TIDMTAW
RNS Number : 6918M
Tawa PLC
20 September 2012
PRESS RELEASE 20 SEPTEMBER 2012
FOR IMMEDIATE RELEASE
INTERIM RESULTS ANNOUNCEMENT
Tawa plc
Interim results for the six months ended 30 June 2012
Tawa on the move!
Tawa plc ("Tawa" or "the Group") today announces unaudited
interim results for the six months ended 30 June 2012.
Activity Highlights
-- On track for the 2012 plan;
-- GBP GBP14 million released from the tax escrow;
-- On 26 January 2012, the consortium comprising Tawa plc,
Skuld, and Paraline Group Limited completed the acquisition of
Whittington Insurance Markets Limited (now Asta Capital
Limited);
-- On 19 April 2012, Tawa completed the acquisition of Hamburger
Internationale Rückversicherung ("HIR"), the holding company for
the Chiltington group of companies;
-- On 5 June 2012 Swiss Re transferred 74% of its shares of ASS Assekuranz Service-und Sachverständigen GmbH ("ASS") to Chiltington International Holding GmbH (73%) and Pro Insurance Solutions Limited (1%). ASS is a specialised service provider in disability claims handling. Swiss Re will retain 26% of the shares.
Finance Highlights
-- Reduced loss for the half year: $6.5 million (30 June 2011:
loss $9.8 million excluding profit on set-up of QX Re); majority
linked to continued investment in incubators;
-- Positive earnings from risk carriers aggregated of $1.6
million (30 June 2011: loss $5.8 million excluding QX Re profits of
$20.9 million);
-- Downscaling of risk carriers reserves of $16 million,
including $12 million for associate CX Re;
-- Group net assets: $193.3 million (31 December 2011: $198.2 million); and
-- Net assets per share in US dollars : $1.70 /GBP1.10per share
(31 December 2011: $1.75 / GBP1.13);
Tawa set its goal for 2012 of focussing on volatility reduction,
portfolio downscaling and potential sales of some assets. The
positive contribution from the risk carriers vindicates this
strategy. The balance of the lower income from Pro from its legacy
business, continuing investment into the incubators to support Q360
and Lodestar Marine start-ups and the one-off acquisition expenses
of Asta are, as expected, still affecting this half year's
financial results. Management remain positive that these
investments will deliver financial growth and provide a platform
for further opportunities in the future.
Gilles Erulin, Chief Executive, commented:
"Tawa is on the move. On the move potentially as to its
shareholders, but also internally. We have set ourselves a
challenging and exciting road map for this year and we are on
target for its key components, such as divestment, burn rate
reduction and internal reorganization. We welcome success such as
extraction from the tax assets, launch of Lodestar Marine and 45
percent growth on new clients' billings. Meanwhile we remain
focused on our service division EBITDA generation which remains
insufficient in aggregate. We are in the middle of the transition
phase and we are very optimistic for the prospects of the platform
we have created."
--ENDS-
Enquiries:
Gilles Erulin, Chief Executive, Tawa plc 020 7068 8000
Victoria Sisson or Alexandra Thompson, FWD 020 7623 2368
James Britton, or Guy Wiehahn, Peel Hunt (Nominated
Adviser and Broker) 020 7418 8900
Notes for Editors:
Tawa plc was formed in 2001 and is a specialised investor in the
insurance industry. In the last few years, Tawa has moved from
being a pure run-off risk owner towards being a multi-segment
investor in the insurance market, expanding significantly in the
servicing arena of the international insurance industry.
Tawa invests in acquiring run-off portfolios ("Portfolios",
"Risk Carriers") and investing in servicing business. The Group
also operates as an incubator for new projects and has invested
alongside professional teams to create two new businesses, Q360 and
Lodestar Marine, in addition to developing its own products to
serve the insurance market as a whole such as STRIPE(R) .
On the portfolio front, Tawa has acquired, since its formation,
six insurance entities in run-off - CX Reinsurance Company Limited,
KX Reinsurance Company Limited, LGIC Holdings, LLC, PXRE
Reinsurance Company, Island Capital Limited and OX Reinsurance
Company Limited. As an alternative technique to assuming run-off
risks, Tawa has also established a dedicated reinsurance vehicle in
Bermuda to reinsure portfolios. On the service side, Tawa acquired
Pro Insurance Solutions Ltd (Pro) in 2009 and the HIR group in
April 2012. HIR owns the Chiltington Consulting Group. Through HIR,
Tawa now offers a vehicle for European run-off portfolio transfers
under the European Union portfolio transfer directive.
The Group's combined team of approximately 400 professionals
service a number of the largest insurance businesses in the UK and
Europe and deliver a market-wide third-party servicing capability
and cover London's company and Lloyd's markets as well as Europe,
Bermuda, South America and the USA. The service companies provide
underwriting, claims management, broking and consulting services to
a broad array of international clients across the insurance market,
whether active underwriters or run-off. Pro has also established an
innovative platform to provide turnkey services supporting clients
wishing for immediate start of a new broking or MGA venture.
As part of its expansion in the Lloyd's market, in January 2012,
Tawa became the owner of 33% of Asta Capital Limited, the leading
turnkey agency management services company in Lloyd's.
In July 2007 Tawa plc was floated on the AIM market.
Further information can be found on the Company's website:
www.tawaplc.co.uk.
Tawa plc is listed on the AIM market.
Interim results
Highlights
Since the beginning of the year Tawa plcs ("Tawa") energy
regarding the run-off portfolio has been focused on volatility
reduction, portfolio downscaling and potential sales of some
assets. On the Servicing side efforts are oriented towards
generating profitable growth, integration of our platforms across
the various subsidiaries and regions, and cost synergies. Results
of those work streams do not yet compensate for the expense of the
continuing investment in the recent start-ups, nor the cost of
closing prior year acquisitions. The Group has continued to expand
during this half year and management remain positive that these
investments will deliver financial growth and provide a platform
for further opportunities in the future.
Summary of 2012 interim financial results: 30 Jun 2012 $m 30 Jun 2011 $m 31 Dec 2011 $m
------------------- ---------------- ----------------
External revenue 16.1 17.9 35.4
Profit recognised following set-up of QX Re - 20.9 7.8
(Loss)/profit for the period (6.5) (9.8) (29.4)
Group surplus 193.3 234.6 198.2
-- Loss for the period attributable to owners of the Company was
$6.5 million (30 June 2011: loss $9.8 million excluding profit on
set-up of QX Re);
-- The Group's total equity has decreased by $4.9 million since
31 December 2011 to $193.3 million as at 30 June 2012;
-- Net assets per share in sterling decreased from GBP1.13 to
GBP1.10 ($ decreased from $1.75 to $1.70);
-- The Group's net tangible assets are $167.4 million (31 December 2011: $173.5 million).
