TIDMTAW
RNS Number : 2371T
Tawa PLC
23 September 2010
Tawa plc
Interim results for the six months ended 30 June 2010
An active first half of year for Tawa, with announced acquisition of Island
Capital, launch of STRIPE , further capital extraction from risk carriers,
stable technical results and further leveraging of the PRO/Tawa integration
Tawa plc ("Tawa" or "the Group") today announces interim results for the six
months ended 30 June 2010.
Highlights
· Profit for the half year was $1.4 million (2009: $2.3 million).
· Group net assets are $223.9 million.
· Net assets per share in US dollars are $1.98 (GBP1.35) per share.
· A dividend of $35 million was paid by subsidiary KX Reinsurance Company
Limited ("KX Re") to Tawa plc. This dividend represents free cash to the Group.
· Tawa has also received approval for $12 million of capital extraction
from its Connecticut domiciled subsidiary PXRE Reinsurance Company ('PXRE'). The
$12 million will be used to repay part of the acquisition debt.
· A final dividend for the year ended 31 December 2009 of 3.75 cents (2.5
pence) per share was paid in June 2010.
· Agreed to acquire Island Capital which, subject to regulatory approval,
should complete before year end.
Tawa plc holds capital extraction and free cash flow generation as its main
performance indicator. In this context a $35 million dividend from KX Re was
received during the period. This represents the extraction of trapped regulatory
capital and is free cash to Tawa plc. Tawa has also received approval for $12
million of capital extraction from its Connecticut domiciled subsidiary PXRE
Reinsurance Company ('PXRE'). The $12 million will be used to repay part of the
acquisition debt. The capital extractions confirm the progress made by the Tawa
team to decrease volatility, commute claims and reduce the technical provisions
held for insurance policies.
Gilles Erulin, Chief Executive, commented: "The Group is gaining momentum in its
cash investment-cash extraction model. Overall the first half of the year was,
once again, benign as to the insurance books we are carrying. Meanwhile we are
benefiting from last year's acquisition of PRO and its sophisticated
professional consulting teams. Tawa has enhanced ability to access portfolio
acquisition opportunities and improved stable earnings flow. This move, at
modest cost, has significantly enhanced Tawa's footprint and capabilities in the
global insurance market and will fuel our future growth across all segments of
our business".
As a provider of products to serve the insurance market as a whole, Tawa has
launched STRIPE in 2010 with the aim to sell this IT platform to the wider
insurance market. Gilles Erulin said "STRIPE will enable each claims handler,
from big and small insurance companies in the market, to present insurance
claims real time to reinsurers over the Internet, loading claim documents into a
secure data warehouse, and sending an email giving access to the data to
counterparts. To the best of my knowledge, there is no other tool in the market
which provides such high tech, low cost user, immediate and friendly technology
capable of dealing with market bottlenecks in claim processing.
Tawa also remains active in the purchase of run-off assets, with the announced
agreement to acquire Island Capital, subject to regulatory approval, where it
sees strategic opportunities priced sensibly in the market place."
--ENDS-
Enquiries:
+---------------------------------------------------+---------------+
| Gilles Erulin, Chief Executive, Tawa plc | 020 7068 8000 |
+---------------------------------------------------+---------------+
| Peter Rigby or Charlotte Ens, Haggie Financial | 020 7417 8989 |
| LLP | |
+---------------------------------------------------+---------------+
| James Britton, or Guy Wiehahn, KBC Peel Hunt | 020 7418 8900 |
| (Nominated Adviser and Broker) | |
+---------------------------------------------------+---------------+
Note for Editors
Tawa plc was formed in 2001 with the purpose of acquiring or developing assets
and business in the insurance industry. Tawa is an acquirer of run-off
portfolios of insurance and reinsurance companies, companies and businesses
providing services to the run-off industry and a developer of its own products
to serve the insurance market as a whole such as STRIPE .
By creating a diversified portfolio of businesses at different stages of the
run-off process and in the servicing business Tawa is 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, KX
Reinsurance Company Limited, PXRE Reinsurance Company and the PRO group of
companies and is in the process of completing on Island Capital Limited.
The combined Tawa/PRO team of over 300 professionals service a number of the
largest insurance businesses in the UK and Europe and deliver a market-wide,
third-party run-off servicing capability as PRO services active underwriters as
well as run-offs and covers London's company and Lloyd's markets as well as
Europe and the USA. Tawa also operates as an incubator for new projects and has
recently launched STRIPE , a new claims and post-placement transactions
processing platform.
Tawa plc was floated on the AIM market in July 2007.
Further information can be found on the Company's website: www.tawaplc.co.uk.
Interim results
Highlights
The consolidated net earnings of Tawa plc returned a Group net profit after tax
of $1.4 million, which are made of a benign half year period for our insurance
risk carriers coupled with good performance from our servicing business. Those
business results are impacted by accounting non cash entries, the largest of
which is a $4 million foreign exchange loss as a result of sterling's weakness
against the US dollar on the assets held in the tax escrow fund. The
strengthening of sterling against the dollar since 30 June has reduced this
exchange loss by $2.7 million.
Ongoing operations contributed $7.7 million to overall profits for the six
months to 30 June 2010. A loss on discontinued operations of $6.3 million
resulted in a Group net profit of $1.4 million. This compares with net profits
of $2.3 million in the six months to 30 June 2009.
As to cash generation capacity, which Tawa plc views as its main performance
indicator, a capital extraction of $35 million from KX Reinsurance Company
Limited ('KX Re') was achieved at the end of March. This represents the
extraction of trapped regulatory capital and is free cash available to Tawa plc.
Tawa has also received approval for cumulative $12 million of capital extraction
from its Connecticut domiciled subsidiary PXRE Reinsurance Company ('PXRE'). The
$12 million will be used to repay debt. Both confirm the significant progresses
made on reduction of the volatility achieved by downscaling the liability
portfolios owned by the group.
Following its acquisition of the PRO Group of companies in November 2009 Tawa
has been successfully integrating the two businesses and this has realised cost
efficiencies to the Group in excess of $1.5 million per annum. As of 1 January,
our work force was almost exclusively employed by PRO. In the first half PRO
delivered a strong result of $2.4 million net profit.
On 20 August 2010 the Group announced the acquisition of 94.3% of the shares of
Island Capital Ltd for an initial consideration of $7.4 million. The acquisition
will give Tawa access to expertise in the credit and political risk insurance
market place. Island Capital is also a fully licenced Class III Bermudian
reinsurance company, giving the Group a receptacle to host run-off portfolio
reinsurance deals in the future. It is intended that the acquisition will be
financed from Tawa's existing cash resources. The transaction is subject to
regulatory approval from the Bermuda Monetary Authority and the FSA. It is
expected that such approval should be obtained by the year end.
Financial review
During the first six months of 2010, Tawa recognised net profits of $1.4 million
compared to net profits of $2.3 million in the six months to 30 June 2009.
During the period Group net assets decreased by $4.5 million, from $228.4
million at 31 December 2009 to $223.9 million ($1.98/GBP1.35 per share) at 30
June 2010 mainly as a result of a $4 million dividend paid in June 2010.
Dividend and dividend policy
In line with the Group's dividend policy a final dividend for the year ended 31
December 2009 of 3.75 cents (2.5 pence) per share was paid in June 2010.
Consistent with prior years 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, insurance portfolios
management, insurance services (PRO), development of IT tools for the insurance
industry (STRIPE ) 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 while protecting policyholder's
future rights. The underwriting run-off profit for the period was $3.8 million.
A dividend of $35 million paid by KX Re, was paid in two instalments of $10
million in April 2010 and $25 million in June 2010.
