO Inc have offices in Madrid, Barcelona, Boston and New York.
Overall the 3 PRO companies employ 300 staff.
PRO 2008 total consolidated revenues were GBP30.3 million and consolidated post
tax earnings were GBP6.7 million.
The portfolio management, claims and consultancy services offered by PRO along
with its successful new debt purchase product will complement Tawa's proven
expertise and capability in acquiring portfolios in run-off.
Further information can be found on www.pro-ltd.co.uk.
Interim results
Highlights
Tawa returns to profit and significantly strengthens its balance sheet with the
repayment of $37.4 million of debt.
During the first six months of 2009, Tawa returned to profit following the
turbulence within the bond markets during 2008. Net profits for the period were
$2.3 million up from $1.4 million in the six months to 30 June 2008. The Group
also achieved a capital extraction of $40 million from its subsidiary, KX Re, of
which $37.4 million was utilised to repay bank debt taken on at the time of KX
Re's acquisition.
The Group continues to develop further opportunities within the run-off market
including acquisitions, market service initiatives and consultancy assignments.
Recent sales of companies in run-off, which have been put out to tender, have
indicated that prices are becoming more realistic. However, prices are still
high and Tawa remains determined to maintain pricing discipline and will not
jeopardise shareholder value by not adequately reflecting risks within its
pricing of portfolios.
Financial results
Ongoing operations contributed $2.9 million to overall profits. During the
interim period the Group reviewed goodwill held on the balance sheet and reduced
it by $5 million. Overall, including the goodwill reduction, the continuing
operations returned an accounting loss of $2.1 million. The profit on
discontinued operations was $4.4 million, resulting in a Group net profit of
$2.3 million.
During the period Group net assets increased by $5.6 million, from $214.6
million at 31 December 2008 to $220.2 million ($1.95/GBP1.18 per share) at 30
June 2009.
Dividend and dividend policy
In line with the Group's dividend policy a final dividend for the year ended 31
December 2008 of 0.8 cents (0.5 pence) per share was paid in July 2009. The
Group does not propose the payment of a dividend relating to the interim period.
Operational results
The Group's operations are underwriting run-off, run-off management and other
corporate activities.
Underwriting run-off
Underwriting run-off comprises the Group's insurance subsidiaries in run-off,
namely KX Re and PXRE. The objective for the Group is to reduce insurance
liabilities by accelerating the natural run-off of the portfolios to enable
extraction of capital with regulatory consent. The underwriting run-off profit
for the period was $5.7 million and the Group reduced net insurance liabilities
by $22.1 million. A dividend of $40 million was paid on 25 June 2009 by KX Re
which was utilised to repay bank borrowings of $37.4 million and to provide
working capital for the Group.
Run-off management
Run-off management represents the results of the Group's providers of run-off
management and consultancy services. The revenue comprises income from
consultancy services, inspections performed, run-off fees and expenses
recharged. Profit for the period was $1.4 million which was broadly in line with
the business plan.
Other corporate activities
Other corporate activities summarises acquisition activity, the Group's
investment in its associated undertaking CX Re, the change in the deferred
consideration attributable to the sale of 87.35% of the shares of CX Re in March
2006 and the costs of developing the Group's business.
Through the Group's remaining investment in CX Re and the deferred
consideration, which is dependent on the ultimate earn-out of the company, the
Group's results are affected by changes in the net assets of CX Re. During the
interim period CX Re net assets increased by $5.0 million to $52.3 million. The
principal contributory factors were:
* The significant rally within the bond markets and the strengthening of Sterling
since March 2008 has provided a benefit of $12.7 million to the balance sheet.
This performance has validated the company's investment strategy of retaining
investments with unrealised losses to enable the company to benefit from future
unwinding of losses, subject to regular review of the security of investments
and the overall risk profile of the portfolio. The investment managers have
taken the opportunity afforded by the improvement in the bond prices to reduce
the holdings of Commercial Mortgage Backed Securities ("CMBS") and to invest in
certain new issues of bonds of which several have the backing of the US
Treasury. The average credit rating of CX Re's investment portfolio remains AA+.
* Net discounted claims reserves and provision for expenses reduced in the period
from $169.1 million to $158.9 million. There was a net incurred deterioration on
insurance risks of $3.6 million. In addition CX Re strengthened its ULAE (a
provision for future management costs) by $5 million.
Future prospects
The Group is well positioned to deliver its strategy of investing in the run-off
market, whether acquiring run-off portfolios, as a service provider, or
developing innovative products for the industry. Its short term key goal remains
extraction of capital from the insurance carriers in which it has invested as
well as creating further value for its shareholders by making considered,
appropriately priced investments in run-off portfolios and developing innovative
service products for the global insurance market.
Condensed consolidated income statementFor the period ended 30 June 2009
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | 6 | | 6 | | 12 |
| | | | months | | months | | months |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | 30 Jun | | 30 Jun | | 31 Dec |
| | | | 2009 | | 2008 | | 2008 |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | (Unaudited) | | (Unaudited) | | (Audited) |
| | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | Notes | | $m | | $m | | $m |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Continuing | | | | | | | |
| operations | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Income | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Insurance | | | (1.2) | | 0.1 | | 0.5 |
| premium | | | | | | | |
| (expense) | | | | | | | |
| / revenue | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Insurance | | | 0.3 | | (0.1) | | 0.2 |
| premium | | | | | | | |
| ceded to | | | | | | | |
| reinsurers | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Net | | | (0.9) | | - | | 0.7 |
| earned | | | | | | | |
| premium | | | | | | | |
| (expense) | | | | | | | |
| / revenue | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Revenue | | | 4.3 | | 11.9 | | 20.3 |
| from | | | | | | | |
| run-off | | | | | | | |
| services | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Investment | | | (0.9) | | 2.6 | | 15.7 |
| return | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Total | | | 2.5 | | 14.5 | | 36.7 |
| income | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Insurance | | | 12.5 | | 6.4 | | (10.0) |
| claims | | | | | | | |
| and loss | | | | | | | |
| adjustment | | | | | | | |
| expenses | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Insurance | | (1.9) | | 0.4 | | 2.8 |
| claims and loss | | | | | | |
| adjustment | | | | | | |
| expenses | | | | | | |
| recovered from | | | | | | |
| reinsurers | | | | | | |
+-------------------------+--------+-------------+--------+-------------+--------+-----------+
| Net | | | 10.6 | | 6.8 | | (7.2) |
| insurance | | | | | | | |
| claims | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Cost | | | (3.1) | | (7.0) | | (13.5) |
| of | | | | | | | |
| run-off | | | | | | | |
| services | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Administrative | | | (5.8) | | (6.4) | | (16.1) |
| expenses | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Total | | | (8.9) | | (13.4) | | (29.6) |
| expenses | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Results of operating | 4.2 | | 7.9 | | (0.1) |
| activities before | | | | | |
| negative goodwill | | | | | |
| recognised and goodwill | | | | | |
| write-off | | | | | |
+----------------------------------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Negative | | | - | | 7.8 | | 6.4 |
| goodwill | | | | | | | |
| recognised | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Goodwill | 8 | | (5.0) | | - | | - |
| write-off | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Results | | | (0.8) | | 15.7 | | 6.3 |
| of | | | | | | | |
| operating | | | | | | | |
| activities | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Share | | | 0.6 | | (1.5) | | (5.7) |
| of | | | | | | | |
| results | | | | | | | |
| of | | | | | | | |
| associate | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Finance | | | (1.9) | | (2.5) | | (4.4) |