On 26 January 2012, a consortium comprising Tawa plc, Skuld, and
Paraline Group Limited completed the acquisition of Whittington
Insurance Markets Limited. The company has since been renamed Asta
Insurance Markets Limited under a new holding company set up by the
consortium named Asta Capital Limited ("Asta"). This transaction
provides Tawa with a platform through which to expand its range of
services to the Lloyd's market. Asta is the leading franchise in
the Lloyd's agency management market and provides the Group with
real scale as a provider of insurance services to the live market.
This is highly complementary with the range of consulting and
outsourcing services currently provided through Pro. This half
year, the positive earnings of Asta managing agency of $1.8 million
have been offset by initial acquisition costs and IFRS adjustments
of $2.6 million resulting in a $0.8 million net loss accruing to
group consolidated accounts.
On 20 April 2012, Tawa completed the acquisition of Hamburger
Internationale Rückversicherung ("HIR"), the holding company for
the Chiltington group of companies ("Chiltington"). Chiltington
provides consultancy and outsource services to the international
(re)insurance industry. While strengthening Tawa's UK and US units,
this transaction provides a strong footprint in Continental Europe
and a unique platform of insurance consulting in South America.
Also, through HIR, Tawa now offers a vehicle for European run-off
portfolio transfers under the European Union portfolio transfer
directive such as the Austrian Oberoesterreichische portfolio
received in May 2012, following the Sparkassen portfolio received
in late 2011.
Financial review
During the first six months of 2012, Tawa recognised net losses
of $6.5 million compared to net profits of $11.1 million in the six
months to 30 June 2011. The half-year 2011 figures benefited from
the recognition of an immediate profit of $20.9 million following
the set-up of QX Reinsurance Company Limited ("QX Re"). During the
period Group net assets decreased by $4.9 million, from $198.2
million ($1.75/GBP1.13 per share) at 31 December 2011 to $193.3
million ($1.70/GBP1.10 per share) at 30 June 2012 mainly as a
result of investment in new or recently acquired business.
Dividend and dividend policy
No dividend will be distributed in 2012 in relation to the
results for the 2011 financial year. The Group does not propose the
payment of a dividend to shareholders in relation to the six month
period to 30 June 2012 (June 2011: nil).
Operational results
Tawa has the following divisions with clearly identified lines
of business, namely:
-- Risk carriers/insurance divisionwhich holds the acquired
insurance entities in run-off (the risk carriers). Profitability is
achieved by effectively managing these assets and liabilities;
-- Service providers which comprise a platform that generates
income from both consulting and outsourcing. Consulting typically
includes work provided directly for clients and the outsourcing
division includes work done on behalf of clients on our operating
platform; and
-- Corporate division which comprises incubators, all group
overheads, corporate costs, acquisition activities and
financing.
Risk carriers/insurance division
Tawa generates value from run-offs in a variety of ways,
depending on the nature of each run-off entity in question. These
strategies include:
-- Buying net assets at a significant discount to economic value
and accelerating capital extraction; and
-- Buying volatile books of business and applying its management
techniques to create value and reduce volatility.
This division comprises the results from the following run-off
companies in which Tawa held the following interests at the
reporting date:
Place of incorporation (or registration)
Name of subsidiary and operation Portion of ownership interest
------------------------------------------ ------------------------------------------ ------------------------------
KX Reinsurance Company Limited ("KX
Re") Great Britain 100%
PXRE Reinsurance Company ("PXRE") United States Connecticut 100%
Hamburger Internationale
Rückversicherung ("HIR") Germany 100%
Island Capital Ltd ("ICL") Bermuda 94.30%
Island Capital (Europe) Ltd ("ICE") Great Britain 94.30%
OX Reinsurance Company Limited ("OX
Re") Great Britain 100%
Pavant International Re S.A ("PIR") France 100%
QX Reinsurance Company Limited ("QX
Re") Bermuda 100%
Name of Associate
------------------------------------------ ------------------------------------------ ------------------------------
CX Reinsurance Company Limited ("CX
Re") Great Britain 12.65%
CX Re was initially a subsidiary of the Group but on 21 March
2006 Tawa disposed of 87.35% of its shareholding. In accordance
with IFRS, the retained shareholding of 12.65% has been accounted
for as an associate since that date. Although the Company disposed
of 87.35% of CX Re the deferred consideration receivable on the
sale will reflect the current net asset value of CX Re. As at 30
June 2012, the total deferred consideration was $48.0 million (June
2011: $61.9 million / December 2011: $53.8 million).
The risk carriers' net profit of $1.9 million (June 2011: loss
of $5.8 million), excluding taxation which is subject to group
relief and any intergroup fees which are eliminated on
consolidation, is summarised below:
Group risk carriers Associate
--------------------------------------------------------------------------------------------------------------------- ----------------
KX Re PXRE ICG (1) OX Re QX Re Total Group CX Re 30 Jun 2012 30 Jun 2011 (2)
$m $m $m $m $m $m $m $m $m
--------------- ------------------- ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ---------------- --------------------
Results
ALM results 0.7 0.3 0.4 0.1 1.1 2.6 0.7 3.3 3.0
Premium and
other income 2.1 (0.1) 0.1 - - 2.1 (1.1) 1.0 1.8
Liability
management (1.4) 0.4 (0.5) - (0.3) (1.8) 0.7 (1.1) (8.1)
Other (0.6) (0.5) - (0.1) (0.1) (1.3) - (1.3) (2.5)
------------------- ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ---------------- --------------------
Group
profit/(loss)
for the year 0.8 0.1 - - 0.7 1.6 0.3 1.9 (5.8)
Group relief
payment of
surrendered
losses (2.0) - - - - (2.0) - (2.0) -
Intergroup
fees
eliminated on
consolidation (1.0) - - - - (1.0) (0.6) (1.6) (2.3)
------------------- ------------------ ------------------ ------------------ ------------------ ---------------- ---------------- ---------------- --------------------
Segmental
profit/(loss)
for the year (2.2) 0.1 - - 0.7 (1.4) (0.3) (1.7) (8.1)
Capital
extracted - - - (2.4) - (2.4) - (2.4) (22.8)
(1) ICG includes the results of ICL and ICE.
(2) The 30 June 2011 comparative excludes the profit of $20.9
million recognised following the set-up of QX Re.
A dividend of $2.4 million was paid by OX Re during the
period.
Service providers
Tawa's servicing platform comprises income from both consulting
and outsourcing. Consulting typically refers to work provided
directly to clients and the outsourcing division refers to work
Tawa does on behalf of clients on its operating platform.