Run-off management
Run-off management represents the results of the Group's providers of run-off
management through its subsidiary Tawa Management Ltd. The revenue comprises
income from run-off fees and expenses recharged within the Group. Profit for the
period was $1.8 million.
Insurance services (PRO)
The insurance services segment represents the results of the Group's subsidiary
PRO which is a provider of insurance services to external clients. Profit for
the period was $2.4 million from total revenues of $23.9 million.
Interim results continued
Other corporate activities
Other corporate activities summarises acquisition activity, the Group's
investment in its associated undertaking CX Reinsurance Company Limited ('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 decreased by $7.2 million to $54 million. The
principal contributory factors were:
CX Re claims management
Net discounted claims reserves and provision for expenses reduced in the period
from $138.9 million to $128.8 million. During the period there was a net
incurred deterioration on insurance risks of $2.7 million.
CX Re asset and liability management ("ALM")
The return on investments supporting the liabilities (excluding the impact of
changes in interest rates) was $3 million more than the unwinding of the
discount. This was due to the continued improvement of credit spreads in
corporate bonds and commercial mortgage backed securities. There was also a
foreign exchange loss of $4 million in the period.
CX Re operating expenses
Net operating expenses, which exclude those costs charged to unallocated loss
adjustment expenses and allocated loss adjustment expenses in the period, were
$2.4 million, comprising management fees payable to Tawa Management Limited and
staff bonus.
Future prospects
The Group has benefitted significantly from its acquisition of PRO which, as
anticipated, enhanced its ability to access portfolio acquisition opportunities
while providing a stable earning flow. The combined team of over 300
professionals service a number of the largest insurance businesses in the UK and
Europe. Through PRO, the Group now also service active underwriters as well as
run-offs and covers London's company and Lloyd's markets as well as Europe and
the USA. This move, at modest cost, has significantly enhanced Tawa's footprint
and capabilities in the global insurance market.
Last, as a provider of products to serve the insurance market as a whole, Tawa
has launched STRIPE in early 2010 with the prospect to sell IT solutions to the
wider market. STRIPE is a proprietary, web based platform allowing principal to
principal processing of claims and other post placement transactions between
ceding company and reinsurer.
Overall the Group's 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
the global insurance market.
Condensed consolidated income statement
For the period ended 30
June 2010
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | 6 | | 6 | | 12 |
| | | | months | | months | | months |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | 30 | | 30 | | 31 |
| | | | Jun | | Jun | | Dec |
| | | | 2010 | | 2009 | | 2009 |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | (Unaudited) | | (Unaudited) | | (Audited) |
| | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | Notes | | $m | | $m | | $m |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Income | | | | | | | |
| continuing | | | | | | | |
| operations | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Insurance | | | (0.8) | | (1.2) | | (1.2) |
| premium | | | | | | | |
| revenue | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Insurance | | | 0.5 | | 0.3 | | 0.6 |
| premium | | | | | | | |
| ceded to | | | | | | | |
| reinsurers | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Net | | | (0.3) | | (0.9) | | (0.6) |
| earned | | | | | | | |
| premium | | | | | | | |
| revenue | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Revenue | | | 20.1 | | 4.3 | | 14.4 |
| from | | | | | | | |
| consultancy | | | | | | | |
| and run-off | | | | | | | |
| services | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Investment | | | 6.5 | | (0.9) | | 2.7 |
| return | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Interest | | | 2.3 | | - | | - |
| Income | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Other | | | 3.2 | | - | | 1.1 |
| income | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Total | | | 32.1 | | 3.4 | | 18.2 |
| income | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Insurance | | | (1.6) | | 12.5 | | 12.2 |
| claims | | | | | | | |
| and loss | | | | | | | |
| adjustment | | | | | | | |
| expenses | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Insurance | | | 2.0 | | (1.9) | | (2.3) |
| claims | | | | | | | |
| and loss | | | | | | | |
| adjustment | | | | | | | |
| expenses | | | | | | | |
| recovered | | | | | | | |
| from | | | | | | | |
| reinsurers | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Net | | | 0.4 | | 10.6 | | 9.9 |
| insurance | | | | | | | |
| claims | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Cost | | | (16.7) | | (3.1) | | (10.1) |
| of | | | | | | | |
| consultancy | | | | | | | |
| and run-off | | | | | | | |
| services | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Administrative | | | (4.9) | | (5.8) | | (10.2) |
| expenses | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Total | | | (21.6) | | (8.9) | | (20.3) |
| expenses | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Results | | | 10.6 | | 4.2 | | 7.2 |
| of | | | | | | | |
| operating | | | | | | | |
| activities | | | | | | | |
| before | | | | | | | |
| impairment | | | | | | | |
| of | | | | | | | |
| goodwill | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Impairment | | | - | | (5.0) | | (5.0) |
| of | | | | | | | |
| goodwill | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Results | | | 10.6 | | (0.8) | | 2.2 |
| of | | | | | | | |
| operating | | | | | | | |
| activities | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Share | | | (0.9) | | 0.6 | | 1.8 |
| of | | | | | | | |
| results | | | | | | | |
| of | | | | | | | |
| associate | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Finance | | | (2.0) | | (1.9) | | (4.9) |
| costs | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Profit/(loss) | | | 7.7 | | (2.1) | | (0.9) |
| before | | | | | | | |
| taxation | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Taxation | | | - | | - | | - |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Profit/(loss) | | | 7.7 | | (2.1) | | (0.9) |
| for the year | | | | | | | |
| from | | | | | | | |
| continuing | | | | | | | |
| operations | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| (Loss)/profit | 5 | | (6.3) | | 4.4 | | 12.1 |
| for the year | | | | | | | |
| from | | | | | | | |
| discontinued | | | | | | | |
| operations | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Profit | | | 1.4 | | 2.3 | | 11.2 |
| for | | | | | | | |
| the | | | | | | | |
| year | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Attributable | | | | | | | |
| to: | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Equity | | | 1.4 | | 2.3 | | 11.2 |
| holders | | | | | | | |
| of the | | | | | | | |
| Group | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Earnings | | | | | | | |
| per | | | | | | | |
| share | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| From | 6 | | | | | | |
| continuing | | | | | | | |
| and | | | | | | | |
| discontinued | | | | | | | |
| operations | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Basic: | | | 0.0124 | | 0.0204 | | 0.0991 |
| Ordinary | | | | | | | |
| shares | | | | | | | |
| ($ per | | | | | | | |
| share) | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Diluted: | | | 0.0117 | | 0.0196 | | 0.0948 |
| Ordinary | | | | | | | |
| shares | | | | | | | |
| ($ per | | | | | | | |
| share) | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| From | 6 | | | | | | |
| continuing | | | | | | | |
| operations | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Basic: | | | 0.0681 | | (0.0186) | | (0.0080) |
| Ordinary | | | | | | | |
| shares | | | | | | | |
| ($ per | | | | | | | |
| share) | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Diluted: | | | 0.0645 | | (0.0179) | | (0.0076) |
| Ordinary | | | | | | | |
| shares | | | | | | | |
| ($ per | | | | | | | |
| share) | | | | | | | |
+----------------+--------+--------+-------------+--------+-------------+--------+-----------+
Condensed consolidated statement of comprehensive income
For the period ended 30 June
2010
+-----------------+--------+--------+--------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | 6 | | 6 | | 12 |
| | | | | | | months | | months | | months |
+-----------------+--------+--------+--------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | 30 | | 30 | | 31 |