| costs | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| (Loss) | | | (2.1) | | 11.7 | | (3.8) |
| / | | | | | | | |
| profit | | | | | | | |
| before | | | | | | | |
| taxation | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Taxation | | | - | | - | | 0.6 |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| (Loss) | | | (2.1) | | 11.7 | | (3.2) |
| / | | | | | | | |
| profit | | | | | | | |
| for | | | | | | | |
| the | | | | | | | |
| period | | | | | | | |
| from | | | | | | | |
| continuing | | | | | | | |
| operations | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Profit | 4 | | 4.4 | | (10.3) | | (39.2) |
| / | | | | | | | |
| (loss) | | | | | | | |
| for | | | | | | | |
| the | | | | | | | |
| period | | | | | | | |
| from | | | | | | | |
| discontinued | | | | | | | |
| operations | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Profit | | | 2.3 | | 1.4 | | (42.4) |
| / | | | | | | | |
| (loss) | | | | | | | |
| for | | | | | | | |
| the | | | | | | | |
| period | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Attributable | | | | | | | |
| to: | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Equity | | | 2.3 | | 1.4 | | (42.4) |
| holders | | | | | | | |
| of the | | | | | | | |
| Group | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Earnings | | | | | | | |
| per | | | | | | | |
| share | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| From | 5 | | | | | | |
| continuing | | | | | | | |
| and | | | | | | | |
| discontinued | | | | | | | |
| operations | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Basic: | | | 0.0204 | | 0.0133 | | (0.3847) |
| Ordinary | | | | | | | |
| shares | | | | | | | |
| ($ per | | | | | | | |
| share) | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Diluted: | | | 0.0196 | | 0.0130 | | (0.3758) |
| Ordinary | | | | | | | |
| shares | | | | | | | |
| ($ per | | | | | | | |
| share) | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| From | 5 | | | | | | |
| continuing | | | | | | | |
| operations | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Basic: | | | (0.0186) | | 0.1108 | | (0.0290) |
| Ordinary | | | | | | | |
| shares | | | | | | | |
| ($ per | | | | | | | |
| share) | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Diluted: | | | (0.0179) | | 0.1090 | | (0.0284) |
| Ordinary | | | | | | | |
| shares | | | | | | | |
| ($ per | | | | | | | |
| share) | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
Condensed consolidated balance sheetAs at 30 June 2009
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | 30 Jun | | 30 Jun | | 31 Dec |
| | | | 2009 | | 2008 | | 2008 |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | (Unaudited) | | (Unaudited) | | (Audited) |
| | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | Notes | | $m | | $m | | $m |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Assets | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Cash | | | 22.0 | | 53.9 | | 29.0 |
| and | | | | | | | |
| cash | | | | | | | |
| equivalents | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Financial | | | 291.9 | | 328.5 | | 322.4 |
| assets - | | | | | | | |
| investments | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Loans | | | 44.5 | | 40.4 | | 66.1 |
| and | | | | | | | |
| receivables | | | | | | | |
| including | | | | | | | |
| insurance | | | | | | | |
| receivables | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Reinsurers' | | | 26.5 | | 48.7 | | 31.5 |
| share of | | | | | | | |
| technical | | | | | | | |
| provisions | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Property, | | | 1.1 | | 1.4 | | 1.0 |
| plant and | | | | | | | |
| equipment | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Deferred | 7 | | 67.4 | | 94.4 | | 59.9 |
| assets | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Interest | | | 6.6 | | 10.2 | | 6.0 |
| in | | | | | | | |
| associate | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Goodwill | 8 | | 13.2 | | 18.2 | | 18.2 |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Total | | | 473.2 | | 595.7 | | 534.1 |
| assets | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Equity | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Share | | | 22.2 | | 22.2 | | 22.2 |
| capital | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Share | | | 111.4 | | 111.4 | | 111.4 |
| premium | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Share | | | 1.7 | | 0.6 | | 1.3 |
| based | | | | | | | |
| payments | | | | | | | |
| reserve | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Retained | | | 84.9 | | 129.2 | | 79.7 |
| earnings | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Total | | | 220.2 | | 263.4 | | 214.6 |
| equity | | | | | | | |
| attributable | | | | | | | |
| to equity | | | | | | | |
| holders | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Liabilities | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Creditors | | | 64.3 | | 68.7 | | 65.3 |
| arising | | | | | | | |
| out of | | | | | | | |
| insurance | | | | | | | |
| operations | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Other | | | 6.0 | | 8.2 | | 8.9 |
| liabilities | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Financial | 9 | | 32.3 | | 66.0 | | 67.8 |
| liabilities | | | | | | | |
| - | | | | | | | |
| borrowings | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Technical | | | 150.4 | | 189.4 | | 177.5 |
| provisions | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Total | | | 253.0 | | 332.3 | | 319.5 |
| liabilities | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Total | | | 473.2 | | 595.7 | | 534.1 |
| liabilities | | | | | | | |
| and equity | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
Condensed consolidated cash flow statement For the period ended 30 June 2009
+-------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | 6 | | 6 | | 12 |
| | | | months | | months | | months |
+-------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | 30 | | 30 | | 31 |
| | | | Jun | | Jun | | Dec |
| | | | 2009 | | 2008 | | 2008 |
+-------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | (Unaudited) | | (Unaudited) | | (Audited) |
| | | | | | | | |
+-------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | Note | | $m | | $m | | $m |
+-------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+-------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Net | 10 | | (0.7) | | (6.9) | | (66.6) |
| cash | | | | | | | |
| used | | | | | | | |
| in | | | | | | | |
| operations | | | | | | | |
+-------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Investing | | | | | | | |
| activities | | | | | | | |
+-------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Cash | | | (337.1) | | (494.2) | | (1,023.6) |
| payments | | | | | | | |
| to | | | | | | | |
| acquire | | | | | | | |
| debt | | | | | | | |
| securities | | | | | | | |
+-------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Cash | | | 356.1 | | 515.3 | | 1,038.8 |
| receipts | | | | | | | |
| from | | | | | | | |
| sale of | | | | | | | |
| debt | | | | | | | |
| securities | | | | | | | |
+-------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Cash | | | 5.9 | | (7.5) | | 26.9 |
| transferred | | | | | | | |
| from / (to) | | | | | | | |
| investing | | | | | | | |
| activities | | | | | | | |
+-------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Cash | | | 4.6 | | 4.5 | | 7.2 |
| receipts | | | | | | | |
| from | | | | | | | |
| interest | | | | | | | |
+-------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Purchases | | | (0.2) | | (1.5) | | (1.3) |
| of | | | | | | | |
| property, | | | | | | | |
| plant and | | | | | | | |
| equipment | | | | | | | |
+-------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Acquisition | | | - | | (49.4) | | (49.4) |
| of | | | | | | | |
| subsidiary | | | | | | | |
| net of cash | | | | | | | |
| and cash | | | | | | | |
| equivalents | | | | | | | |
+-------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Cash | | | 29.3 | | (32.8) | | (1.4) |
| generated | | | | | | | |
| by / | | | | | | | |
| (used) in | | | | | | | |
| investing | | | | | | | |
| activities | | | | | | | |
+-------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Financing | | | | | | | |
| activities | | | | | | | |
+-------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Dividend | | | - | | (3.3) | | (3.3) |
| paid | | | | | | | |
+-------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Proceeds | | | - | | 28.4 | | 28.4 |
| from | | | | | | | |
| issue of | | | | | | | |
| equity | | | | | | | |
| shares | | | | | | | |
+-------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Proceeds | | | 7.8 | | 30.0 | | 33.4 |
| from | | | | | | | |
| financial | | | | | | | |
| borrowings | | | | | | | |
+-------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Repayment | | | (43.4) | | - | | - |
| of | | | | | | | |
| financial | | | | | | | |
| borrowings | | | | | | | |
+-------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Cash | | | (35.6) | | 55.1 | | 58.5 |
| flows | | | | | | | |