This division comprises the results from the following service
companies, in which Tawa had the following interests at the
reporting date:
Place of incorporation (or registration)
Name of subsidiary and operation Portion of ownership interest
------------------------------------------ ------------------------------------------ ------------------------------
Pro Insurance Solutions Limited
("Pro") Great Britain 100%
Pro IS, Inc ("Pro IS") United States Delaware 100%
Tawa Consulting Limited ("TCL") Great Britain 100%
Chiltington group of companies
("Chiltington") (1) Various 100%
(1) Chiltington group of companies reported under this segment
comprises all entities listed in Note 4, with the exception of the
risk carriers HIR and PIR.
The service providers' net profit of $0.6 million, excluding any
taxation which will be eliminated on consolidation under group
relief, is summarised below:
Pro (1) TCL 30 Jun 2012 30 Jun 2011
$m $m $m $m
--------------------------------------- ------------------- ------------------ ---------------- ------------------
Results
Revenue from services 13.4 0.2 13.6 15.2
Other income 2.1 - 2.1 1.3
Cost of services (14.9) (0.2) (15.1) (13.2)
------------------- ------------------ ---------------- ------------------
Group profit for the year 0.6 - 0.6 3.3
Taxation eliminated under Group relief (0.3) - (0.3) (0.9)
------------------- ------------------ ---------------- ------------------
Segmental profit for the year 0.3 - 0.3 2.4
Capital extracted (3.2) - (3.2) -
(1) Pro includes the results of Pro and Pro IS.
A dividend of $3.2 million was paid by Pro during the
period.
No result has been recognised in the period in respect of
Chiltington. As part of the integration process implemented post
acquisition, there are some operational and procedural changes that
need to be addressed to align the Chiltington reporting cycle with
that of the Group. It is anticipated that coterminous reporting
will be achieved by 31 December 2012.
Corporate division
This division incorporates the corporate costs and Group
overheads, incubator costs, acquisition activities and
financing.
The corporate divisions' net loss of $6.7 million, excluding any
intergroup fees which are eliminated on consolidation, is
summarised below:
30 Jun 2012 30 Jun 2011
$m $m
----------------------------------------------- --------------------- ------------------
Corporate costs
Tawa plc (2.3) (3.2)
Variable pay - (0.7)
Share based payment accrual (0.2) (0.3)
Group tax relief received 2.3 0.8
Other (0.4) (2.2)
--------------------- ------------------
Total corporate costs (0.6) (5.6)
Incubator costs (3.5) (1.1)
Acquisition related costs
Acquisition related costs (0.2) (0.3)
Negative goodwill - 1.5
--------------------- ------------------
Total acquisition related costs (0.2) 1.2
Finance costs (1.6) (1.0)
Share of result in associate Asta Capital Ltd (0.8) -
--------------------- ------------------
Group loss for the year (6.7) (6.5)
Intergroup fees eliminated on consolidation 1.6 2.3
--------------------- ------------------
Segmental loss for the year (5.1) (4.2)
--------------------- ------------------
The ongoing development in incubators remains substantial.
Operating costs of Q360 Limited $2.1 million, Lodestar Marine
Limited $1.1 million and STRIPE(R) $0.6 million were only
marginally offset by combined revenues of $0.3 million. As these
investments represent development of new projects, it is accepted
that the generation of positive cash flows will take varying
amounts of time and the Group is implementing measures to control
costs.
Although Tawa's associate Asta Capital Limited returned a
trading profit for the period of $5.4 million, it reported an
overall loss for the period of $2.3 million, of which Tawa has a
33.33% share. The main contributory factors for this loss are fees
in relation to the acquisition being expensed and a one-off
acquisition completion bonus payable to executives and staff.
Prospects
Following the AGM on 21 June 2012, it was announced that the
Board and management are reviewing strategic themes such as:
-- Sale of non core assets;
-- Expansion of the service business and further run-off acquisition opportunities; and
-- Entry of new equity partners either through Tawa new shares
offering or through partnerships or similar arrangement to
complement existing shareholder capital.
The above all work towards the goal of continuing and
accelerating the migration of the Group from a pure run-off
acquirer to a diversified insurance specialist. Since then progress
has been made on this review, with the latest step being the
announcement on 10 September 2012 that Tawa is seeking potential
offerors by means of a formal sale process in accordance with Rule
2.6 of the Takeover Code.
The aim of this process is to benchmark the shareholder value
creation of the other strategic options available against the
potential immediate value to our shareholders of a bid for the
entire company. There can be no certainty that an offer will be
made or as to the terms of any such offer, be it from strategic
investors or financial shareholders.
Condensed consolidated income statement For the period ended 30
June 2012
6 months 6 months 12 months
30 Jun 2012 30 Jun 2011 31 Dec 2011
(Unaudited) (Unaudited) (Audited)
Notes $m $m $m
------------------------------------ ------ ------------------------ ---------------------- ----------------------
Income from continuing operations
Insurance premium revenue (1) 0.2 57.8 58.6
Insurance premium ceded to
reinsurers (0.2) 2.0 (0.4)
Commission income 0.1 - -
------------------------------------ ------ ------------------------ ---------------------- ----------------------
Net earned premium revenue 0.1 59.8 58.2
Revenue from consultancy, insurance
and run-off services 16.1 17.9 35.4
Investment return 4.0 2.6 11.0
Other income 4.0 1.9 5.6
------------------------------------ ------ ------------------------ ---------------------- ----------------------
Income 24.1 22.4 52.0
Total income 24.2 82.2 110.2
------------------------------------ ------ ------------------------ ---------------------- ----------------------
Insurance claims and loss
adjustment expenses (3.8) (43.8) (84.6)
Insurance claims and loss
adjustment expenses recovered from
reinsurers 0.7 3.0 21.6
------------------------------------ ------ ------------------------ ---------------------- ----------------------
Net insurance claims (3.1) (40.8) (63.0)
------------------------------------ ------ ------------------------ ---------------------- ----------------------
Total expenses (25.0) (23.5) (53.3)
------------------------------------ ------ ------------------------ ---------------------- ----------------------
Results of operating activities
before negative goodwill
recognised (3.9) 17.9 (6.1)
Negative goodwill recognised - 1.5 1.5
Results of operating activities (3.9) 19.4 (4.6)
Share of results of associates (0.8) (0.8) (1.8)
Finance costs (1.5) (2.1) (4.0)
------------------------------------ ------ ------------------------ ---------------------- ----------------------
(Loss)/profit before taxation (6.2) 16.5 (10.4)
Taxation - (0.2) 1.0
------------------------------------ ------ ------------------------ ---------------------- ----------------------
(Loss)/profit for the period from
continuing operations (6.2) 16.3 (9.4)
Loss for the period from
discontinued operations 7 (0.3) (5.3) (12.5)
------------------------ ---------------------- ----------------------
(Loss)/profit for the period (6.5) 11.0 (21.9)
------------------------------------ ------ ------------------------ ---------------------- ----------------------
Attributable to:
Owners of the Company (6.5) 11.1 (21.6)
Non-controlling interests - (0.1) (0.3)
------------------------ ---------------------- ----------------------
(6.5) 11.0 (21.9)
------------------------------------ ------ ------------------------ ---------------------- ----------------------
Earnings per share
From continuing and discontinued
operations
Basic: Ordinary shares (cents per
share) 8 (5.78) 9.96 (19.83)
Diluted: Ordinary shares (cents per
share) 8 (5.78) 9.96 (19.83)
------------------------------------ ------ ------------------------ ---------------------- ----------------------
From continuing operations
Basic: Ordinary shares (cents per
share) 8 (5.51) 14.76 (8.51)
Diluted: Ordinary shares (cents per
share) 8 (5.51) 14.76 (8.51)
------------------------------------ ------ ------------------------ ---------------------- ----------------------
The 2011 comparatives include the single reinsurance premium of
$56.9 million paid to QX Reinsurance Company Limited from Penn
National at inception.