| | | | | | | Jun | | Jun | | Dec |
| | | | | | | 2010 | | 2009 | | 2009 |
+-----------------+--------+--------+--------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | (Unaudited) | | (Unaudited) | | (Audited) |
| | | | | | | | | | | |
+-----------------+--------+--------+--------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | $m | | $m | | $m |
+-----------------+--------+--------+--------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | | | | |
+-----------------+--------+--------+--------+--------+--------+-------------+--------+-------------+--------+-----------+
| Profit | | | | | | 1.4 | | 2.3 | | 11.2 |
| for | | | | | | | | | | |
| the | | | | | | | | | | |
| year | | | | | | | | | | |
+-----------------+--------+--------+--------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | | | | |
+-----------------+--------+--------+--------+--------+--------+-------------+--------+-------------+--------+-----------+
| Other | | | | | | | | | | |
| comprehensive | | | | | | | | | | |
| (losses)/income | | | | | | | | | | |
+-----------------+--------+--------+--------+--------+--------+-------------+--------+-------------+--------+-----------+
| Currency | | | | | | (2.3) | | 2.9 | | 2.3 |
| translation | | | | | | | | | | |
| differences | | | | | | | | | | |
+-----------------+--------+--------+--------+--------+--------+-------------+--------+-------------+--------+-----------+
| Total | | | | | (0.9) | | 5.2 | | 13.5 |
| comprehensive | | | | | | | | | |
| (losses)/income | | | | | | | | | |
| for the year | | | | | | | | | |
+--------------------------+--------+--------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | | | | |
+-----------------+--------+--------+--------+--------+--------+-------------+--------+-------------+--------+-----------+
| Attributable | | | | | | | | | | |
| to: | | | | | | | | | | |
+-----------------+--------+--------+--------+--------+--------+-------------+--------+-------------+--------+-----------+
| Equity | | | | | | (0.9) | | 5.2 | | 13.5 |
| holders | | | | | | | | | | |
| of the | | | | | | | | | | |
| Group | | | | | | | | | | |
+-----------------+--------+--------+--------+--------+--------+-------------+--------+-------------+--------+-----------+
Condensed consolidated statement of financial position
As at 30 June
2010
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | 30 | | 30 | | 31 |
| | | | Jun | | Jun | | Dec |
| | | | 2010 | | 2009 | | 2009 |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | (Unaudited) | | (Unaudited) | | (Audited) |
| | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | Notes | | $m | | $m | | $m |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Assets | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Cash | | | 60.9 | | 22.0 | | 30.9 |
| and | | | | | | | |
| cash | | | | | | | |
| equivalents | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Financial | | | 216.5 | | 291.9 | | 260.7 |
| assets - | | | | | | | |
| investments | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Loans | | | 53.5 | | 44.5 | | 61.2 |
| and | | | | | | | |
| receivables | | | | | | | |
| including | | | | | | | |
| insurance | | | | | | | |
| receivables | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Reinsurers' | | | 24.4 | | 26.5 | | 24.7 |
| share of | | | | | | | |
| technical | | | | | | | |
| provisions | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Property, | | | 1.8 | | 1.1 | | 1.6 |
| plant and | | | | | | | |
| equipment | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Deferred | 8 | | 65.6 | | 67.4 | | 74.3 |
| assets | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Interest | | | 6.8 | | 6.6 | | 7.7 |
| in | | | | | | | |
| associate | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Other | | | 2.6 | | - | | 0.9 |
| intangible | | | | | | | |
| assets | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Goodwill | | | 23.2 | | 13.2 | | 28.3 |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Total | | | 455.3 | | 473.2 | | 490.3 |
| assets | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Equity | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Share | | | 22.2 | | 22.2 | | 22.2 |
| capital | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Share | | | 111.4 | | 111.4 | | 111.4 |
| premium | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Share | | | 2.9 | | 1.7 | | 2.5 |
| based | | | | | | | |
| payments | | | | | | | |
| reserve | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Retained | | | 87.4 | | 84.9 | | 92.3 |
| earnings | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Total | | | 223.9 | | 220.2 | | 228.4 |
| equity | | | | | | | |
| attributable | | | | | | | |
| to equity | | | | | | | |
| holders | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Liabilities | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Creditors | | | 61.2 | | 64.3 | | 66.8 |
| arising | | | | | | | |
| out of | | | | | | | |
| insurance | | | | | | | |
| operations | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Other | | | 18.0 | | 6.0 | | 25.5 |
| liabilities | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Financial | | | 29.6 | | 32.3 | | 33.3 |
| liabilities | | | | | | | |
| - | | | | | | | |
| borrowings | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Technical | | | 122.6 | | 150.4 | | 136.3 |
| provisions | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Total | | | 231.4 | | 253.0 | | 261.9 |
| liabilities | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Total | | | 455.3 | | 473.2 | | 490.3 |
| liabilities | | | | | | | |
| and equity | | | | | | | |
+--------------+--------+--------+-------------+--------+-------------+--------+-----------+
Condensed consolidated statement of changes in equity
As at 30 June
2010
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| | | | | | | Share | | | | |
| | | | | | | based | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| | | Issued | | Share | | payments | | Retained | | Total |
| | | | | premium | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| | | capital | | reserve | | reserve | | earnings | | |
| | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| | | $m | | $m | | $m | | $m | | $m |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| 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) | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| Balance | | 22.2 | | 111.4 | | 1.7 | | 84.9 | | 220.2 |
| at 1 | | | | | | | | | | |
| July | | | | | | | | | | |
| 2009 | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| Share | | - | | - | | 0.8 | | - | | 0.8 |
| based | | | | | | | | | | |
| payments | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| Dividends | | - | | - | | - | | (0.9) | | (0.9) |
| paid | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| Total | | - | | - | | - | | 8.3 | | 8.3 |
| comprehensive | | | | | | | | | | |
| income for | | | | | | | | | | |
| the period | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| Balance | | 22.2 | | 111.4 | | 2.5 | | 92.3 | | 228.4 |
| at 31 | | | | | | | | | | |
| December | | | | | | | | | | |
| 2009 | | | | | | | | | | |
| (Audited) | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| Balance | | 22.2 | | 111.4 | | 2.5 | | 92.3 | | 228.4 |
| at 1 | | | | | | | | | | |
| January | | | | | | | | | | |
| 2010 | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| Share | | - | | - | | 0.4 | | - | | 0.4 |
| based | | | | | | | | | | |
| payments | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| Dividends | | - | | - | | - | | (4.0) | | (4.0) |
| paid | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| Total | | - | | - | | - | | (0.9) | | (0.9) |
| comprehensive | | | | | | | | | | |
| losses for | | | | | | | | | | |
| the period | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
| Balance | | 22.2 | | 111.4 | | 2.9 | | 87.4 | | 223.9 |
| at 30 | | | | | | | | | | |
| June | | | | | | | | | | |
| 2010 | | | | | | | | | | |
| (Unaudited) | | | | | | | | | | |
+---------------+--------+---------+--------+---------+--------+----------+--------+----------+--------+--------+
Condensed consolidated statement of cash flows
For the period ended 30
June 2010
+---------------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | 6 | | 6 | | 12 |
| | | | months | | months | | months |
+---------------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | 30 | | 30 | | 31 |
| | | | Jun | | Jun | | Dec |
| | | | 2010 | | 2009 | | 2009 |
+---------------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | (Unaudited) | | (Unaudited) | | (Audited) |
| | | | | | | | |
+---------------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | Note | | $m | | $m | | $m |