| (utilised | | | | | | | |
| in) / | | | | | | | |
| generated | | | | | | | |
| from | | | | | | | |
| financing | | | | | | | |
| activities | | | | | | | |
+-------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+-------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Net | | | (7.0) | | 15.4 | | (9.5) |
| (decrease) | | | | | | | |
| / increase | | | | | | | |
| in cash | | | | | | | |
| and cash | | | | | | | |
| equivalents | | | | | | | |
+-------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Cash | | | 29.0 | | 38.5 | | 38.5 |
| and | | | | | | | |
| cash | | | | | | | |
| equivalents | | | | | | | |
| at | | | | | | | |
| beginning | | | | | | | |
| of period | | | | | | | |
+-------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Cash | | | 22.0 | | 53.9 | | 29.0 |
| and | | | | | | | |
| cash | | | | | | | |
| equivalents | | | | | | | |
| at end of | | | | | | | |
| period | | | | | | | |
+-------------+--------+--------+-------------+--------+-------------+--------+-----------+
Condensed consolidated statement of comprehensive income For the period
ended 30 June 2009
+---------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | 6 | | 6 | | 12 |
| | | | months | | months | | months |
+---------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | 30 Jun | | 30 | | 31 |
| | | | 2009 | | Jun | | Dec |
| | | | | | 2008 | | 2008 |
+---------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | (Unaudited) | | (Unaudited) | | (Audited) |
| | | | | | | | |
+---------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | $m | | $m | | $m |
+---------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+---------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Profit | | | 2.3 | | 1.4 | | (42.4) |
| / | | | | | | | |
| (loss) | | | | | | | |
| for | | | | | | | |
| the | | | | | | | |
| period | | | | | | | |
+---------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+---------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Other | | | | | | | |
| comprehensive | | | | | | | |
| income / | | | | | | | |
| (losses) | | | | | | | |
+---------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Currency | | | 2.9 | | (0.8) | | (6.5) |
| translation | | | | | | | |
| differences | | | | | | | |
+---------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Total | | | 5.2 | | 0.6 | | (48.9) |
| comprehensive | | | | | | | |
| income / | | | | | | | |
| (losses) for | | | | | | | |
| the period | | | | | | | |
+---------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+---------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Attributable | | | | | | | |
| to: | | | | | | | |
+---------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Equity | | | 5.2 | | 0.6 | | (48.9) |
| holders | | | | | | | |
| of the | | | | | | | |
| Group | | | | | | | |
+---------------+--------+--------+-------------+--------+-------------+--------+-----------+
Condensed consolidated statement of changes in equity As at 30 June 2009
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| | | | | | | Share | | | | |
| | | | | | | based | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| | | Issued | | Share | | payments | | Retained | | Total |
| | | | | premium | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| | | capital | | reserve | | reserve | | earnings | | |
| | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| | | $m | | $m | | $m | | $m | | $m |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| Balance | | 20.0 | | 85.2 | | - | | 131.9 | | 237.1 |
| at 1 | | | | | | | | | | |
| January | | | | | | | | | | |
| 2008 | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| Share | | 2.2 | | - | | - | | - | | 2.2 |
| issue | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| Premium | | - | | 26.5 | | - | | - | | 26.5 |
| arising | | | | | | | | | | |
| on | | | | | | | | | | |
| issue | | | | | | | | | | |
| of | | | | | | | | | | |
| equity | | | | | | | | | | |
| shares | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| Expenses | | - | | (0.3) | | - | | - | | (0.3) |
| on issue | | | | | | | | | | |
| of | | | | | | | | | | |
| equity | | | | | | | | | | |
| shares | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| Share | | - | | - | | 0.6 | | - | | 0.6 |
| based | | | | | | | | | | |
| payments | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| Dividends | | - | | - | | - | | (3.3) | | (3.3) |
| paid | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| Total | | - | | - | | - | | 0.6 | | 0.6 |
| comprehensive | | | | | | | | | | |
| income for | | | | | | | | | | |
| the period | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| Balance | | 22.2 | | 111.4 | | 0.6 | | 129.2 | | 263.4 |
| at 30 | | | | | | | | | | |
| June | | | | | | | | | | |
| 2008 | | | | | | | | | | |
| (Unaudited) | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| Balance | | 22.2 | | 111.4 | | 0.6 | | 129.2 | | 263.4 |
| at 1 | | | | | | | | | | |
| July | | | | | | | | | | |
| 2008 | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| Share | | - | | - | | 0.7 | | - | | 0.7 |
| based | | | | | | | | | | |
| payments | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| Total | | - | | - | | - | | (49.5) | | (49.5) |
| comprehensive | | | | | | | | | | |
| losses for | | | | | | | | | | |
| the period | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| Balance | | 22.2 | | 111.4 | | 1.3 | | 79.7 | | 214.6 |
| at 31 | | | | | | | | | | |
| December | | | | | | | | | | |
| 2008 | | | | | | | | | | |
| (Audited) | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| Balance | | 22.2 | | 111.4 | | 1.3 | | 79.7 | | 214.6 |
| at 1 | | | | | | | | | | |
| January | | | | | | | | | | |
| 2009 | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| Share | | - | | - | | 0.4 | | - | | 0.4 |
| based | | | | | | | | | | |
| payments | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| Total | | - | | - | | - | | 5.2 | | 5.2 |
| comprehensive | | | | | | | | | | |
| income for | | | | | | | | | | |
| the period | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| Balance | | 22.2 | | 111.4 | | 1.7 | | 84.9 | | 220.2 |
| at 30 | | | | | | | | | | |
| June | | | | | | | | | | |
| 2009 | | | | | | | | | | |
| (Unaudited) | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
Notes to the condensed consolidated financial statements For the period ended 30
June 2009
1General information
Tawa plc (the "Company") and its subsidiaries (together the "Group") are engaged
in two principal business activities:
* The acquisition and run-off of insurance companies that have ceased
underwriting; and
* The provision of run-off management services to acquired insurance companies.
The interim consolidated financial statements do not constitute statutory
accounts as defined in section 434 of the Companies Act 2006 and should be read
in conjunction with the Company's consolidated financial statements for the year
ended 31 December 2008. A copy of the statutory accounts for that year has been
delivered to the Registrar of Companies. The auditors' report on those accounts
was not qualified, did not include a reference to any matters to which the
auditors draw attention by way of emphasis without qualifying the report, and
did not contain any statements under section 237(2) or (3) of the Companies Act
1985.
The Directors have considered the position of the Group's investments and assets
compared to the technical provisions and other liabilities. In addition they
have assessed the Group's liquidity with regard to expected future cash flows.
They have also considered the performance of the business, as discussed in the
interim results. On 25 March 2009 the Financial Services Authority confirmed
that they had no objection to a $40 million capital reduction from subsidiary KX
Reinsurance Company Limited. Part of the KX Reinsurance Company Limited initial
capital distribution was utilised to repay in whole the outstanding acquisition
debt of $37.4 million. The remainder was used to provide working capital at
Group level. In light of these reviews the Directors have concluded that it is
appropriate to adopt the going concern basis in preparing the interim report.
The Directors confirm that the risks disclosed in the Company's consolidated
financial statements for the year ended 31 December 2008 are still relevant for
the current period and the remaining period to the year end. A description of
these risks is included in note 5 to the 31 December 2008 consolidated financial
statements, namely; insurance risk, market risk (including interest rate risk),
credit risk, liquidity risk, foreign currency risk and risk related to the
Group's deferred assets.
2Significant accounting policies
The annual financial statements of Tawa plc are prepared in accordance with IFRS
as adopted by the European Union. The condensed set of financial statements
included in this interim report has been prepared in accordance with
International Accounting Standard 34 "Interim Financial Reporting" as adopted by
the European Union.