Condensed consolidated statement of comprehensive income For the
period ended 30 June 2012
6 months 6 months 12 months
30 Jun 2012 30 Jun 2011 31 Dec 2011
(Unaudited) (Unaudited) (Audited)
$m $m $m
---------------------------------------------------- ---------------------- ------------- -------------
(Loss)/profit for the period (6.5) 11.0 (21.9)
Other comprehensive (losses)/income
Currency translation differences (0.4) 0.9 (0.8)
Total comprehensive (losses)/income for the period (6.9) 11.9 (22.7)
---------------------------------------------------- ---------------------- ------------- -------------
Attributable to:
Owners of the Company (6.9) 12.0 (22.4)
Non-controlling interests - (0.1) (0.3)
----------------------------------------------------
(6.9) 11.9 (22.7)
---------------------------------------------------- ---------------------- ------------- -------------
Condensed consolidated statement of financial position As at 30
June 2012
30 Jun 2012 30 Jun 2011 31 Dec 2011
(Unaudited) (Unaudited) (Audited)
Notes $m $m $m
------------------------------------------------------- ------ ------------- ------------- -------------
Assets
Cash and cash equivalents 63.3 54.2 44.7
Financial assets - investments 279.7 266.8 267.1
Loans and receivables including insurance receivables 60.9 67.2 56.5
Reinsurers' share of technical provisions 41.4 33.8 46.3
Property, plant and equipment 1.9 1.4 2.1
Deferred assets 10 48.0 61.9 53.8
Interest in associates 14.3 6.0 4.9
Other intangible assets 2.2 2.0 1.3
Goodwill 23.7 23.0 23.4
Total assets 535.4 516.3 500.1
------------------------------------------------------- ------ ------------- ------------- -------------
Equity
Share capital 22.2 22.2 22.2
Share premium 110.6 111.4 111.4
Other reserves 2.2 1.2 (0.2)
Retained earnings 57.3 98.6 63.8
------------------------------------------------------- ------ ------------- ------------- -------------
Equity attributable to owners of the Company 192.3 233.4 197.2
Non-controlling interests 1.0 1.2 1.0
Total equity 193.3 234.6 198.2
------------------------------------------------------- ------ ------------- ------------- -------------
Liabilities
Creditors arising out of insurance operations 69.4 58.3 58.9
Other liabilities 38.4 26.9 29.4
Financial liabilities - borrowings 59.5 36.5 36.6
Technical provisions 174.8 160.0 177.0
Total liabilities 342.1 281.7 301.9
------------------------------------------------------- ------ ------------- ------------- -------------
Total liabilities and equity 535.4 516.3 500.1
------------------------------------------------------- ------ ------------- ------------- -------------
Condensed consolidated statement of changes in equity As at 30
June 2012
Share based
Issued Share premium payments Own shares Translation Retained Non-controlling Total
capital reserve reserve reserve reserve earnings Total interests Equity
$m $m $m $m $m $m $m $m $m
--------------- --------------- ---------------- ---------------- ------------- ------------------- ---------------- ------- ----------------- --------
Balance at 1
January 2011 22.2 111.4 3.2 (1.1) (0.5) 89.8 225.0 1.3 226.3
Comprehensive
income
Profit/(loss)
for the
period - - - - - 11.1 11.1 (0.1) 11.0
Other
comprehensive
income
Currency
translation
differences - - - - 0.9 - 0.9 - 0.9
Total
comprehensive
income for
the period - - - - 0.9 11.1 12.0 (0.1) 11.9
--------------- --------------- ---------------- ---------------- ------------- ------------------- ---------------- ------- ----------------- --------
Transactions
with owners
Share based
payments - - 0.3 - - - 0.3 - 0.3
Dividends paid - - - - - (2.3) (2.3) - (2.3)
Own shares
acquired in
the period - - - (1.6) - - (1.6) - (1.6)
Total
transactions
with owners - - 0.3 (1.6) - (2.3) (3.6) - (3.6)
--------------- --------------- ---------------- ---------------- ------------- ------------------- ---------------- ------- ----------------- --------
Balance at 30
June 2011 22.2 111.4 3.5 (2.7) 0.4 98.6 233.4 1.2 234.6
--------------- --------------- ---------------- ---------------- ------------- ------------------- ---------------- ------- ----------------- --------
Balance at 1
July 2011 22.2 111.4 3.5 (2.7) 0.4 98.6 233.4 1.2 234.6
Comprehensive
income
Loss for the
period - - - - - (32.7) (32.7) (0.2) (32.9)
Other
comprehensive
income
Currency
translation
differences - - - - (1.7) - (1.7) - (1.7)
Total
comprehensive
income for
the period - - - - (1.7) (32.7) (34.4) (0.2) (34.6)
--------------- --------------- ---------------- ---------------- ------------- ------------------- ---------------- ------- ----------------- --------
Transactions
with owners
Share based
payments - - 0.2 - - - 0.2 - 0.2
Dividends paid - - - - - (2.1) (2.1) - (2.1)
Own shares
acquired in
the period - - - 0.1 - - 0.1 - 0.1
Total
transactions
with owners - - 0.2 0.1 - (2.1) (1.8) - (1.8)
--------------- --------------- ---------------- ---------------- ------------- ------------------- ---------------- ------- ----------------- --------
Balance at 31
December 2011 22.2 111.4 3.7 (2.6) (1.3) 63.8 197.2 1.0 198.2
--------------- --------------- ---------------- ---------------- ------------- ------------------- ---------------- ------- ----------------- --------
Balance at 1
January 2012 22.2 111.4 3.7 (2.6) (1.3) 63.8 197.2 1.0 198.2
Comprehensive
income
Loss for the
period - - - - - (6.5) (6.5) - (6.5)
Other
comprehensive
income
Currency
translation
differences - - - - (0.4) - (0.4) - (0.4)
--------------- --------------- ---------------- ---------------- ------------- ------------------- ---------------- -------------- ---------------- ------------
Total
comprehensive
income for
the period - - - - (0.4) (6.5) (6.9) - (6.9)
--------------- --------------- ---------------- ---------------- ------------- ------------------- ---------------- -------------- ---------------- ------------
Transactions
with owners
Issue of share
capital 0.4 1.4 - - - - 1.8 - 1.8
Share based
payments - - 0.2 - - - 0.2 - 0.2
Dividends paid - - - - - - - - -
Own shares
cancelled in
the period (0.4) (2.2) - 2.6 - - - - -