+---------------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+---------------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Net | 9 | | (14.6) | | (0.7) | | (13.3) |
| cash | | | | | | | |
| used | | | | | | | |
| in | | | | | | | |
| operations | | | | | | | |
+---------------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Investing | | | | | | | |
| activities | | | | | | | |
+---------------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Cash | | | (260.6) | | (337.1) | | (1,718.4) |
| payments | | | | | | | |
| to | | | | | | | |
| acquire | | | | | | | |
| debt | | | | | | | |
| securities | | | | | | | |
+---------------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Cash | | | 310.0 | | 356.1 | | 1,773.5 |
| receipts | | | | | | | |
| from | | | | | | | |
| sale of | | | | | | | |
| debt | | | | | | | |
| securities | | | | | | | |
+---------------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Cash | | | 0.8 | | 5.9 | | 3.0 |
| transferred | | | | | | | |
| from | | | | | | | |
| investing | | | | | | | |
| activities | | | | | | | |
+---------------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Cash | | | 2.8 | | 4.6 | | 8.6 |
| receipts | | | | | | | |
| from | | | | | | | |
| interest | | | | | | | |
+---------------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Purchases | | | (0.6) | | (0.2) | | (6.7) |
| of | | | | | | | |
| property, | | | | | | | |
| plant and | | | | | | | |
| equipment | | | | | | | |
+---------------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Acquisition | | | - | | - | | (8.6) |
| of | | | | | | | |
| subsidiary | | | | | | | |
| net of cash | | | | | | | |
| and cash | | | | | | | |
| equivalents | | | | | | | |
+---------------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Cash | | | 52.4 | | 29.3 | | 51.4 |
| generated | | | | | | | |
| by | | | | | | | |
| investing | | | | | | | |
| activities | | | | | | | |
+---------------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Financing | | | | | | | |
| activities | | | | | | | |
+---------------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Dividends | | | (4.0) | | - | | (0.9) |
| paid | | | | | | | |
+---------------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Proceeds | | | - | | 7.8 | | 1.7 |
| from | | | | | | | |
| financial | | | | | | | |
| borrowings | | | | | | | |
+---------------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Repayments | | | (3.8) | | (43.4) | | (37.0) |
| of | | | | | | | |
| financial | | | | | | | |
| borrowings | | | | | | | |
+---------------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Cash | | | (7.8) | | (35.6) | | (36.2) |
| flows | | | | | | | |
| used | | | | | | | |
| in | | | | | | | |
| financing | | | | | | | |
| activities | | | | | | | |
+---------------------+--------+--------+-------------+--------+-------------+--------+-----------+
| | | | | | | | |
+---------------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Net | | | 30.0 | | (7.0) | | 1.9 |
| increase/(decrease) | | | | | | | |
| in cash and cash | | | | | | | |
| equivalents | | | | | | | |
+---------------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Cash | | | 30.9 | | 29.0 | | 29.0 |
| and | | | | | | | |
| cash | | | | | | | |
| equivalents | | | | | | | |
| at | | | | | | | |
| beginning | | | | | | | |
| of year | | | | | | | |
+---------------------+--------+--------+-------------+--------+-------------+--------+-----------+
| Cash | | | 60.9 | | 22.0 | | 30.9 |
| and | | | | | | | |
| cash | | | | | | | |
| equivalents | | | | | | | |
| at end of | | | | | | | |
| year | | | | | | | |
+---------------------+--------+--------+-------------+--------+-------------+--------+-----------+
Notes to the condensed consolidated financial statements
For the period ended 30 June
2010
1 General information
Tawa plc (the "Company") and its subsidiaries (together the "Group") are engaged
in three principal business activities:
· The acquisition and run-off of insurance companies that have ceased
underwriting;
· The provision of run-off management services to acquired insurance
companies; and
· The provision of insurance services to external clients.
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 2009. 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
2006.
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 23 March 2010 the Financial Services Authority confirmed
that they had no objection to a $35 million capital reduction from subsidiary KX
Re, which 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 2009 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 2009 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.
The interim results have been reviewed by the Group's auditors, Deloitte LLP,
and their review report is set out on page 18.
2 Significant 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 2009.
During the period ended 30 June 2010 the Group adopted the following significant
standards and revisions to standards:
· Amendments to IFRS 2 "Share-based payment" effective for annual periods
beginning on or after 1 January 2010. Amendment for Group cash-settled
share-based payment transactions;
· IFRS 3 (Revised 2008) "Business combinations" effective for annual
periods beginning on or after 1 July 2009. A comprehensive revision on applying
the acquisition method. Consequential amendments to IAS 27 "Consolidated and
separate financial statements", IAS 28 "Investments in associates" and IAS 31
"Interests in joint ventures", effective for annual periods on or after 1 July
2009;
· IFRIC 17 Distributions of non-cash assets to owners effective for annual
periods beginning on or after 1 July 2009; and
· Various annual improvements to IFRSs (2009) effective for annual periods
beginning on or after 1 July 2009 or 1 January 2010.
3 Fair value adjustment
Acquisition of subsidiaries
On 20 November 2009, 100% of the issued share capital of the PRO group of
companies comprising: PRO Insurance Solutions Limited, PRO IS, Inc and
Participant Run-Off (PRO) Iberica, SLU were acquired by the Company. This
transaction has been accounted for by the purchase method of accounting. The net
assets acquired in the transaction, and the goodwill arising, are as follows:
+---------------+--------+-----------+--------+-------------+--------+-------------+
| | | Book | | Fair | | Fair |
| | | value | | value | | value |
| | | | | adjustments | | on |
| | | | | | | acquisition |
+---------------+--------+-----------+--------+-------------+--------+-------------+
| | | $m | | $m | | $m |
+---------------+--------+-----------+--------+-------------+--------+-------------+
| Assets | | | | | | |
+---------------+--------+-----------+--------+-------------+--------+-------------+
| Intangible | | - | | 2.0 | | 2.0 |
| asset | | | | | | |
| acquired | | | | | | |
+---------------+--------+-----------+--------+-------------+--------+-------------+
| Cash | | 0.1 | | - | | 0.1 |
| and | | | | | | |
| cash | | | | | | |
| equivalents | | | | | | |
+---------------+--------+-----------+--------+-------------+--------+-------------+
| Loans | | 13.3 | | - | | 13.3 |
| and | | | | | | |
| receivables | | | | | | |
| including | | | | | | |
| insurance | | | | | | |
| receivables | | | | | | |
+---------------+--------+-----------+--------+-------------+--------+-------------+
| Property, | | 0.8 | | - | | 0.8 |
| plant and | | | | | | |
| equipment | | | | | | |
+---------------+--------+-----------+--------+-------------+--------+-------------+
| Liabilities | | | | | | |
+---------------+--------+-----------+--------+-------------+--------+-------------+
| Other | | (10.0) | | (1.5) | | (11.5) |
| liabilities | | | | | | |
+---------------+--------+-----------+--------+-------------+--------+-------------+
| | | 4.2 | | 0.5 | | 4.7 |
+---------------+--------+-----------+--------+-------------+--------+-------------+
| Consideration | | | | | | 8.7 |
| paid in cash | | | | | | |
+---------------+--------+-----------+--------+-------------+--------+-------------+
| Deferred | | | | | | 5.3 |
| consideration | | | | | | |
| payable | | | | | | |
+---------------+--------+-----------+--------+-------------+--------+-------------+
| Consideration | | | | | | 6.7 |
| paid net of | | | | | | |
| cash and cash | | | | | | |
| equivalents | | | | | | |
+---------------+--------+-----------+--------+-------------+--------+-------------+
| Goodwill | | | | | | 9.3 |
| on | | | | | | |
| acquisition | | | | | | |
+---------------+--------+-----------+--------+-------------+--------+-------------+
The initial accounting for the business combination and amounts recognised in
the 2009 annual financial statements were provisional. The fair values of the
acquired intangible assets were provisional pending the final valuations of
these assets. The fair value exercise to regarding the PRO acquisition has now
been completed.