The same accounting policies, presentation and methods of computation are
followed in these condensed financial statements as were applied in the
preparation of the Group's consolidated financial statements for the year ended
31 December 2008.
During the period ended 30 June 2009 the Group adopted the following significant
standards and revisions to standards:
* IFRS 8 (Revised) "Operating Segments" with effect from 1 January 2009. IFRS 8
requires operating segments to be identified on the basis of internal reports
about components of the Group that are regularly reviewed by the Group Chief
Executive to allocate resources to the segments and assess their performance. In
contrast, the predecessor Standard (IAS 14 Segment Reporting) required the Group
to identify two sets of segments (business and geographical), using a risks and
rewards approach.
* IAS 1 (Revised) "Presentation of financial statements" with effect from 1
January 2009. The revised standard aims to ensure comparability both with the
Group's financial statements of previous periods and with the financial
statements of other entities. The adoption of the revised standard has no effect
on the results reported in the consolidated financial statements. It does
however result in certain presentational changes in the Group's financial
statements, including:
* the presentation of all items in the income statement in two financial
statements, a "Condensed consolidated income statement" and a "Condensed
consolidated statement of comprehensive income".
* During the period the Group adopted some amendments to standards and
interpretations which had no significant effect on the consolidated financial
statements.
3Segmental information
Following the adoption of IFRS 8, the Group's reportable segments have not
changed as the business segments reported to the Group Chief Executive follow
clear lines with distinct risk and rewards which formed the basis under IAS 14.
The Group's reportable segments under IFRS 8 are therefore identified as
follows:
* Underwriting run-off;
* Run-off management services; and
* Other corporate activities.
The other corporate activities segment includes corporate expenses and other
activities not related to the core business segments and which are not
reportable segments due to their immateriality. Certain expenses and taxes are
not allocated across the segments.
The accounting policies of the reportable segments are the same as the Group's
accounting policies. Segment profit represents the profit earned by each segment
without allocation of central corporate expenses and tax expense. This is the
measure reported to the Group Chief Executive for the purposes of resource
allocation and assessment of segment performance. Amounts reported for the prior
period have been restated to conform to the requirements of IFRS 8.
Segment income and results
The following is an analysis of the Group's revenue and result by reportable
segment.
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| | | Under | | Run-off | | Other | | Intra-group | | Total |
| | | - | | manage- | | corporate | | | | |
| | | writing | | ment | | activities | | | | |
| | | run-off | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| For | | $m | | $m | | $m | | $m | | $m |
| the | | | | | | | | | | |
| period | | | | | | | | | | |
| ended | | | | | | | | | | |
| 30 | | | | | | | | | | |
| June | | | | | | | | | | |
| 2009 | | | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| Continuing | | | | | | | | | | |
| operations | | | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| Income | | | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| Insurance | | (1.2) | | - | | - | | - | | (1.2) |
| premium | | | | | | | | | | |
| expense | | | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| Insurance | | 0.3 | | - | | - | | - | | 0.3 |
| premium | | | | | | | | | | |
| ceded to | | | | | | | | | | |
| reinsurers | | | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| Net | | (0.9) | | - | | - | | - | | (0.9) |
| earned | | | | | | | | | | |
| premium | | | | | | | | | | |
| expense | | | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| | | | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| Revenue | | - | | 11.6 | | 0.2 | | (7.5) | | 4.3 |
| from | | | | | | | | | | |
| run-off | | | | | | | | | | |
| services | | | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| Investment | | (1.0) | | - | | 0.1 | | - | | (0.9) |
| return | | | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| Segment | | (1.9) | | 11.6 | | 0.3 | | (7.5) | | 2.5 |
| income | | | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| | | | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| Insurance | | 10.0 | | (0.7) | | 2.3 | | 0.9 | | 12.5 |
| claims | | | | | | | | | | |
| and loss | | | | | | | | | | |
| adjustment | | | | | | | | | | |
| expenses | | | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| Insurance | | (1.3) | | - | | (0.6) | | - | | (1.9) |
| claims | | | | | | | | | | |
| and loss | | | | | | | | | | |
| adjustment | | | | | | | | | | |
| expenses | | | | | | | | | | |
| recovered | | | | | | | | | | |
| from | | | | | | | | | | |
| reinsurers | | | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| Net | | 8.7 | | (0.7) | | 1.7 | | 0.9 | | 10.6 |
| insurance | | | | | | | | | | |
| claims | | | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| | | | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| Cost | | (0.1) | | (9.0) | | (0.6) | | 6.6 | | (3.1) |
| of | | | | | | | | | | |
| run-off | | | | | | | | | | |
| services | | | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| Administrative | | (1.0) | | (0.5) | | (4.3) | | - | | (5.8) |
| expenses | | | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| Segment | | (1.1) | | (9.5) | | (4.9) | | 6.6 | | (8.9) |
| expenses | | | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| | | | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| Segment | | 5.7 | | 1.4 | | (2.9) | | - | | 4.2 |
| results | | | | | | | | | | |
| of | | | | | | | | | | |
| operating | | | | | | | | | | |
| activities | | | | | | | | | | |
| before | | | | | | | | | | |
| goodwill | | | | | | | | | | |
| write-off | | | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| | | | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| Goodwill | | - | | (5.0) | | - | | - | | (5.0) |
| write-off | | | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| Segment | | 5.7 | | (3.6) | | (2.9) | | - | | (0.8) |
| results | | | | | | | | | | |
| of | | | | | | | | | | |
| operating | | | | | | | | | | |
| activities | | | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| | | | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| Share | | - | | - | | 0.6 | | - | | 0.6 |
| of | | | | | | | | | | |
| results | | | | | | | | | | |
| of | | | | | | | | | | |
| associate | | | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| Finance | | - | | - | | (1.9) | | - | | (1.9) |
| costs | | | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| Profit | | - | | - | | 4.4 | | - | | 4.4 |
| for | | | | | | | | | | |
| the | | | | | | | | | | |
| period | | | | | | | | | | |
| from | | | | | | | | | | |
| discontinued | | | | | | | | | | |
| operations | | | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
| Segment | | 5.7 | | (3.6) | | 0.2 | | - | | 2.3 |
| profit | | | | | | | | | | |
| / | | | | | | | | | | |
| (loss) | | | | | | | | | | |
| for the | | | | | | | | | | |
| period | | | | | | | | | | |
+----------------+--------+---------+--------+---------+--------+------------+--------+-------------+--------+--------+
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| | | Under | | Run-off | | Other | | Intra-group | | Total |
| | | - | | manage-ment | | corporate | | | | |
| | | writing | | | | activities | | | | |
| | | run-off | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| For | | $m | | $m | | $m | | $m | | $m |
| the | | | | | | | | | | |
| period | | | | | | | | | | |
| ended | | | | | | | | | | |
| 30 | | | | | | | | | | |
| June | | | | | | | | | | |
| 2008 | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| Continuing | | | | | | | | | | |
| operations | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| Income | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| Insurance | | 0.1 | | - | | - | | - | | 0.1 |
| premium | | | | | | | | | | |
| revenue | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| Insurance | | (0.1) | | - | | - | | - | | (0.1) |
| premium | | | | | | | | | | |
| ceded to | | | | | | | | | | |
| reinsurers | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| Net | | - | | - | | - | | - | | - |
| earned | | | | | | | | | | |
| premium | | | | | | | | | | |
| revenue | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| Revenue | | - | | 21.1 | | 0.6 | | (9.8) | | 11.9 |
| from | | | | | | | | | | |
| run-off | | | | | | | | | | |
| services | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| Investment | | 2.2 | | - | | 0.4 | | - | | 2.6 |