--------------- --------------- ---------------- ---------------- ------------- ------------------- ---------------- -------------- ---------------- ------------
Total
transactions
with owners - (0.8) 0.2 2.6 - - 2.0 - 2.0
--------------- --------------- ---------------- ---------------- ------------- ------------------- ---------------- -------------- ---------------- ------------
Balance at 30
June 2012 22.2 110.6 3.9 - (1.7) 57.3 192.3 1.0 193.3
--------------- --------------- ---------------- ---------------- ------------- ------------------- ---------------- -------------- ---------------- ------------
Condensed consolidated statement of cash flows
For the period ended 30 June 2012
6 months 6 months 12 months
30 Jun 2012 30 Jun 2011 31 Dec 2011
(Unaudited) (Unaudited) (Audited)
Notes $m $m $m
----------------------------------------------------- ------- ------------- ------------- -------------
Net cash (used in)/generated by operations 11 (36.2) 37.1 25.9
----------------------------------------------------- ------- ------------- ------------- -------------
Investing activities
Cash payments to acquire debt securities (170.7) (669.7) (1,144.8)
Cash receipts from sale or maturity of debt
securities 193.1 606.3 1,113.1
Cash transferred from investing activities 5.9 26.9 (3.7)
Cash receipts from interest 4.0 2.4 6.8
Purchases of property, plant and equipment - - (1.0)
Acquisition of investment in an associate (10.1) - -
Acquisition of subsidiary net of cash and cash
equivalents 9.2 2.4 2.4
----------------------------------------------------- -------
Cash generated by/(used in) investing activities 31.4 (31.7) (27.2)
----------------------------------------------------- ------- ------------- ------------- -------------
Financing activities
Dividends paid - (2.3) (4.4)
Own shares purchased - (1.6) (1.5)
Proceeds from financial borrowings 23.2 27.6 27.6
Repayments of financial borrowings - (23.4) (24.1)
----------------------------------------------------- -------
Cash flows generated by/(used in) financing
activities 23.2 0.3 (2.4)
----------------------------------------------------- ------- ------------- ------------- -------------
Net increase in cash and cash equivalents 18.4 5.7 (3.7)
Cash and cash equivalents at beginning of period 44.7 48.5 48.5
Effects of exchange rate changes on the balance of
cash held in foreign currencies 0.2 - (0.1)
Cash and cash equivalents at end of period 63.3 54.2 44.7
----------------------------------------------------- ------- ------------- ------------- -------------
Notes to the condensed consolidated financial statements For the
period ended 30 June 2012
1 General information
Tawa plc (the "Company") and its subsidiaries (together the
"Group") are engaged in four principal business activities:
-- The acquisition and run-off of insurance companies that have ceased underwriting;
-- The provision of insurance;
-- The provision of run-off management services to acquired insurance companies; and
-- The provision of insurance services to external clients.
On 26 January 2012, a consortium comprising Tawa plc, Skuld, and
Paraline Group Limited completed the acquisition of Whittington
Insurance Markets Limited. The company has since been renamed Asta
Insurance Markets Limited under a new holding company set up by the
consortium named Asta Capital Limited ("Asta"). This transaction
provides Tawa with a platform through which to expand its range of
services to the Lloyd's market. Asta is the leading franchise in
the Lloyd's agency management market and provides the Group with
real scale as a provider of insurance services to the live market.
This is highly complementary with the range of consulting and
outsourcing services currently provided through Pro.
On 20 April 2012, Tawa completed the acquisition of Hamburger
Internationale Rückversicherung ("HIR"), the holding company for
the Chiltington group of companies ("Chiltington"). Chiltington
provides consultancy and outsource services to the international
(re)insurance industry and specialises in compliance, audit and
investigation work, litigation support, restructuring services,
claims management and commutations. While strengthening our UK and
US units, this transaction provides a strong footprint in
Continental Europe and a platform of insurance consulting in South
America.
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 Group's
consolidated financial statements for the year ended 31 December
2011. 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 498(2) or 498(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. 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
2011 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 2011 consolidated financial statements,
namely; insurance risk, market risk (including interest rate risk),
currency risk, credit risk, liquidity risk, and risk related to the
Group's deferred assets.
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 consolidated financial
statements as were applied in the preparation of the Group's
consolidated financial statements for the year ended 31 December
2011.
3 Financial risk management
The Group's activities expose it to a variety of financial
risks: market risk (including currency risk, fair value interest
rate risk, cash flow interest rate risk and price risk), credit
risk and liquidity risk.
The interim condensed consolidated financial statements do not
include all risk management information and disclosures required in
the annual financial statements, and should be read in conjunction
with the Group's annual financial statements as at 31 December
2011. There have been no changes since the year end in any risk
management policies.
4 Acquisition of subsidiaries
Hamburger Internationale Rückversicherung AG
On 20 April 2012 the Group acquired 100% of the issued share
capital of Hamburger Internationale Rückversicherung AG ("HIR").
HIR is the parent company of a group of companies detailed below
which are involved in reinsurance, management and advisory
services:
Chiltington Holdings Limited Chiltington International GmbH
Chiltington International Limited Chiltington Internacional
S.A.
Professional Resources Limited Professional Resources S.A.