The deferred consideration of $5.3 million (2009: $9.1 million) has been taken
into account in the calculation of the goodwill and is included in other
liabilities in the statement of financial position. The group now also
recognises an intangible asset of $2.0 million as part of the acquisition.
4 Segmental information
The Group's reportable segments under IFRS 8 are identified as follows:
· Underwriting run-off;
· Run-off management services
· Insurance services (PRO); 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.
Segment income and results
The following is an analysis of the Group's revenue and result by reportable
segment.
+----------------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+-------------+--------+--------+
| | | Under | | Run-off | | Insurance | | Other | | Intra-group | | Total |
| | | - | | manage-ment | | services | | corporate | | | | |
| | | writing | | | | (PRO) | | activities | | | | |
| | | run-off | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+-------------+--------+--------+
| For | | $m | | $m | | $m | | $m | | $m | | $m |
| the | | | | | | | | | | | | |
| period | | | | | | | | | | | | |
| ended | | | | | | | | | | | | |
| 30 | | | | | | | | | | | | |
| June | | | | | | | | | | | | |
| 2010 | | | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+-------------+--------+--------+
| Income | | | | | | | | | | | | |
| continuing | | | | | | | | | | | | |
| operations | | | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+-------------+--------+--------+
| Insurance | | (0.8) | | - | | - | | - | | - | | (0.8) |
| premium | | | | | | | | | | | | |
| expense | | | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+-------------+--------+--------+
| Insurance | | 0.5 | | - | | - | | - | | - | | 0.5 |
| premium | | | | | | | | | | | | |
| ceded to | | | | | | | | | | | | |
| reinsurers | | | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+-------------+--------+--------+
| Net | | (0.3) | | - | | - | | - | | - | | (0.3) |
| earned | | | | | | | | | | | | |
| premium | | | | | | | | | | | | |
| expense | | | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+-------------+--------+--------+
| | | | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+-------------+--------+--------+
| Revenue | | - | | 2.3 | | 22.9 | | 4.0 | | (9.1) | | 20.1 |
| from | | | | | | | | | | | | |
| consultancy | | | | | | | | | | | | |
| and run-off | | | | | | | | | | | | |
| services | | | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+-------------+--------+--------+
| Investment | | 6.4 | | - | | - | | 0.1 | | - | | 6.5 |
| return | | | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+-------------+--------+--------+
| Interest | | 2.3 | | - | | - | | - | | - | | 2.3 |
| income | | | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+-------------+--------+--------+
| Other | | 2.1 | | - | | 1.0 | | 0.1 | | | | 3.2 |
| income | | | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+-------------+--------+--------+
| Segment | | 10.8 | | 2.3 | | 23.9 | | 4.2 | | (9.1) | | 32.1 |
| income | | | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+-------------+--------+--------+
| | | | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+-------------+--------+--------+
| Insurance | | (4.0) | | - | | - | | 2.4 | | - | | (1.6) |
| claims | | | | | | | | | | | | |
| and loss | | | | | | | | | | | | |
| adjustment | | | | | | | | | | | | |
| expenses | | | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+-------------+--------+--------+
| Insurance | | 2.4 | | - | | 0.1 | | (0.5) | | - | | 2.0 |
| claims | | | | | | | | | | | | |
| and loss | | | | | | | | | | | | |
| adjustment | | | | | | | | | | | | |
| expenses | | | | | | | | | | | | |
| recovered | | | | | | | | | | | | |
| from | | | | | | | | | | | | |
| reinsurers | | | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+-------------+--------+--------+
| Net | | (1.6) | | - | | 0.1 | | 1.9 | | - | | 0.4 |
| insurance | | | | | | | | | | | | |
| claims | | | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+-------------+--------+--------+
| | | | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+-------------+--------+--------+
| Cost | | - | | - | | (20.4) | | (4.2) | | 7.9 | | (16.7) |
| of | | | | | | | | | | | | |
| consultancy | | | | | | | | | | | | |
| and run-off | | | | | | | | | | | | |
| services | | | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+-------------+--------+--------+
| Administrative | | (5.1) | | (0.5) | | 0.1 | | (0.6) | | 1.2 | | (4.9) |
| expenses | | | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+-------------+--------+--------+
| Segment | | (5.1) | | (0.5) | | (20.3) | | (4.8) | | 9.1 | | (21.6) |
| expenses | | | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+-------------+--------+--------+
| | | | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+-------------+--------+--------+
| Segment | | 3.8 | | 1.8 | | 3.7 | | 1.3 | | - | | 10.6 |
| results | | | | | | | | | | | | |
| of | | | | | | | | | | | | |
| operating | | | | | | | | | | | | |
| activities | | | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+-------------+--------+--------+
| | | | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+-------------+--------+--------+
| Share | | - | | - | | - | | (0.9) | | - | | (0.9) |
| of | | | | | | | | | | | | |
| results | | | | | | | | | | | | |
| of | | | | | | | | | | | | |
| associate | | | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+-------------+--------+--------+
| Finance | | - | | - | | - | | (2.0) | | - | | (2.0) |
| costs | | | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+-------------+--------+--------+
| Taxation | | - | | - | | (1.3) | | 1.3 | | - | | - |
+----------------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+-------------+--------+--------+
| Loss | | - | | - | | - | | (6.3) | | - | | (6.3) |
| for | | | | | | | | | | | | |
| the | | | | | | | | | | | | |
| period | | | | | | | | | | | | |
| from | | | | | | | | | | | | |
| discontinued | | | | | | | | | | | | |
| operations | | | | | | | | | | | | |
+----------------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+-------------+--------+--------+
| Segment | | 3.8 | | 1.8 | | 2.4 | | (6.6) | | - | | 1.4 |
| 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 | | | | | | | | | | | | |
| 2009 | | | | | | | | | | | | |
+----------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| Income | | | | | | | | | | | | |
| continuing | | | | | | | | | | | | |
| operations | | | | | | | | | | | | |
+----------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| 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 | | | | | | | | | | | | |
| consultancy | | | | | | | | | | | | |
| and run-off | | | | | | | | | | | | |
| services | | | | | | | | | | | | |
+----------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| Investment | | | | (1.0) | | - | | 0.1 | | - | | (0.9) |
| return | | | | | | | | | | | | |
+----------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| Segment | | | | (1.0) | | 11.6 | | 0.3 | | (7.5) | | 3.4 |
| 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 | | | | | | | | | | | | |
| consultancy | | | | | | | | | | | | |
| and 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 | | | | | | | | | | | | |
| impairment | | | | | | | | | | | | |
| of | | | | | | | | | | | | |
| goodwill | | | | | | | | | | | | |
| recognised | | | | | | | | | | | | |
+----------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| | | | | | | | | | | | | |
+----------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| Impairment | | | | - | | (5.0) | | - | | - | | (5.0) |
| of | | | | | | | | | | | | |
| goodwill | | | | | | | | | | | | |
+----------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
| 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 | | | | | | | | | | | | |
+----------------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+-------------+--------+--------+
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 | | Insurance | | Other | | Total |
| | | | | - | | manage-ment | | services | | corporate | | |
| | | | | writing | | | | (PRO) | | activities | | |
| | | | | run-off | | | | | | | | |
+--------------+--------+--------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+---------+
| As at | | | | $m | | $m | | $m | | $m | | $m |
| 30 | | | | | | | | | | | | |
| June | | | | | | | | | | | | |
| 2010 | | | | | | | | | | | | |
+--------------+--------+--------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+---------+
| Segment | | | | 313.1 | | 7.4 | | 17.2 | | 117.6 | | 455.3 |
| assets | | | | | | | | | | | | |
+--------------+--------+--------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+---------+
| Segment | | | | (179.2) | | (2.6) | | (11.3) | | (38.3) | | (231.4) |
| liabilities | | | | | | | | | | | | |
+--------------+--------+--------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+---------+
| Segment | | | | 133.9 | | 4.8 | | 5.9 | | 79.3 | | 223.9 |
| net | | | | | | | | | | | | |
| assets | | | | | | | | | | | | |
+--------------+--------+--------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+---------+
| | | | | | | | | | | | | |
+--------------+--------+--------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+---------+
| Capital | | | | - | | - | | (0.8) | | - | | (0.8) |
| expenditure | | | | | | | | | | | | |
+--------------+--------+--------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+---------+
| Depreciation | | | | - | | - | | (0.2) | | - | | (0.2) |
+--------------+--------+--------+--------+---------+--------+-------------+--------+-----------+--------+------------+--------+---------+
| 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 | | | | | | | | | | | | |
| 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) |
+--------------+--------+--------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+---------+
| Impairment | | | | | | - | | (5.0) | | - | | (5.0) |
| of | | | | | | | | | | | | |
| goodwill | | | | | | | | | | | | |
+--------------+--------+--------+--------+--------+--------+---------+--------+-------------+--------+------------+--------+---------+
| Amortisation | | | | | | - | | - | | 1.9 | | 1.9 |
| 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 | | | | | | | | | | | | |
| 2010 | | | | | | | | | | | | |
+---------+--------+--------+--------+--------+--------+--------+--------+------------+--------+---------+--------+------------+
| Segment | | | | | | | | 29.9 | | 1.9 | | 31.8 |
| revenue | | | | | | | | | | | | |
+---------+--------+--------+--------+--------+--------+--------+--------+------------+--------+---------+--------+------------+
| Segment | | | | | | | | 152.8 | | 71.1 | | 223.9 |
| net | | | | | | | | | | | | |
| assets | | | | | | | | | | | | |
+---------+--------+--------+--------+--------+--------+--------+--------+------------+--------+---------+--------+------------+
| | | | | | | | | | | | | |
+---------+--------+--------+--------+--------+--------+--------+--------+------------+--------+---------+--------+------------+
| | | | | | | | | 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 | | | | | | | | | | | | |
+---------+--------+--------+--------+--------+--------+--------+--------+------------+--------+---------+--------+------------+
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.