| return | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| Segment | | 2.2 | | 21.1 | | 1.0 | | (9.8) | | 14.5 |
| income | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| Insurance | | 6.6 | | (1.1) | | 0.6 | | 0.3 | | 6.4 |
| claims | | | | | | | | | | |
| and loss | | | | | | | | | | |
| adjustment | | | | | | | | | | |
| expenses | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| Insurance | | 0.4 | | - | | - | | - | | 0.4 |
| claims | | | | | | | | | | |
| and loss | | | | | | | | | | |
| adjustment | | | | | | | | | | |
| expenses | | | | | | | | | | |
| recovered | | | | | | | | | | |
| from | | | | | | | | | | |
| reinsurers | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| Net | | 7.0 | | (1.1) | | 0.6 | | 0.3 | | 6.8 |
| insurance | | | | | | | | | | |
| claims | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| Cost | | (0.1) | | (16.4) | | - | | 9.5 | | (7.0) |
| of | | | | | | | | | | |
| run-off | | | | | | | | | | |
| services | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| Administrative | | 0.7 | | (1.2) | | (5.9) | | - | | (6.4) |
| expenses | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| Segment | | 0.6 | | (17.6) | | (5.9) | | 9.5 | | (13.4) |
| expenses | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| Segment results | 9.8 | | 2.4 | | (4.3) | | - | | 7.9 |
| of operating | | | | | | | | | |
| activities | | | | | | | | | |
| before negative | | | | | | | | | |
| goodwill | | | | | | | | | |
| recognised | | | | | | | | | |
+-------------------------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| Negative | | - | | - | | 7.8 | | - | | 7.8 |
| goodwill | | | | | | | | | | |
| recognised | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| Segment | | 9.8 | | 2.4 | | 3.5 | | - | | 15.7 |
| results | | | | | | | | | | |
| of | | | | | | | | | | |
| operating | | | | | | | | | | |
| activities | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| Share | | - | | - | | (1.5) | | - | | (1.5) |
| of | | | | | | | | | | |
| results | | | | | | | | | | |
| of | | | | | | | | | | |
| associate | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| Finance | | - | | - | | (2.5) | | - | | (2.5) |
| costs | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| Loss | | - | | - | | (10.3) | | - | | (10.3) |
| for | | | | | | | | | | |
| the | | | | | | | | | | |
| period | | | | | | | | | | |
| from | | | | | | | | | | |
| discontinued | | | | | | | | | | |
| operations | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| Segment | | 9.8 | | 2.4 | | (10.8) | | - | | 1.4 |
| profit | | | | | | | | | | |
| / | | | | | | | | | | |
| (loss) | | | | | | | | | | |
| for the | | | | | | | | | | |
| period | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
Segment assets, liabilities and other information
The following is an analysis of the Group's net assets, capital expenditure,
impairment losses, depreciation and amortisation by reportable segment.
+--------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+---------+
| | | | | Under | | Run-off | | Other | | Total |
| | | | | - | | manage-ment | | corporate | | |
| | | | | writing | | | | activities | | |
| | | | | run-off | | | | | | |
+--------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+---------+
| As at | | | | $m | | $m | | $m | | $m |
| 30 | | | | | | | | | | |
| June | | | | | | | | | | |
| 2009 | | | | | | | | | | |
+--------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+---------+
| Segment | | | | 374.4 | | 11.2 | | 87.6 | | 473.2 |
| assets | | | | | | | | | | |
+--------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+---------+
| Segment | | | | (205.4) | | (4.6) | | (43.0) | | (253.0) |
| liabilities | | | | | | | | | | |
+--------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+---------+
| Segment | | | | 169.0 | | 6.6 | | 44.6 | | 220.2 |
| net | | | | | | | | | | |
| assets | | | | | | | | | | |
+--------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+---------+
| | | | | | | | | | | |
+--------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+---------+
| Capital | | | | - | | 0.2 | | - | | 0.2 |
| expenditure | | | | | | | | | | |
+--------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+---------+
| Depreciation | | | | - | | (0.2) | | - | | (0.2) |
+--------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+---------+
| Goodwill | | | | - | | (5.0) | | - | | (5.0) |
| write-off | | | | | | | | | | |
+--------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+---------+
| Amortisation | | | | - | | - | | 1.9 | | 1.9 |
| of risk | | | | | | | | | | |
| premium | | | | | | | | | | |
+--------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+---------+
+--------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+---------+
| | | | | Under | | Run-off | | Other | | Total |
| | | | | - | | manage-ment | | corporate | | |
| | | | | writing | | | | activities | | |
| | | | | run-off | | | | | | |
+--------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+---------+
| As at | | | | $m | | $m | | $m | | $m |
| 30 | | | | | | | | | | |
| June | | | | | | | | | | |
| 2008 | | | | | | | | | | |
+--------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+---------+
| Segment | | | | 456.6 | | 19.9 | | 119.2 | | 595.7 |
| assets | | | | | | | | | | |
+--------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+---------+
| Segment | | | | (249.5) | | (5.8) | | (77.0) | | (332.3) |
| liabilities | | | | | | | | | | |
+--------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+---------+
| Segment | | | | 207.1 | | 14.1 | | 42.2 | | 263.4 |
| net | | | | | | | | | | |
| assets | | | | | | | | | | |
+--------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+---------+
| | | | | | | | | | | |
+--------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+---------+
| Capital | | | | - | | 1.5 | | - | | 1.5 |
| expenditure | | | | | | | | | | |
+--------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+---------+
| Depreciation | | | | - | | (0.2) | | - | | (0.2) |
+--------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+---------+
| Amortisation | | | | - | | - | | 0.6 | | 0.6 |
| of risk | | | | | | | | | | |
| premium | | | | | | | | | | |
+--------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+---------+
For the purposes of monitoring segment performance and allocating resources
between segments, the Group Chief Executive monitors the tangible, intangible
and financial assets and liabilities of each segment. All assets and liabilities
are allocated to reportable segments.
Revenue from major products and services
The Group's revenue from major products and services is disclosed in the segment
income tables.
Geographical information
The Group's revenue and information about its segment net assets by geographical
location are as follows:
+---------+--------+--------+--------+--------+--------+---------+--------+---------+--------+--------+
| | | | | | | United | | United | | Total |
| | | | | | | Kingdom | | States | | |
| | | | | | | | | of | | |
| | | | | | | | | America | | |
+---------+--------+--------+--------+--------+--------+---------+--------+---------+--------+--------+
| As at | | | | | | $m | | $m | | $m |
| 30 | | | | | | | | | | |
| June | | | | | | | | | | |
| 2009 | | | | | | | | | | |
+---------+--------+--------+--------+--------+--------+---------+--------+---------+--------+--------+
| Segment | | | | | | 1.3 | | 1.2 | | 2.5 |
| revenue | | | | | | | | | | |
+---------+--------+--------+--------+--------+--------+---------+--------+---------+--------+--------+
| Segment | | | | | | 144.5 | | 75.7 | | 220.2 |
| net | | | | | | | | | | |
| assets | | | | | | | | | | |
+---------+--------+--------+--------+--------+--------+---------+--------+---------+--------+--------+
| | | | | | | | | | | |
+---------+--------+--------+--------+--------+--------+---------+--------+---------+--------+--------+
| | | | | | | United | | United | | Total |
| | | | | | | Kingdom | | States | | |
| | | | | | | | | of | | |
| | | | | | | | | America | | |
+---------+--------+--------+--------+--------+--------+---------+--------+---------+--------+--------+
| As at | | | | | | $m | | $m | | $m |
| 30 | | | | | | | | | | |
| June | | | | | | | | | | |
| 2008 | | | | | | | | | | |
+---------+--------+--------+--------+--------+--------+---------+--------+---------+--------+--------+
| Segment | | | | | | 9.3 | | 5.2 | | 14.5 |
| revenue | | | | | | | | | | |
+---------+--------+--------+--------+--------+--------+---------+--------+---------+--------+--------+
| Segment | | | | | | 185.1 | | 78.3 | | 263.4 |
| net | | | | | | | | | | |
| assets | | | | | | | | | | |
+---------+--------+--------+--------+--------+--------+---------+--------+---------+--------+--------+
Information about major customers
The Group does not derive revenue from an individual policyholder or
intermediary that represents 10% or more of the Group's total revenue.
