RNS Number:3187P
Benfield Group Limited
03 September 2003
3 September 2003
Benfield Group Limited
INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2003
Benfield Group Limited ("Benfield"), the reinsurance intermediary which listed
on the London Stock Exchange on 18 June 2003, today announces its interim
results for the six months ended 30 June 2003.
Group Financial Highlights
Operating revenue growth combined with a focus on margin enhancement and further
realisation of the benefits following the acquisition of E W Blanch in May 2001
have led to positive growth in the trading result and continued improvement in
margins.
* Group operating revenue increased by 8.3% to #153.7m (H1 2002: #142.0m).
At constant rates of exchange the increase in operating revenue was 12.5%
* Group trading result(1) increased by 51.1% to #44.6m (H1 2002: #29.5m).
Group trading margin improved to 29.0% (H1 2002: 20.8%)
* Profit before tax and exceptional items increased by #19.2m to #28.1m (H1
2002:#8.9m). Profit before tax improved to #1.5m (H1 2002: loss #2.7m)
* Adjusted diluted earnings per share (before goodwill amortisation and
exceptional items) increased to 9.73p (H1 2002: 1.86p). Basic earnings per
share reported a loss of 2.61p (H1 2002 loss of 5.68p)
(1) Trading result comprises operating profit from continuing operations
before amortisation of goodwill, depreciation of tangible fixed assets
and exceptional items. A reconciliation of trading result to the
statutory format profit and loss account is shown in note 2 to the
interim report.
John Coldman, Chairman of Benfield, commented: "A highlight of the last six
months for Benfield was the completion of our IPO in June. We were pleased with
the positive response to the IPO and welcome our new shareholders. I am
delighted to be able to report good progress in Benfield's first interim results
statement as a listed company."
Grahame Chilton, Chief Executive of Benfield, commented: "New business growth
and focused cost control continue to deliver margin enhancement in both the US
and International divisions. Continued change in the global reinsurance market
is increasing demand for our specialist transactional skills and analytical
services. Trading conditions remain favourable and we believe that Benfield is
well positioned to continue to deliver long term growth to shareholders."
Results of operations
Six months to 30 June
2003 2002 Change
#'000 #'000
Operating revenue
International 89,339 83,573 +6.9%
United States 62,193 56,667 +9.8%
Corporate 2,147 1,712 +25.4%
Total operating revenue 153,679 141,952 +8.3%
Trading result
International 33,747 28,990 +16.4%
United States 18,239 8,533 +113.7%
Corporate (7,398) (8,023) +7.8%
Total trading result 44,588 29,500 +51.1%
Trading margin
International 37.8% 34.7%
United States 29.3% 15.1%
Total trading margin 29.0% 20.8%
Contact details:
Investors
Julianne Jessup Benfield +44 (0)20 7578 7425
Alex Child-Villers or Robert Bailhache Financial Dynamics +44 (0)20 7831 3113
Media
David Bogg Benfield +44 (0)20 7522 4016
Alison Burgess Benfield +44 (0)20 7578 7047
David Haggie or Peter Rigby Haggie Financial +44 (0)20 7417 8989
NEWSWIRES: There will be a conference call today for wire services at 7.30am
(BST) on UK dial in +44 (0)800 953 0539 and international dial in +44 1 4525
60345.
Quote: Benfield, David Haggie.
ANALYSTS: A presentation to analysts will take place at 9.30am (BST) at
Benfield, 55 Bishopsgate, London EC2N 3BD. The analysts' presentation is being
audio webcast later in the day and can be replayed on Benfield's website
www.benfieldgroup.com. The presentation slides will also be available on the
website.
CHIEF EXECUTIVE'S STATEMENT
Overview
Operating revenue growth combined with a focus on margin enhancement and the
further realisation of benefits following the acquisition of E W Blanch in May
2001 have led to positive growth in the trading result and continued improvement
in margins.