C.I.R.A.S. Limited Chiltington Internacional S.A. de CV
Stopstart Limited Chiltington Internacional S.L
Chiltington International Holdings Limited Pavant International
Re S.A. ("PIR")
Chiltington International Holding GmbH Hamburg International
Reinsurance Limited
Chiltington International Inc PlusPunkt Marketing AG i.L. (in
liquidation)
This transaction has been accounted for by the purchase method
of accounting. The initial accounting for the business combination
is incomplete and the amounts recognised in these financial
statements are provisional. The fair values of the acquired
intangible assets are provisional pending the final valuations of
these assets. The net assets acquired in the transaction, and the
goodwill arising, are as follows:
Book value Fair value adjustments Fair value on acquisition
$m $m $m
-------------------------------------------------- ------------ ----------------------- ---------------------------
Assets
Cash and cash equivalents 13.7 - 13.7
Financial assets - investments 32.9 0.2 33.1
Loans and receivables including insurance
receivables 6.0 - 6.0
Reinsurers' share of technical provisions 0.6 - 0.6
Property, plant and equipment 0.1 - 0.1
Other intangible assets - 1.0 1.0
Liabilities
Creditors arising out of insurance operations (5.1) - (5.1)
Other liabilities (14.8) (1.2) (16.0)
Technical provisions (26.8 0.4 (26.4)
-------------------------------------------------- ------------ ----------------------- ---------------------------
6.6 0.4 7.0
-------------------------------------------------- ------------ ----------------------- ---------------------------
Consideration paid in cash 4.5
Consideration paid in shares 1.9
Deferred consideration payable 0.9
-------------------------------------------------- ------------ ----------------------- ---------------------------
Consideration paid net of cash and cash
equivalents (9.2)
-------------------------------------------------- ------------ ----------------------- ---------------------------
Goodwill on acquisition 0.3
-------------------------------------------------- ------------ ----------------------- ---------------------------
The goodwill arising on acquisition is a result of expected
synergies from combining operations and intangible assets that do
not qualify for separate recognition.
Hamburger Internationale Rückversicherung AG continued
Deferred consideration payable as reserved dividends are due to
the sellers as illustrated in the table below:
Maximum settlements per annum
$m
-------------------------------------------------------- ----- ------------------------------
Dividends paid by HIR prior to 31 Mar 2012 100% 3.8
Dividends paid by HIR between 1 Apr 2012 - 31 Dec 2012 90% 3.4
Dividends paid by HIR between 1 Apr 2013 - 31 Dec 2013 75% 2.8
Dividends paid by HIR between 1 Apr 2014 - 31 Dec 2014 60% 2.3
Dividends paid by HIR between 1 Apr 2015 - 31 Dec 2015 45% 1.7
Dividends paid by HIR between 1 Apr 2016 - 31 Dec 2016 30% 1.1
Dividends paid by HIR between 1 Apr 2017 - 31 Dec 2017 15% 0.6
Since acquisition the HIR group of companies have contributed no
profit or loss after the elimination of intra-group income and
expenses. If the acquisition of the HIR group of companies had been
completed on the first day of the financial year, Group loss
attributable to equity holders of the parent would have increased
by $0.5 million.
On 5 June 2012 Swiss Re transferred 74% of its shares of ASS
Assekuranz Service-und Sachverständigen GmbH ("ASS") to Chiltington
International Holding GmbH (73%) and PRO Insurance Solutions
Limited (1%). ASS is a specialised service provider in disability
claims handling. Swiss Re will retain 26% of the shares.
5 Investment in associate
Asta Capital Limited
On 26 January 2012, the consortium comprising Tawa plc, Skuld,
and Paraline Group Limited completed the acquisition of Whittington
Insurance Markets Limited. The company has since been renamed Asta
Insurance Markets Limited under a new holding company set up by the
consortium named Asta Capital Limited ("Asta"). Tawa's share of
associate as at 30 June 2012 is:
30 Jun 2012
$m
--------------------------------------------------- -------------
Revenue 8.1
Loss for the year (2.2)
Group's share of associate's loss at 33.33% (0.8)
--------------------------------------------------- -------------
Total assets 50.7
Total liabilities (23.7)
Net assets 27.0
--------------------------------------------------- -------------
Group's share of associate's net assets at 33.33% 9.0
--------------------------------------------------- -------------
6 Segmental information
The Group's reportable segments under IFRS 8 are identified as
follows:
-- Underwriting run-off and insurance;
-- CX Re (associate) underwriting run-off;
-- Service providers; 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 not the
same as the Group's accounting policies. The segmental reporting
includes the results for associate CX Re in relation to all equity
holders as an operating segment, whereas the financial statements
show the results for CX Re as a non-operating activity; namely
share of results of associate and loss for the year from
discontinued operations. A reconciliation to the financial
statements has been performed.
Segment income and results
The following is an analysis of the Group's revenue and result
by reportable segment.