4Discontinued operation
On 21 March 2006, the Company sold a significant proportion (87.35%) of its "A"
shareholding in CX Reinsurance Company Limited to a consortium in which the
Company participates. The majority of the consideration receivable is in the
form of deferred consideration, any adjustments to the deferred consideration
are accounted for as a profit / (loss) on sale of investment in the period in
which the adjustments to the deferred consideration arise. The results of the
discontinued operation which have been included in the consolidated income
statement are as follows:
+------------+--------+--------+--------+--------+--------+--------+--------+
| | | | 30 Jun | | 30 Jun | | 31 Dec |
| | | | 2009 | | 2008 | | 2008 |
+------------+--------+--------+--------+--------+--------+--------+--------+
| | | | $m | | $m | | $m |
+------------+--------+--------+--------+--------+--------+--------+--------+
| Profit | | | 4.4 | | (10.3) | | (39.2) |
| / | | | | | | | |
| (loss) | | | | | | | |
| on | | | | | | | |
| sale | | | | | | | |
| of | | | | | | | |
| investment | | | | | | | |
+------------+--------+--------+--------+--------+--------+--------+--------+
5Earnings per share
+--------------+--------+--------+--------------+--------+-------------+--------+-------------+
| | | | 30 Jun | | 30 Jun | | 31 Dec |
| | | | 2009 | | 2008 | | 2008 |
+--------------+--------+--------+--------------+--------+-------------+--------+-------------+
| Earnings | | | $m | | $m | | $m |
+--------------+--------+--------+--------------+--------+-------------+--------+-------------+
| Earnings for the | 2.3 | | 1.4 | | (42.4) |
| purposes of basic | | | | | |
| earnings per share from | | | | | |
| continuing and | | | | | |
| discontinued operations | | | | | |
| being net profit / | | | | | |
| (loss) attributable to | | | | | |
| equity holders of the | | | | | |
| Group | | | | | |
+--------------------------------+--------------+--------+-------------+--------+-------------+
| Earnings for the | (2.1) | | 11.7 | | (3.2) |
| purposes of basic | | | | | |
| earnings per share from | | | | | |
| continuing operations | | | | | |
| being net (loss) / | | | | | |
| profit attributable to | | | | | |
| equity holders of the | | | | | |
| Group | | | | | |
+--------------------------------+--------------+--------+-------------+--------+-------------+
| | | | | | | | |
+--------------+--------+--------+--------------+--------+-------------+--------+-------------+
| Number | | | | | | | |
| of | | | | | | | |
| shares | | | | | | | |
+--------------+--------+--------+--------------+--------+-------------+--------+-------------+
| Weighted average number | 112,987,164 | | 105,589,733 | | 110,213,127 |
| of ordinary shares for | | | | | |
| the purposes of basic | | | | | |
| earnings per share | | | | | |
+--------------------------------+--------------+--------+-------------+--------+-------------+
| Effect | | | 4,435,532 | | 1,740,000 | | 2,617,627 |
| of | | | | | | | |
| dilutive | | | | | | | |
| potential | | | | | | | |
| ordinary | | | | | | | |
| shares: | | | | | | | |
| Share | | | | | | | |
| options | | | | | | | |
+--------------+--------+--------+--------------+--------+-------------+--------+-------------+
| Weighted average number | 117,422,696 | | 107,329,733 | | 112,830,754 |
| of ordinary shares for | | | | | |
| the purposes of diluted | | | | | |
| earnings per share | | | | | |
+--------------------------------+--------------+--------+-------------+--------+-------------+
| | | | | | | | |
+--------------+--------+--------+--------------+--------+-------------+--------+-------------+
| | | | | | | | |
+--------------+--------+--------+--------------+--------+-------------+--------+-------------+
| Basic | | | $ | | $ | | $ |
| earnings | | | | | | | |
| per | | | | | | | |
| share | | | | | | | |
+--------------+--------+--------+--------------+--------+-------------+--------+-------------+
| | | | | | | | |
+--------------+--------+--------+--------------+--------+-------------+--------+-------------+
| From | | | | | | | |
| continuing | | | | | | | |
| and | | | | | | | |
| discontinued | | | | | | | |
| operations | | | | | | | |
+--------------+--------+--------+--------------+--------+-------------+--------+-------------+
| Basic: | | | 0.0204 | | 0.0133 | | (0.3847) |
| Ordinary | | | | | | | |
| shares | | | | | | | |
| ($ per | | | | | | | |
| share) | | | | | | | |
+--------------+--------+--------+--------------+--------+-------------+--------+-------------+
| Diluted: | | | 0.0196 | | 0.0130 | | (0.3758) |
| Ordinary | | | | | | | |
| shares | | | | | | | |
| ($ per | | | | | | | |
| share) | | | | | | | |
+--------------+--------+--------+--------------+--------+-------------+--------+-------------+
| | | | | | | | |
+--------------+--------+--------+--------------+--------+-------------+--------+-------------+
| From | | | | | | | |
| continuing | | | | | | | |
| operations | | | | | | | |
+--------------+--------+--------+--------------+--------+-------------+--------+-------------+
| Basic: | | | (0.0186) | | 0.1108 | | (0.0290) |
| Ordinary | | | | | | | |
| shares | | | | | | | |
| ($ per | | | | | | | |
| share) | | | | | | | |
+--------------+--------+--------+--------------+--------+-------------+--------+-------------+
| Diluted: | | | (0.0179) | | 0.1090 | | (0.0284) |
| Ordinary | | | | | | | |
| shares | | | | | | | |
| ($ per | | | | | | | |
| share) | | | | | | | |
+--------------+--------+--------+--------------+--------+-------------+--------+-------------+
6 Dividends
During the interim period no dividends were paid to the shareholders (Jun 2008:
2.96 cents per share).
7Deferred assets
Deferred assets relate to the consideration outstanding on the disposal of a
subsidiary CX Reinsurance Company Limited, as described in note 4, and a
transaction facilitation fee. Part of the deferred consideration is related to
the net asset value of CX Reinsurance Company Limited and is subject to net
asset value adjustments through the income statement.
+---------------+--------+--------+--------+--------+--------+--------+--------+
| | | | 30 Jun | | 30 | | 31 |
| | | | 2009 | | Jun | | Dec |
| | | | | | 2008 | | 2008 |
+---------------+--------+--------+--------+--------+--------+--------+--------+
| | | | $m | | $m | | $m |
+---------------+--------+--------+--------+--------+--------+--------+--------+
| Facilitation | | | 20.6 | | 24.0 | | 18.5 |
| fee | | | | | | | |
+---------------+--------+--------+--------+--------+--------+--------+--------+
| Deferred | | | 46.8 | | 70.4 | | 41.4 |
| consideration | | | | | | | |
+---------------+--------+--------+--------+--------+--------+--------+--------+
| Deferred | | | 67.4 | | 94.4 | | 59.9 |
| assets | | | | | | | |
+---------------+--------+--------+--------+--------+--------+--------+--------+
8 Goodwill
As at 30 June 2009 the run-off management segment carried goodwill. For the
purpose of testing goodwill for impairment, the Group compares the
cash-generating unit's current carrying value of goodwill with the higher of its
fair value less costs to sell or value in use.