5 Discontinued operation
On 21 March 2006, the Company sold a significant proportion (87.35%) of its "A"
shareholding in CX Re 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 | | 30 | | 31 |
| | | | Jun | | Jun | | Dec |
| | | | 2010 | | 2009 | | 2009 |
+---------------+--------+--------+---------+--------+--------+--------+---------+
| | | | $m | | $m | | $m |
+---------------+--------+--------+---------+--------+--------+--------+---------+
| (Loss)/profit | | | (6.3) | | 4.4 | | 12.1 |
| on sale of | | | | | | | |
| investment | | | | | | | |
+---------------+--------+--------+---------+--------+--------+--------+---------+
| (Loss)/profit | | | (6.3) | | 4.4 | | 12.1 |
| for the year | | | | | | | |
+---------------+--------+--------+---------+--------+--------+--------+---------+
6 Earnings per share
+---------------+--------+--------+-------------+--------+-------------+--------+-------------+
| | | | 30 | | 30 | | 31 |
| | | | Jun | | Jun | | Dec |
| | | | 2010 | | 2009 | | 2009 |
+---------------+--------+--------+-------------+--------+-------------+--------+-------------+
| Earnings | | | $m | | $m | | $m |
+---------------+--------+--------+-------------+--------+-------------+--------+-------------+
| Earnings | | | 1.4 | | 2.3 | | 11.2 |
| for the | | | | | | | |
| purposes | | | | | | | |
| of basic | | | | | | | |
| earnings | | | | | | | |
| per | | | | | | | |
| share | | | | | | | |
| from | | | | | | | |
| continuing | | | | | | | |
| and | | | | | | | |
| discontinued | | | | | | | |
| operations | | | | | | | |
| being net | | | | | | | |
| profit | | | | | | | |
| attributable | | | | | | | |
| to equity | | | | | | | |
| holders of | | | | | | | |
| the Group | | | | | | | |
+---------------+--------+--------+-------------+--------+-------------+--------+-------------+
| Earnings | | | 7.7 | | (2.1) | | (0.9) |
| for the | | | | | | | |
| purposes | | | | | | | |
| of basic | | | | | | | |
| earnings | | | | | | | |
| per | | | | | | | |
| share | | | | | | | |
| from | | | | | | | |
| continuing | | | | | | | |
| operations | | | | | | | |
| being net | | | | | | | |
| profit/(loss) | | | | | | | |
| attributable | | | | | | | |
| to equity | | | | | | | |
| holders of | | | | | | | |
| the Group | | | | | | | |
+---------------+--------+--------+-------------+--------+-------------+--------+-------------+
| | | | | | | | |
+---------------+--------+--------+-------------+--------+-------------+--------+-------------+
| Number | | | | | | | |
| of | | | | | | | |
| shares | | | | | | | |
+---------------+--------+--------+-------------+--------+-------------+--------+-------------+
| Weighted | | | 112,987,164 | | 112,987,164 | | 112,987,164 |
| average | | | | | | | |
| number | | | | | | | |
| of | | | | | | | |
| Ordinary | | | | | | | |
| Shares | | | | | | | |
| for the | | | | | | | |
| purposes | | | | | | | |
| of basic | | | | | | | |
| earnings | | | | | | | |
| per | | | | | | | |
| share | | | | | | | |
+---------------+--------+--------+-------------+--------+-------------+--------+-------------+
| Effect | | | 6,378,232 | | 4,435,532 | | 5,116,563 |
| of | | | | | | | |
| dilutive | | | | | | | |
| potential | | | | | | | |
| Ordinary | | | | | | | |
| Shares: | | | | | | | |
| Share | | | | | | | |
| options | | | | | | | |
+---------------+--------+--------+-------------+--------+-------------+--------+-------------+
| Weighted | | 119,365,396 | | 117,422,696 | | 118,103,727 |
| average number | | | | | | |
| of Ordinary | | | | | | |
| Shares for the | | | | | | |
| purposes of | | | | | | |
| diluted | | | | | | |
| earnings per | | | | | | |
| share | | | | | | |
+------------------------+--------+-------------+--------+-------------+--------+-------------+
| | | | | | | | |
+---------------+--------+--------+-------------+--------+-------------+--------+-------------+
| Basic | | | $ | | $ | | $ |
| earnings | | | | | | | |
| per | | | | | | | |
| share | | | | | | | |
+---------------+--------+--------+-------------+--------+-------------+--------+-------------+
| | | | | | | | |
+---------------+--------+--------+-------------+--------+-------------+--------+-------------+
| From | | | | | | | |
| continuing | | | | | | | |
| and | | | | | | | |
| discontinued | | | | | | | |
| operations | | | | | | | |
+---------------+--------+--------+-------------+--------+-------------+--------+-------------+
| Basic: | | | 0.0124 | | 0.0204 | | 0.0991 |
| Ordinary | | | | | | | |
| Shares | | | | | | | |
| ($ per | | | | | | | |
| share) | | | | | | | |
+---------------+--------+--------+-------------+--------+-------------+--------+-------------+
| Diluted: | | | 0.0117 | | 0.0196 | | 0.0948 |
| Ordinary | | | | | | | |
| Shares | | | | | | | |
| ($ per | | | | | | | |
| share) | | | | | | | |
+---------------+--------+--------+-------------+--------+-------------+--------+-------------+
| | | | | | | | |
+---------------+--------+--------+-------------+--------+-------------+--------+-------------+
| From | | | | | | | |
| continuing | | | | | | | |
| operations | | | | | | | |
+---------------+--------+--------+-------------+--------+-------------+--------+-------------+
| Basic: | | | 0.0681 | | (0.0186) | | (0.0080) |
| Ordinary | | | | | | | |
| Shares | | | | | | | |
| ($ per | | | | | | | |
| share) | | | | | | | |
+---------------+--------+--------+-------------+--------+-------------+--------+-------------+
| Diluted: | | | 0.0645 | | (0.0179) | | (0.0076) |
| Ordinary | | | | | | | |
| Shares | | | | | | | |
| ($ per | | | | | | | |
| share) | | | | | | | |
+---------------+--------+--------+-------------+--------+-------------+--------+-------------+
7 Dividends
The Group does not propose the payment of a dividend to the shareholders in
relation to the interim period (Jun 2009: nil).