Underwriting CX Re Other Reconciliation
run-off and underwriting Service corporate to financial
insurance run-off providers activities Intra-group statements Total
For the period
ended 30 June
2012 $m $m $m $m $m $m $m
--------------- -------------- -------------- ------------- ------------- ------------- ---------------- -------
Continuing
operations
Income
Insurance
premium
revenue 0.2 (0.7) - - - 0.7 0.2
Insurance
premium ceded
to reinsurers (0.2) (0.4) - - - 0.4 (0.2)
Commission
income - - - 0.1 - - 0.1
--------------- -------------- -------------- ------------- ------------- ------------- ---------------- -------
Net earned
premium
revenue - (1.1) - 0.1 - 1.1 0.1
Revenue from
consultancy
and run-off
services - - 18.0 7.6 (9.5) - 16.1
Investment
return 4.0 2.7 - - - (2.7) 4.0
Other income 1.9 - 2.1 - - - 4.0
--------------- -------------- -------------- ------------- ------------- ------------- ---------------- -------
Total other
income 5.9 2.7 20.1 7.6 (9.5) (2.7) 24.1
Total income 5.2 1.6 20.1 7.7 (9.5) (1.6) 24.2
--------------- -------------- -------------- ------------- ------------- ------------- ---------------- -------
Insurance
claims and
loss
adjustment
expenses (3.8 (1.9) - - - 1.9 (3.8)
Insurance
claims and
loss
adjustment
expenses
recovered
from
reinsurers 0.7 0.8 - - - (0.8) 0.7
--------------- -------------- -------------- ------------- ------------- ------------- ---------------- -------
Net insurance
claims (3.1) (1.1) - - - 1.1 (3.1)
--------------- -------------- -------------- ------------- ------------- ------------- ---------------- -------
Segment
expenses (2.1) (0.8) (19.6) (12.8) 9.5 0.8 (25.0)
--------------- -------------- -------------- ------------- ------------- ------------- ---------------- -------
Segment
results of
operating
activities
before
recognising
negative
goodwill 0.7 (0.3) 0.5 (5.1) - 0.3 (3.9)
--------------- -------------- -------------- ------------- ------------- ------------- ---------------- -------
Negative
goodwill
recognised - - - - - - -
Segment
results of
operating
activities 0.7 (0.3) 0.5 (5.1) - 0.3 (3.9)
--------------- -------------- -------------- ------------- ------------- ------------- ---------------- -------
Share of
results of
associate - - - (0.8) - - (0.8)
Finance costs (0.1) - (1.4) - - (1.5)
Taxation (2.0) - (0.2) 2.2 - - -
Loss for the
period from
discontinued
operations - - - - - (0.3) (0.3)
---------------
Segment
(loss)/profit
for the
period (1.4) (0.3) 0.3 (5.1) - - (6.5)
--------------- -------------- -------------- ------------- ------------- ------------- ---------------- -------
Underwriting CX Re Other Reconciliation
run-off and underwriting Service corporate to financial
insurance run-off providers activities Intra-group statements Total
For the period
ended 30 June
2011 $m $m $m $m $m $m $m
--------------- -------------- -------------- ------------- ------------ ------------- ---------------- -------
Continuing
operations
Income
Insurance
premium
revenue 57.8 - - - - - 57.8
Insurance
premium ceded
to reinsurers 2.0 0.2 - - - (0.2) 2.0
--------------- -------------- -------------- ------------- ------------ ------------- ---------------- -------
Net earned
premium
revenue 59.8 0.2 - - - (0.2) 59.8
Revenue from
consultancy
and run-off
services - - 23.6 16.8 (22.5) - 17.9
Investment
return 2.5 3.1 - 0.1 - (3.1) 2.6
Other income 1.0 - 1.3 (0.4) - - 1.9
--------------- -------------- -------------- ------------- ------------ ------------- ---------------- -------
Total other
income 3.5 3.1 24.9 16.5 (22.5) (3.1) 22.4
Total income 63.3 3.3 24.9 16.5 (22.5) (3.3) 82.2
--------------- -------------- -------------- ------------- ------------ ------------- ---------------- -------
Insurance
claims and
loss
adjustment
expenses (43.8) (9.1) - - - 9.1 (43.8)
Insurance
claims and
loss
adjustment
expenses
recovered
from
reinsurers 3.0 0.6 - - - (0.6) 3.0
--------------- -------------- -------------- ------------- ------------ ------------- ---------------- -------
Net insurance
claims (40.8) (8.5) - - - 8.5 (40.8)
--------------- -------------- -------------- ------------- ------------ ------------- ---------------- -------
Segment
expenses (2.5) (0.9) (21.6) (21.9) 22.5 0.9 (23.5)
--------------- -------------- -------------- ------------- ------------ ------------- ---------------- -------
Segment
results of
operating
activities
before
recognising
negative
goodwill 20.0 (6.1) 3.3 (5.4) - 6.1 17.9
--------------- -------------- -------------- ------------- ------------ ------------- ---------------- -------
Negative
goodwill
recognised - - - 1.5 - - 1.5
Segment
results of
operating
activities 20.0 (6.1) 3.3 (3.9) - 6.1 19.4
--------------- -------------- -------------- ------------- ------------ ------------- ---------------- -------
Share of
results of
associate - - - - - (0.8) (0.8)
Finance costs (1.1) - - (1.0) - - (2.1)
Taxation (0.1) 0.1 (0.9) 0.7 - - (0.2)
Loss for the
period from
discontinued
operations - - - - - (5.3) (5.3)
---------------
Segment
profit/(loss)
for the
period 18.8 (6.0) 2.4 (4.2) - - 11.0
--------------- -------------- -------------- ------------- ------------ ------------- ---------------- -------
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.
Underwriting CX Re Other Reconciliation
run-off and underwriting Service corporate to financial
insurance run-off providers activities Intra-group statements Total
As at 30 June
2012 $m $m $m $m $m $m $m
-------------- -------------- -------------- ------------- ------------- ------------- ---------------- --------
Segment
assets 424.2 195.6 24.6 100.7 (15.3) (194.6) 535.2
Segment
liabilities (268.4) (156.9) (14.4) (74.4) 15.3 156.9 (341.9)
Segment net
assets 155.8 38.7 10.2 26.3 - (37.7) 193.3
-------------- -------------- -------------- ------------- ------------- ------------- ---------------- --------
Depreciation - - (0.4) - - - (0.4)
Amortisation
of
intangible
assets - - (0.1) - - - (0.1)
Amortisation
of risk
premium 0.2 - - - - - 0.2
-------------- -------------- -------------- ------------- ------------- ------------- ---------------- --------
Underwriting CX Re Other Reconciliation
run-off and underwriting Service corporate to financial
insurance run-off providers activities Intra-group statements Total
As at 30 June
2011 $m $m $m $m $m $m $m
-------------- -------------- -------------- ------------- ------------- ------------- ---------------- --------
Segment
assets 413.0 231.7 19.4 90.4 (8.5) (229.7) 516.3
Segment
liabilities (226.7) (184.5) (10.4) (53.1) 8.5 184.5 (281.7)
Segment net
assets 186.3 47.2 9.0 37.3 - (45.2) 234.6
-------------- -------------- -------------- ------------- ------------- ------------- ---------------- --------
Depreciation - - (0.3) - - - (0.3)
Amortisation
of
intangible
assets - - (0.4) - - - (0.4)
Amortisation
of risk
premium 1.3 - - - - - 1.3
-------------- -------------- -------------- ------------- ------------- ------------- ---------------- --------
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.
Geographical information
The Group's revenue and information about its segment net assets
by geographical location are as follows:
United Kingdom United States of America Total
As at 30 June 2012 $m $m $m
-------------------- --------------- ------------------------- ----------
Segment revenue 19.3 4.9 24.2
Segment net assets 92.4 100.9 193.3
-------------------- --------------- ------------------------- ----------
As at 30 June 2011 $m $m $m
-------------------- --------------- ------------------------- ----------
Segment revenue 20.2 62.0 82.2
Segment net assets 111.3 123.3 234.6
-------------------- --------------- ------------------------- ----------
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.