Current acquisition activity within the Group has been significantly below
anticipated levels and the reduced likelihood of future acquisitions being
completed has led to the recognition of impairment losses.
The recoverable amount of the cash-generating unit is its value in use. The
current estimate of the cash-generating unit's value in use is $13.2 million
using a discount rate of 10%. Compared to the current carrying value of the
cash-generating unit's goodwill of $18.2 million an impairment loss of $5
million has been recognised in the Group's interim report.
9 Financial liabilities - borrowings
The Group repaid and terminated a term and revolving loan of $37.4 million on 25
June 2009.
10Cash used in operating activities
+--------------+--------+---------+---------+--------+--------+---------+---------+--------+--------+---------+---------+--------+
| | | 6 months to 30 Jun 2009 | | 6 months to 30 Jun 2008 | | 12 months to 31 Dec 2008 |
+--------------+--------+----------------------------+--------+----------------------------+--------+----------------------------+
| | | Contin- | Discon- | Total | | Contin- | Discon- | Total | | Contin- | Discon- | Total |
| | | uing | tinued | | | uing | tinued | | | uing | tinued | |
+--------------+--------+---------+---------+--------+--------+---------+---------+--------+--------+---------+---------+--------+
| | | $m | $m | $m | | $m | $m | $m | | $m | $m | $m |
+--------------+--------+---------+---------+--------+--------+---------+---------+--------+--------+---------+---------+--------+
| (Loss) | | (2.1) | 4.4 | 2.3 | | 11.7 | (10.3) | 1.4 | | (3.2) | (39.2) | (42.4) |
| / | | | | | | | | | | | | |
| profit | | | | | | | | | | | | |
| for | | | | | | | | | | | | |
| the | | | | | | | | | | | | |
| period | | | | | | | | | | | | |
+--------------+--------+---------+---------+--------+--------+---------+---------+--------+--------+---------+---------+--------+
| Adjustments | | | | | | | | | | | | |
| for: | | | | | | | | | | | | |
+--------------+--------+---------+---------+--------+--------+---------+---------+--------+--------+---------+---------+--------+
| - | | (0.6) | - | (0.6) | | 1.5 | - | 1.5 | | 5.7 | - | 5.7 |
| share | | | | | | | | | | | | |
| of | | | | | | | | | | | | |
| results | | | | | | | | | | | | |
| of | | | | | | | | | | | | |
| associate | | | | | | | | | | | | |
+--------------+--------+---------+---------+--------+--------+---------+---------+--------+--------+---------+---------+--------+
| - | | - | (4.4) | (4.4) | | - | 10.3 | 10.3 | | - | 39.2 | 39.2 |
| discontinued | | | | | | | | | | | | |
| operations | | | | | | | | | | | | |
+--------------+--------+---------+---------+--------+--------+---------+---------+--------+--------+---------+---------+--------+
| - | | - | - | - | | (7.8) | - | (7.8) | | (6.4) | - | (6.4) |
| negative | | | | | | | | | | | | |
| goodwill | | | | | | | | | | | | |
+--------------+--------+---------+---------+--------+--------+---------+---------+--------+--------+---------+---------+--------+
| - | | (4.4) | - | (4.4) | | (5.1) | - | (5.1) | | (11.9) | - | (11.9) |
| investment | | | | | | | | | | | | |
| return | | | | | | | | | | | | |
+--------------+--------+---------+---------+--------+--------+---------+---------+--------+--------+---------+---------+--------+
| - | | (0.5) | - | (0.5) | | 0.4 | - | 0.4 | | 1.1 | - | 1.1 |
| realised | | | | | | | | | | | | |
| (gains) | | | | | | | | | | | | |
| / losses | | | | | | | | | | | | |
| on | | | | | | | | | | | | |
| investments | | | | | | | | | | | | |
+--------------+--------+---------+---------+--------+--------+---------+---------+--------+--------+---------+---------+--------+
| - | | 5.8 | - | 5.8 | | 2.1 | - | 2.1 | | (4.9) | - | (4.9) |
| unrealised | | | | | | | | | | | | |
| losses / | | | | | | | | | | | | |
| (gains) on | | | | | | | | | | | | |
| investments | | | | | | | | | | | | |
+--------------+--------+---------+---------+--------+--------+---------+---------+--------+--------+---------+---------+--------+
| - | | 1.9 | - | 1.9 | | 2.5 | - | 2.5 | | 4.4 | - | 4.4 |
| finance | | | | | | | | | | | | |
| costs | | | | | | | | | | | | |
+--------------+--------+---------+---------+--------+--------+---------+---------+--------+--------+---------+---------+--------+
| - | | 0.2 | - | 0.2 | | 0.2 | - | 0.2 | | 0.4 | - | 0.4 |
| depreciation | | | | | | | | | | | | |
+--------------+--------+---------+---------+--------+--------+---------+---------+--------+--------+---------+---------+--------+
| - | | 5.0 | - | 5.0 | | - | - | - | | - | - | - |
| goodwill | | | | | | | | | | | | |
| write-off | | | | | | | | | | | | |
+--------------+--------+---------+---------+--------+--------+---------+---------+--------+--------+---------+---------+--------+
| - | | 0.4 | - | 0.4 | | 0.3 | - | 0.3 | | 1.3 | - | 1.3 |
| share | | | | | | | | | | | | |
| based | | | | | | | | | | | | |
| payment | | | | | | | | | | | | |
| expense | | | | | | | | | | | | |
+--------------+--------+---------+---------+--------+--------+---------+---------+--------+--------+---------+---------+--------+
| - | | (1.9) | - | (1.9) | | (0.6) | - | (0.6) | | (3.2) | - | (3.2) |
| amortisation | | | | | | | | | | | | |
| of risk | | | | | | | | | | | | |
| premium | | | | | | | | | | | | |
+--------------+--------+---------+---------+--------+--------+---------+---------+--------+--------+---------+---------+--------+
| - | | 2.9 | - | 2.9 | | (0.8) | - | (0.8) | | (1.3) | - | (1.3) |
| other | | | | | | | | | | | | |
| gains | | | | | | | | | | | | |
| and | | | | | | | | | | | | |
| losses | | | | | | | | | | | | |
+--------------+--------+---------+---------+--------+--------+---------+---------+--------+--------+---------+---------+--------+
| | | 6.7 | - | 6.7 | | 4.4 | - | 4.4 | | (18.0) | - | (18.0) |
+--------------+--------+---------+---------+--------+--------+---------+---------+--------+--------+---------+---------+--------+
| Change | | | | | | | | | | | | |
| in | | | | | | | | | | | | |
| operating | | | | | | | | | | | | |
| assets | | | | | | | | | | | | |
| and | | | | | | | | | | | | |
| liabilities | | | | | | | | | | | | |
+--------------+--------+---------+---------+--------+--------+---------+---------+--------+--------+---------+---------+--------+
| Net decrease in | (17.8) | - | (17.8) | | (12.4) | - | (12.4) | | (31.5) | - | (31.5) |
| insurance | | | | | | | | | | | |
| receivables and | | | | | | | | | | | |
| liabilities | | | | | | | | | | | |
+-----------------------+---------+---------+--------+--------+---------+---------+--------+--------+---------+---------+--------+
| Net decrease / | 15.1 | - | 15.1 | | 0.5 | - | 0.5 | | (14.1) | - | (14.1) |
| (increase) in | | | | | | | | | | | |
| loans and | | | | | | | | | | | |
| receivables | | | | | | | | | | | |
+-----------------------+---------+---------+--------+--------+---------+---------+--------+--------+---------+---------+--------+
| Net (decrease) | (2.9) | - | (2.9) | | 1.4 | - | 1.4 | | 2.1 | - | 2.1 |
| / increase in | | | | | | | | | | | |
| other operating | | | | | | | | | | | |
| liabilities | | | | | | | | | | | |
+-----------------------+---------+---------+--------+--------+---------+---------+--------+--------+---------+---------+--------+
| Cash | | 1.1 | - | 1.1 | | (6.1) | - | (6.1) | | (61.5) | - | (61.5) |
| generated | | | | | | | | | | | | |
| by / | | | | | | | | | | | | |
| (used in) | | | | | | | | | | | | |
| operations | | | | | | | | | | | | |
+--------------+--------+---------+---------+--------+--------+---------+---------+--------+--------+---------+---------+--------+
| | | | | | | | | | | | | |
+--------------+--------+---------+---------+--------+--------+---------+---------+--------+--------+---------+---------+--------+
| Interest | | (1.8) | - | (1.8) | | (0.8) | - | (0.8) | | (5.1) | - | (5.1) |
| paid | | | | | | | | | | | | |
+--------------+--------+---------+---------+--------+--------+---------+---------+--------+--------+---------+---------+--------+
| Net | | (0.7) | - | (0.7) | | (6.9) | - | (6.9) | | (66.6) | - | (66.6) |
| cash | | | | | | | | | | | | |
| used | | | | | | | | | | | | |
| in | | | | | | | | | | | | |
| operations | | | | | | | | | | | | |
+--------------+--------+---------+---------+--------+--------+---------+---------+--------+--------+---------+---------+--------+
11 Related party transactions
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note. Transactions between the Group and its associate are disclosed below.