8 Deferred assets
Deferred assets relate to the consideration outstanding on the disposal of a
subsidiary CX Re, as described in note 5, and a transaction facilitation fee.
Part of the deferred consideration is related to the net asset value of CX Re
and is subject to net asset value adjustments through the income statement.
+---------------+--------+--------+--------+--------+--------+--------+--------+
| | | | 30 | | 30 | | 31 |
| | | | Jun | | Jun | | Dec |
| | | | 2010 | | 2009 | | 2009 |
+---------------+--------+--------+--------+--------+--------+--------+--------+
| | | | $m | | $m | | $m |
+---------------+--------+--------+--------+--------+--------+--------+--------+
| Facilitation | | | 18.5 | | 20.6 | | 20.8 |
| fee | | | | | | | |
+---------------+--------+--------+--------+--------+--------+--------+--------+
| Deferred | | | 47.1 | | 46.8 | | 53.5 |
| consideration | | | | | | | |
+---------------+--------+--------+--------+--------+--------+--------+--------+
| Deferred | | | 65.6 | | 67.4 | | 74.3 |
| assets | | | | | | | |
+---------------+--------+--------+--------+--------+--------+--------+--------+
9 Cash used in operating activities
+---------------------+--------+----------+----------+--------+--------+----------+----------+--------+--------+----------+----------+--------+
| | | 6 months to 30 Jun 2010 | | 6 months to 30 Jun 2009 | | 12 months to 31 Dec 2009 |
+---------------------+--------+------------------------------+--------+------------------------------+--------+------------------------------+
| | | Contin- | Discon- | Total | | Contin- | Discon- | Total | | Contin- | Discon- | Total |
| | | uing | tinued | | | uing | tinued | | | uing | tinued | |
+---------------------+--------+----------+----------+--------+--------+----------+----------+--------+--------+----------+----------+--------+
| | | $m | $m | $m | | $m | $m | $m | | $m | $m | $m |
+---------------------+--------+----------+----------+--------+--------+----------+----------+--------+--------+----------+----------+--------+
| Profit/(loss) | | 7.7 | (6.3) | 1.4 | | (2.1) | 4.4 | 2.3 | | (0.9) | 12.1 | 11.2 |
| for the year | | | | | | | | | | | | |
+---------------------+--------+----------+----------+--------+--------+----------+----------+--------+--------+----------+----------+--------+
| Adjustments | | | | | | | | | | | | |
| for: | | | | | | | | | | | | |
+---------------------+--------+----------+----------+--------+--------+----------+----------+--------+--------+----------+----------+--------+
| - | | 0.9 | - | 0.9 | | (0.6) | - | (0.6) | | (1.8) | - | (1.8) |
| share | | | | | | | | | | | | |
| of | | | | | | | | | | | | |
| results | | | | | | | | | | | | |
| of | | | | | | | | | | | | |
| associate | | | | | | | | | | | | |
+---------------------+--------+----------+----------+--------+--------+----------+----------+--------+--------+----------+----------+--------+
| - | | - | 6.3 | 6.3 | | - | (4.4) | (4.4) | | - | (12.1) | (12.1) |
| discontinued | | | | | | | | | | | | |
| operations | | | | | | | | | | | | |
+---------------------+--------+----------+----------+--------+--------+----------+----------+--------+--------+----------+----------+--------+
| - | | - | - | - | | 5.0 | - | 5.0 | | 5.0 | - | 5.0 |
| impairment | | | | | | | | | | | | |
| of | | | | | | | | | | | | |
| goodwill | | | | | | | | | | | | |
+---------------------+--------+----------+----------+--------+--------+----------+----------+--------+--------+----------+----------+--------+
| - | | (3.4) | - | (3.4) | | (4.4) | - | (4.4) | | (8.2) | - | (8.2) |
| investment | | | | | | | | | | | | |
| return for | | | | | | | | | | | | |
| the year | | | | | | | | | | | | |
| transferred | | | | | | | | | | | | |
| to | | | | | | | | | | | | |
| investing | | | | | | | | | | | | |
| activities | | | | | | | | | | | | |
+---------------------+--------+----------+----------+--------+--------+----------+----------+--------+--------+----------+----------+--------+
| - | | (0.1) | - | (0.1) | | (0.5) | - | (0.5) | | (0.4) | - | (0.4) |
| realised | | | | | | | | | | | | |
| gains on | | | | | | | | | | | | |
| investments | | | | | | | | | | | | |
+---------------------+--------+----------+----------+--------+--------+----------+----------+--------+--------+----------+----------+--------+
| - | | (3.0) | - | (3.0) | | 5.8 | - | 5.8 | | 5.9 | - | 5.9 |
| unrealised | | | | | | | | | | | | |
| (gains)/losses | | | | | | | | | | | | |
| on investments | | | | | | | | | | | | |
+---------------------+--------+----------+----------+--------+--------+----------+----------+--------+--------+----------+----------+--------+
| - | | 2.0 | - | 2.0 | | 1.9 | - | 1.9 | | 4.9 | - | 4.9 |
| finance | | | | | | | | | | | | |
| costs | | | | | | | | | | | | |
+---------------------+--------+----------+----------+--------+--------+----------+----------+--------+--------+----------+----------+--------+
| - | | 0.2 | - | 0.2 | | 0.2 | - | 0.2 | | 6.1 | - | 6.1 |
| depreciation | | | | | | | | | | | | |
+---------------------+--------+----------+----------+--------+--------+----------+----------+--------+--------+----------+----------+--------+
| - | | 0.4 | - | 0.4 | | 0.4 | - | 0.4 | | 1.2 | - | 1.2 |
| share | | | | | | | | | | | | |
| based | | | | | | | | | | | | |
| payment | | | | | | | | | | | | |
| expense | | | | | | | | | | | | |
+---------------------+--------+----------+----------+--------+--------+----------+----------+--------+--------+----------+----------+--------+
| - | | (1.9) | - | (1.9) | | (1.9) | - | (1.9) | | (3.8) | - | (3.8) |
| amortisation | | | | | | | | | | | | |
| of risk | | | | | | | | | | | | |
| premium | | | | | | | | | | | | |
+---------------------+--------+----------+----------+--------+--------+----------+----------+--------+--------+----------+----------+--------+
| - | | (0.3) | | (0.3) | | - | - | - | | - | - | - |
| amortisation | | | | | | | | | | | | |
| of | | | | | | | | | | | | |
| intangible | | | | | | | | | | | | |
| asset | | | | | | | | | | | | |
+---------------------+--------+----------+----------+--------+--------+----------+----------+--------+--------+----------+----------+--------+
| - | | 4.1 | | 4.1 | | - | - | - | | - | - | - |
| adjustment | | | | | | | | | | | | |
| to | | | | | | | | | | | | |
| amortised | | | | | | | | | | | | |
| cost | | | | | | | | | | | | |
+---------------------+--------+----------+----------+--------+--------+----------+----------+--------+--------+----------+----------+--------+
| - | | (2.3) | - | (2.3) | | 2.9 | - | 2.9 | | (2.3) | - | (2.3) |
| other | | | | | | | | | | | | |
| gains | | | | | | | | | | | | |
| and | | | | | | | | | | | | |
| losses | | | | | | | | | | | | |
+---------------------+--------+----------+----------+--------+--------+----------+----------+--------+--------+----------+----------+--------+
| | | 4.3 | - | 4.3 | | 6.7 | - | 6.7 | | 5.7 | - | 5.7 |