Operating revenue increased by 8.3% to #153.7m for the six months ended 30 June
2003 from #142.0m for the six months ended 30 June 2002. This increase reflects
growth in the form of new business from both new and existing customers,
partially offset by the depreciation in the US dollar. At constant rates of
exchange, operating revenue increased by 12.5%. Approximately 87% of the Group's
turnover in the period was earned from business generated from existing
customers. The remainder was in respect of new customer wins and non-recurring
business, including advice on one-off transactions.
The trading result increased to #44.6m from #29.5m, reflecting growth in both
the International division and, in particular, the US division, supported by
maintenance of a stable central cost base within the Corporate division.
Trading margin improved to 29.0%. The increased margin reflects the operational
leverage provided by a well controlled cost base and is a demonstration of the
benefits achieved from the continued integration of E W Blanch. However, there
were benefits from timing differences on planned investment in the US, which may
lead to a lower margin in the second half of the year.
Profit before tax and exceptional items increased to #28.1m from #8.9m.
Exceptional charges of #26.5m were incurred mainly from the cost of share based
awards to employees and certain charges incurred as a result of the IPO, offset
by a gain on disposal of part of the Group's shareholding in Montpelier Re.
After exceptional items, profit before tax increased to #1.5m from a loss of
#2.7m.
International Division
The International division has maintained its trend of margin improvement
following the initial dilutive impact of the non-US businesses acquired with E W
Blanch. Revenue growth, management of operating costs and the continued
rationalisation of lower margin areas of the business have led to a solid
improvement in the trading result.
International operating revenue increased by 6.9% to #89.3m for the six months
ended 30 June 2003 from #83.6m for the six months ended 30 June 2002. At
constant rates of exchange, operating revenue increased by 9.0%. Within the
division, there was strong growth in areas targeted for expansion. The European
business unit reflected the benefits of market share gains following recent
investment in Central and Eastern Europe. There was also good progress in the
Global ReMetrics and Advisory business units, and within the Pacific Rim area.
The trading result was #33.8m, an increase of 16.4% and the trading margin rose
to 37.8% from 34.7%.
The division's principal reinsurance markets remained generally firm although
some softening was seen in rates for property catastrophe cover in areas not
affected by recent losses. The trend away from proportional to non-proportional
reinsurance created opportunities as demand increased for excess of loss
coverage in Europe.
US Division
The US division has performed well, with growth in both revenue and margin in
the six months ended 30 June 2003. This growth has been achieved by leveraging
the platform established through the acquisition of the predominantly US based E
W Blanch. The division's result has also benefited from the timing of certain
operating costs between the first and second half of the year.
US operating revenue increased by 9.8% to #62.2m for the six months ended 30
June 2003 from #56.7m for the six months ended 30 June 2002. This reported
growth was adversely impacted by the weaker US dollar with growth of 17.5%
achieved at constant rates of exchange. The increased revenue was achieved
through organic growth, underpinned by business from existing customers which
represented approximately 92% of turnover.
The combination of revenue growth, cost control and the timing differences
mentioned above have increased the trading result to #18.2m from #8.5m. In
addition the trading margin has continued to improve, increasing to 29.3% from
15.1% for the comparable period last year.
US property catastrophe reinsurance rates have become more competitive,
reflecting the plentiful capacity available for the most attractive risks.
However there has been increased demand for additional capacity on peak
exposures such as Florida hurricane. Casualty capacity remained fairly
restricted and premiums continued to increase in most casualty classes.
Balance Sheet
The Initial Public Offering of Benfield shares on the London Stock Exchange
generated gross proceeds of #132.0m, which after costs were used to repay
outstanding indebtedness. At 30 June 2003, the Group had net assets (excluding
goodwill) of #33.8m, gross debt of #76.1m and net corporate cash of #6.2m.
On 25 June 2003, the Group agreed to sell part of its shareholding in Montpelier
Re, resulting in an operating exceptional gain of #6.0m. Net cash proceeds of
#16.8m were received on 2 July 2003 in respect of this transaction.
Dividend
An interim dividend of 2p per common share is payable in November 2003 to
shareholders on the register on 27 May 2003.