Associate - CX Reinsurance Company Limited
Two of the Company's subsidiaries, Tawa Management Limited and Tawa Consulting
Limited, provide insurance run-off management services to CX Reinsurance Company
Limited an associate of the Group in which the Company has a 12.65% share
interest and a 49.95% voting interest.
Run-off services are provided on a negotiated fee basis, the terms and pricing
of which are at arm's length. Run-off management expenses are recharged at cost
by Tawa Management Limited and at an hourly charge out rate by Tawa Consulting
Limited.
For the interim period to 30 June 2009 a run-off management fee of $1.5 million
(Jun 2008: $2 million, Dec 2008: $4 million) was charged to CX Reinsurance
Company Limited by Tawa Management Limited, expenses recharged at cost amounted
to $3.1 million (Jun 2008: $9.0 million, Dec 2008: $18 million) and amounts owed
to Tawa Management Limited of $0.2 million (Jun 2008: $4.6 million, Dec 2008:
$3.1 million). $0.2 million (Jun 2008: $0.1 million, Dec 2008: $0.2 million) was
charged by Tawa Consulting Limited.
On 18 June 2008 a sale and repurchase agreement was entered into between CX
Reinsurance Company Limited and the Company's subsidiary, KX Reinsurance Company
Limited as part of the Group's treasury management. On the same date and under
the repurchase agreement CX Reinsurance Company Limited sold an interest in an
ECM fund to KX Reinsurance Company Limited for GBP11.5 million ($23.5 million at
that date). On 6 February 2009 CX Reinsurance Company Limited repurchased this
investment for GBP12.0 million ($17.3 million at that date) including accrued
interest.
Key management personnel
The Group considers its key management personnel to include its Executive and
Non-Executive Directors and those members of management reporting directly to
its Board that have executive management responsibility for Group-wide
operations.
Remuneration of key management personnel
The remuneration of key management included in the income statement is set out
below in aggregate for each of the categories specified in IAS 24 Related Party
Disclosures.
+-----------------+--------+--------+--------+--------+--------+--------+--------+
| | | | 30 Jun | | 30 Jun | | 31 Dec |
| | | | 2009 | | 2008 | | 2008 |
+-----------------+--------+--------+--------+--------+--------+--------+--------+
| | | | $m | | $m | | $m |
+-----------------+--------+--------+--------+--------+--------+--------+--------+
| Short-term | | | 2.7 | | 2.2 | | 3.2 |
| employee | | | | | | | |
| benefits | | | | | | | |
+-----------------+--------+--------+--------+--------+--------+--------+--------+
| Post-employment | | | 0.4 | | 0.4 | | 0.6 |
| benefits | | | | | | | |
+-----------------+--------+--------+--------+--------+--------+--------+--------+
| Termination | | | 0.1 | | - | | - |
| benefits | | | | | | | |
+-----------------+--------+--------+--------+--------+--------+--------+--------+
| Share | | | 0.3 | | 0.2 | | 0.6 |
| based | | | | | | | |
| payments | | | | | | | |
+-----------------+--------+--------+--------+--------+--------+--------+--------+
| Management | | | 3.5 | | 2.8 | | 4.4 |
| remuneration | | | | | | | |
+-----------------+--------+--------+--------+--------+--------+--------+--------+
Share and loan transactions with members of key management
As at 30 June 2009, the Group had no loans outstanding to key management (30 Jun
2008: $nil, 31 Dec 2008: $nil). Share based payments to key management
outstanding during the period were as follows:
+-------------+--------+--------+-----------+--------+-----------+--------+-----------+
| | | | 30 Jun | | 30 Jun | | 31 Dec |
| | | | 2009 | | 2008 | | 2008 |
+-------------+--------+--------+-----------+--------+-----------+--------+-----------+
| | | | Number | | Number | | Number |
| | | | of | | of | | of |
| | | | share | | share | | share |
| | | | awards | | awards | | awards |
+-------------+--------+--------+-----------+--------+-----------+--------+-----------+
| Outstanding | | | 2,940,281 | | 1,509,600 | | 1,509,600 |
| at the | | | | | | | |
| beginning | | | | | | | |
| of the | | | | | | | |
| period | | | | | | | |
+-------------+--------+--------+-----------+--------+-----------+--------+-----------+
| Granted | | | 2,724,127 | | 1,070,435 | | 1,430,681 |
| during | | | | | | | |
| the | | | | | | | |
| period | | | | | | | |
+-------------+--------+--------+-----------+--------+-----------+--------+-----------+
| Forfeited | | | (271,652) | | - | | - |
| during | | | | | | | |
| the | | | | | | | |
| period | | | | | | | |
+-------------+--------+--------+-----------+--------+-----------+--------+-----------+
| Outstanding | | | 5,392,756 | | 2,580,035 | | 2,940,281 |
| at the end | | | | | | | |
| of the | | | | | | | |
| period | | | | | | | |
+-------------+--------+--------+-----------+--------+-----------+--------+-----------+
Immediate and ultimate parent company
In the opinion of the Directors, the immediate and ultimate parent is Financière
Pinault S.C.A., a Société en commandite par actions incorporated in France. The
group financial statements of Financière Pinault S.C.A. may be obtained from the
Tribunal de Commerce de Paris, 1 Quai de Corse, 75004 Paris, France.
12 Contingent liabilities
Certain of the Group's subsidiaries and its associate are routinely involved in
litigation or potential litigation related to primarily the settlement of
insurance claims liabilities. However, none of such actual or proposed
litigation that had not been provided for met the definition of a contingent
liability. Consequently, the Group had no insurance related, or other,
contingent liabilities as at 30 June 2009 (30 Jun 2008 and 31 Dec 2008: no
contingent liabilities).
13 Post balance sheet events
There are no post balance sheet events that require adjustment to, or disclosure
in, the financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DGGDCCSDGGCR
Achp (LSE:ACH)
Historical Stock Chart
From May 2024 to Jun 2024
Achp (LSE:ACH)
Historical Stock Chart
From Jun 2023 to Jun 2024