+---------------------+--------+----------+----------+--------+--------+----------+----------+--------+--------+----------+----------+--------+
| Change in operating | | | | | | | | | | |
| assets and liabilities | | | | | | | | | | |
+-----------------------------------------+----------+--------+--------+----------+----------+--------+--------+----------+----------+--------+
| Net | | (0.6) | - | (0.6) | | (17.8) | - | (17.8) | | (27.1) | - | (27.1) |
| increase | | | | | | | | | | | | |
| in | | | | | | | | | | | | |
| insurance | | | | | | | | | | | | |
| receivables | | | | | | | | | | | | |
| and | | | | | | | | | | | | |
| liabilities | | | | | | | | | | | | |
+---------------------+--------+----------+----------+--------+--------+----------+----------+--------+--------+----------+----------+--------+
| Net | | (8.8) | - | (8.8) | | 15.1 | - | 15.1 | | 16.2 | - | 16.2 |
| (decrease)/increase | | | | | | | | | | | | |
| in loans and | | | | | | | | | | | | |
| receivables | | | | | | | | | | | | |
+---------------------+--------+----------+----------+--------+--------+----------+----------+--------+--------+----------+----------+--------+
| Net | | (7.5) | - | (7.5) | | (2.9) | - | (2.9) | | (4.0) | - | (4.0) |
| decrease | | | | | | | | | | | | |
| in other | | | | | | | | | | | | |
| operating | | | | | | | | | | | | |
| liabilities | | | | | | | | | | | | |
+---------------------+--------+----------+----------+--------+--------+----------+----------+--------+--------+----------+----------+--------+
| Cash | | (12.6) | - | (12.6) | | 1.1 | - | 1.1 | | (9.2) | - | (9.2) |
| (used | | | | | | | | | | | | |
| in)/generated | | | | | | | | | | | | |
| by operations | | | | | | | | | | | | |
+---------------------+--------+----------+----------+--------+--------+----------+----------+--------+--------+----------+----------+--------+
| | | | | | | | | | | | | |
+---------------------+--------+----------+----------+--------+--------+----------+----------+--------+--------+----------+----------+--------+
| Finance | | (2.0) | - | (2.0) | | (1.8) | - | (1.8) | | (4.1) | - | (4.1) |
| costs | | | | | | | | | | | | |
+---------------------+--------+----------+----------+--------+--------+----------+----------+--------+--------+----------+----------+--------+
| Net | | (14.6) | - | (14.6) | | (0.7) | - | (0.7) | | (13.3) | - | (13.3) |
| cash | | | | | | | | | | | | |
| used | | | | | | | | | | | | |
| in | | | | | | | | | | | | |
| operations | | | | | | | | | | | | |
+---------------------+--------+----------+----------+--------+--------+----------+----------+--------+--------+----------+----------+--------+
10 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.
Trading transactions
Tawa Management Limited provides 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.
During the year Group companies entered into the following transactions with
related parties who are not members of the Group:
+-------------+--------+--------+--------+--------+--------+--------+--------+
| | | | Group income received |
+-------------+--------+--------+--------------------------------------------+
| | | | 30 Jun | | 30 Jun | | 31 Dec |
| | | | 2010 | | 2009 | | 2009 |
+-------------+--------+--------+--------+--------+--------+--------+--------+
| | | | $m | | $m | | $m |
+-------------+--------+--------+--------+--------+--------+--------+--------+
| From | | | 1.3 | | 1.5 | | 3.0 |
| associate | | | | | | | |
| CX Re for | | | | | | | |
| a | | | | | | | |
| management | | | | | | | |
| fee | | | | | | | |
+-------------+--------+--------+--------+--------+--------+--------+--------+
| From | | | 4.1 | | 3.1 | | 6.5 |
| associate | | | | | | | |
| CX Re for | | | | | | | |
| expenses | | | | | | | |
| recharged | | | | | | | |
+-------------+--------+--------+--------+--------+--------+--------+--------+
| From | | | - | | 0.2 | | 0.1 |
| associate | | | | | | | |
| CX Re for | | | | | | | |
| consultancy | | | | | | | |
| fees | | | | | | | |
+-------------+--------+--------+--------+--------+--------+--------+--------+
| | | | 5.4 | | 4.8 | | 9.6 |
+-------------+--------+--------+--------+--------+--------+--------+--------+
The following amounts were outstanding:
+-----------+--------+--------+--------+--------+--------+--------+--------+
| | | | Amounts owed (to) / from related parties |
+-----------+--------+--------+--------------------------------------------+
| | | | 30 Jun | | 30 Jun | | 31 Dec |
| | | | 2010 | | 2009 | | 2009 |
+-----------+--------+--------+--------+--------+--------+--------+--------+
| | | | $m | | $m | | $m |
+-----------+--------+--------+--------+--------+--------+--------+--------+
| Amounts | | | 2.7 | | 0.2 | | 0.4 |
| due | | | | | | | |
| from | | | | | | | |
| associate | | | | | | | |
| CX Re | | | | | | | |
+-----------+--------+--------+--------+--------+--------+--------+--------+
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.
+-----------------+--------+--------+--------+--------+--------+--------+--------+
| Remuneration | | | | | | | |
| of key | | | | | | | |
| management | | | | | | | |
| included in | | | | | | | |
| income | | | | | | | |
| statement | | | | | | | |
+-----------------+--------+--------+--------+--------+--------+--------+--------+
| | | | 30 Jun | | 30 Jun | | 31 Dec |
| | | | 2010 | | 2009 | | 2009 |
+-----------------+--------+--------+--------+--------+--------+--------+--------+
| | | | $m | | $m | | $m |
+-----------------+--------+--------+--------+--------+--------+--------+--------+
| Short-term | | | 3.6 | | 2.7 | | 5.2 |
| employee | | | | | | | |
| benefits | | | | | | | |
+-----------------+--------+--------+--------+--------+--------+--------+--------+
| Post-employment | | | 0.3 | | 0.4 | | 0.7 |
| benefits | | | | | | | |
+-----------------+--------+--------+--------+--------+--------+--------+--------+
| Termination | | | - | | 0.1 | | 0.1 |
| benefits | | | | | | | |
+-----------------+--------+--------+--------+--------+--------+--------+--------+
| Share | | | 0.4 | | 0.3 | | 0.9 |
| based | | | | | | | |
| payments | | | | | | | |
+-----------------+--------+--------+--------+--------+--------+--------+--------+
| Management | | | 4.3 | | 3.5 | | 6.9 |
| remuneration | | | | | | | |
+-----------------+--------+--------+--------+--------+--------+--------+--------+
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.
11 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 2010 (30 Jun 2009 and 31 Dec 2009: no
contingent liabilities).
12 Events after reporting period
On 20th August 2010 the Group announced the acquisition of 94.3% of the shares
of Island Capital Ltd for an initial consideration of $7.4m. It is intended that
the acquisition will be financed from Tawa's existing cash resources. The
transaction is subject to regulatory approval from the Bermuda Monetary
Authority and the FSA. It is expected that such approval should be obtained by
the year end.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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