The Board expects to propose the first dividend following the IPO in March 2004,
to be paid in May 2004. Benfield's intended dividend policy is to target a
payout ratio of approximately 50% of earnings before exceptional items and
goodwill amortisation.
Outlook
Trading conditions remain favourable and the Directors expect full year results
to be in line with expectations.
Benfield's leading market position and the increasing demand for reinsurance
provide a strong platform for further revenue growth and margin enhancement.
Grahame Chilton
Chief Executive
3 September 2003
Note to Editors:
Benfield is the world's leading independent reinsurance intermediary and risk
advisory business. Its customers include many of the world's major insurance and
reinsurance companies as well as Government entities and global corporations.
Benfield employs more than 1,600 people based in over 30 locations worldwide.
The company is listed on the London Stock Exchange under the ticker symbol BFD.
See www.benfieldgroup.com.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Unaudited results for the six months ended 30.June.2003.
Notes 6 months to 30 6 months to 30
June 2003 June 2002
#'000 #'000
Turnover 2 150,041 138,861
Interest income 3,638 3,091
Operating Revenue 153,679 141,952
Net operating expenses before exceptional items (118,913) (123,413)
Exceptional items 3 (20,477) (11,613)
Total Net Operating Expenses (139,390) (135,026)
Operating profit before exceptional items 34,766 18,539
Exceptional items 3 (20,477) (11,613)
Group Operating Profit 14,289 6,926
Share of operating losses of associated undertakings (1,608) (3,294)
Gain on the sale of fixed assets 3 36 1,065
Interest payable and similar charges before exceptional items (5,145) (7,429)
Exceptional items 3 (6,050) -
Total interest payable and similar charges (11,195) (7,429)
Profit/(loss) on ordinary activities before taxation 2 1,522 (2,732)
Tax on profit/(loss) on ordinary activities 4 (5,550) (5,420)
Loss on ordinary activities after taxation (4,028) (8,152)
Equity minority interests 11 (31)
Loss for the financial period (4,017) (8,183)
Dividends - including non-equity 5 (3,719) (7,522)
Retained loss for the financial period (7,736) (15,705)
Losses per 1p common share
Basic 6 (2.61)p (5.68)p
Diluted 6 (2.61)p (5.68)p
Adjusted earnings/(losses) per 1p common share excluding exceptional
items and non-operating gains and losses
Basic 6 8.87p (0.87)p
Diluted 6 7.38p (0.87)p
Adjusted earnings per 1p common share excluding goodwill amortisation,
exceptional items and non-operating gains and losses
Basic 6 11.69p 2.07p
Diluted 6 9.73p 1.86p
CONSOLIDATED BALANCE SHEET
Unaudited as at 30 June 2003
Notes As at 30 June As at 30 As at 31
2003 June 2002 December 2002
#'000 #'000 #'000
Fixed Assets
Intangible assets 166,540 176,047 173,987
Tangible assets 20,144 25,957 21,087
Investments in associated undertakings 3,245 4,219 5,506
Investment in own shares 11,354 8,188 7,449
Other long term investments 4,996 25,596 5,572
206,279 240,007 213,601
Current Assets
Debtors - due within one year 8 3,533,689 2,600,190 3,428,225
Debtors - due after one year 8 6,431 5,498 7,981
Investments 49,352 39,115 80,294
Cash at bank and in hand - including fiduciary funds 264,821 238,841 203,474
3,854,293 2,883,644 3,719,974
Current Liabilities
Creditors - amounts falling due within one year 9 (3,777,445) (2,873,608) (3,682,799)
Net Current Assets 76,848 10,036 37,175
Total Assets less Current Liabilities 283,127 250,043 250,776
Creditors - amounts falling due after more than one year 10 (57,132) (182,588) (162,562)
Provisions for liabilities and charges 11 (25,627) (13,117) (27,951)
Net Assets 200,368 54,338 60,263
Capital and Reserves
Called up share capital 2,596 357 357