7 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 Jun 2012 30 Jun 2011 31 Dec 2011
$m $m $m
---------------------------- ------------- ------------- -------------
Loss on sale of investment (0.3) (5.3) (12.5)
------------- ------------- -------------
Loss for the period (0.3) (5.3) (12.5)
---------------------------- ------------- ------------- -------------
8 Earnings per share
30 Jun 2012 30 Jun 2011 31 Dec 2011
Earnings $m $m $m
------------------------------------------------------------------------- ------------- ------------- -------------
Earnings for the purposes of basic earnings per share from continuing
and discontinued operations
being net profit attributable to equity holders of the Group (6.5) 11.0 (21.9)
Earnings for the purposes of basic earnings per share from continuing
operations being net
loss attributable to equity holders of the Group (6.2) 16.3 (9.4)
Number of shares 30 Jun 2012 30 Jun 2011 31 Dec 2011
------------------------------------------------------------------------- ------------- ------------- -------------
Weighted average number of Ordinary Shares for the purposes of basic
earnings per share 112,481,734 110,451,131 110,451,131
Effect of dilutive potential Ordinary Shares: Share options - - -
Weighted average number of Ordinary Shares for the purposes of diluted
earnings per share 112,481,734 110,451,131 110,451,131
------------------------------------------------------------------------- ------------- ------------- -------------
30 Jun 2012 30 Jun 2011 31 Dec 2011
Basic earnings per share US cents US cents US cents
------------------------------------------------------------------------- ------------- ------------- -------------
From continuing and discontinued operations
Basic: Ordinary Shares (cents per share) (5.78) 9.96 (19.83)
Diluted: Ordinary Shares (cents per share) (5.78) 9.96 (19.83)
------------------------------------------------------------------------- ------------- ------------- -------------
From continuing operations
Basic: Ordinary Shares (cents per share) (5.51) 14.76 (8.51)
Diluted: Ordinary Shares (cents per share) (5.51) 14.76 (8.51)
------------------------------------------------------------------------- ------------- ------------- -------------
From discontinued operations
Basic: Ordinary Shares (cents per share) (0.27) (4.80) (11.32)
Diluted: Ordinary Shares (cents per share) (0.27) (4.80) (11.32)
------------------------------------------------------------------------- ------------- ------------- -------------
9 Dividends
The Group does not propose the payment of a dividend to
shareholders in relation to the interim period (June 2011:
nil).
No dividend will be distributed in 2012 in relation to the
results for the 2011 financial year.
10 Deferred assets
Deferred assets relate to the consideration outstanding on the
disposal of a subsidiary CX Re, as described in note 7, 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 Jun 2012 30 Jun 2011 31 Dec 2011
$m $m $m
------------------------ ------------- ------------- -------------
Facilitation fee 14.2 20.6 19.7
Deferred consideration 33.8 41.3 34.1
Deferred assets 48.0 61.9 53.8
------------------------ ------------- ------------- -------------
11 Cash generated by/(used in) operating activities
30 Jun 2012 30 Jun 2011 31 Dec 2011
$m $m $m
---------------------------------------------------------- ---------------------------- ------------- -------------
Operating (loss)/profit for the period (3.9) 19.4 (4.6)
Adjustments for:
- negative goodwill - (1.5) (1.5)
- income tax expense - (0.2) 1.0
- investment return for the period transferred to
investing activities (4.0) (2.6) (6.8)
- realised losses/(gains) on investments 0.3 (0.8) (1.7)
- unrealised (gains)/losses on investments (0.3) 0.8 (2.5)
- depreciation 0.4 0.3 0.6
- share based payment expense 0.2 0.3 0.5
- amortisation of risk premium (0.2) (1.3) (1.9)
- amortisation of intangible asset (0.1) (0.4) (1.0)
- adjustment to amortised cost 0.7 (0.4) 2.3
- other gains and losses (5.3) 0.4 0.7
---------------------------------------------------------- ---------------------------- ------------- -------------
(12.2) 14.0 (14.9)
Change in operating assets and liabilities
Net (increase)/decrease in insurance receivables and
liabilities (16.1) 36.2 55.4
Net increase/(decrease) in loans and receivables 0.4 (3.9) (6.7)
Net decrease in other operating liabilities (7.1) (7.2) (4.7)
---------------------------- ------------- -------------
Cash used in operations (35.0) 39.1 29.0
Finance costs (1.2) (2.0) (3.2)
---------------------------------------------------------- ---------------------------- ------------- -------------
Net cash used in operations (36.2) 37.1 25.9
---------------------------------------------------------- ---------------------------- ------------- -------------
12 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 and balances between the Group
and its associate are disclosed below.
Trading transactions
Tawa Management Limited provides insurance run-off management
services to CX Re an associate of the Group in which the Company
has a 12.65% equity 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 period Group companies entered into the following
transactions with related parties who are not members of the
Group:
Group income received
-------------------------------------------
30 Jun 2012 30 Jun 2011 31 Dec 2011
$m $m $m
--------------------------------------------- ------------- ------------- -------------
From associate CX Re for a management fee 0.6 1.3 2.5
From associate CX Re for expenses recharged 2.5 2.8 6.5
3.1 4.1 9.0
--------------------------------------------- ------------- ------------- -------------
At the period end, the following balances with related parties
who are not members of the Group were outstanding:
Amounts owed (to) / from related parties
---------------------------------------------------------------------
30 Jun 2012 30 Jun 2011 31 Dec 2011
$m $m $m
--------------------------------- --------------------- ---------------------- ----------------------
Amounts due from associate CX Re 0.2 - -
--------------------------------- --------------------- ---------------------- ----------------------
Key management personnel
The Group considers its key management personnel to include its
Executive and Non-Executive Directors and those members of
management reporting directly to its Board that have executive
management responsibility for Group-wide operations.
Remuneration of key management personnel
The remuneration of key management included in the income
statement is set out below in aggregate for each of the categories
specified in IAS 24 Related Party Disclosures.
30 Jun 2012 30 Jun 2011 31 Dec 2011
$m $m $m
------------------------------ ---------------------- ---------------------- ----------------------
Short-term employee benefits 2.0 2.9 5.1
Post-employment benefits 0.2 0.2 0.5
Termination benefits - - -
Share based payments 0.2 0.2 0.5
------------------------------ ---------------------- ---------------------- ----------------------
Management remuneration 2.4 3.3 6.1
------------------------------ ---------------------- ---------------------- ----------------------
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.
13 Contingent liabilities
Certain of the Group's subsidiaries and its associate CX Re 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 2012 (30 June 2011 and 31
December 2011: no contingent liabilities).
14 Events after reporting period
On 10 September 2012 it was announced that Tawa is seeking
potential offerors by means of a formal sale process in accordance
with Rule 2.6 of the Takeover Code.
The aim of this process is to benchmark the shareholder value
creation of the other strategic options available against the
potential immediate value to our shareholders of a bid for the
entire company. There can be no certainty that an offer will be
made or as to the terms of any such offer, be it from strategic
investors or financial shareholders.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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