Share premium 128,325 - -
Other reserves 134,632 136,250 136,250
Profit and loss account (65,356) (82,430) (76,650)
Total Shareholders' Funds
Equity 158,997 13,167 18,074
Non-equity 41,200 41,010 41,883
200,197 54,177 59,957
Equity minority interest 171 161 306
Capital Employed 200,368 54,338 60,263
Consolidated Statement of Total Recognised Gains and Losses
Unaudited for the six months ended 30 June 2003
6 months to 30 6 months to 30
June 2003 June 2002
#'000 #'000
Loss for the financial period (4,017) (8,183)
Exchange adjustments offset in reserves (842) (410)
Total recognised losses relating to the period (4,859) (8,593)
Reconciliation of Movements in Consolidated Shareholders' Funds
Unaudited for the six months ended 30 June 2003
6 months to 30 6 months to 30
June 2003 June 2002
#'000 #'000
Loss for the financial period (4,017) (8,183)
Dividends (3,719) (7,522)
(7,736) (15,705)
Other recognised gains and losses relating to the period (842) (410)
Provision for deferred share units and share options 28,263 2,864
Net proceeds of common shares issued for cash 120,408 -
Common shares issued to employees 147 1,068
Payment of partly paid common shares - 807
Net proceeds of cumulative redeemable convertible preference shares - 19,139
issued for cash
Net change in shareholders' funds 140,240 7,763
Shareholders' funds as at 1 January 59,957 46,414
Shareholders' funds as at 30 June 200,197 54,177
Consolidated Cashflow Statement
Unaudited for the six months ended 30 June 2003
6 months to 6 months to
30 June 2003 30 June 2002
Notes #'000 #'000
Net cash inflow from operating activities 12 40,338 3,693
Returns on investments and servicing of finance
Interest paid (8,085) (7,223)
Arrangement fee for new credit facilities (981) -
Non-equity dividends paid to shareholders (1,008) -
Net cash outflow from servicing of finance (10,074) (7,223)
Taxation (3,683) (3,983)
Capital expenditure and financial investment
Purchase of tangible fixed assets (4,876) (5,295)
Sale of tangible fixed assets 853 4,413
Purchase of fixed asset investments (5) (17,505)
Sale of fixed asset investments 494 23,767
Purchase of own shares - (3)
Net cash (outflow)/inflow from capital expenditure and financial (3,534) 5,377
investment
Acquisitions and disposals
Increase in investment in subsidiary undertakings - (107)
Disposal of associated undertakings 651 -
Net cash inflow/(outflow) from acquisitions 651 (107)
Equity dividends paid to shareholders (3,162) -
Net cash inflow/(outflow) before use of liquid resources and 20,536 (2,243)
financing
Management of liquid resources
Net decrease in current asset investments 20,084 3,607
Increase in short term deposits with banks (26,784) (14,610)
Net cash outflow from management of liquid resources (6,700) (11,003)
Financing
Net proceeds from issue of cumulative redeemable convertible - 19,600
preference shares
Net proceeds from issue of common shares 111,310 294
Proceeds from share options exercised and common shares disposed 18,779 -
of on behalf of holders
Proceeds of final payment of partly paid common shares - 807
Decrease in bank loans (103,308) (35,048)
Loan notes repaid (8,703) (1,029)
Net cash inflow/(outflow) from financing 18,078 (15,376)
Increase/(decrease) in cash (excluding fiduciary funds) 31,914 (28,622)
Fiduciary funds
Movement in fiduciary debtor and creditor balances 3,356 43,217
Increase in net cash 12 35,270 14,595
Reconciliation to net cash
Net cash at 1 January 93,830 3,505
Increase in net cash 35,270 14,595
Movement in deposits 26,784 14,610
Movement in current asset investments (20,084) (3,607)
Movement in borrowings 112,992 36,077
Other non-cash changes (13,967) (205)
Exchange adjustments 3,295 6,123
Net cash at 30 June 12 238,120 71,098
Notes to the Interim Report
For the six months ended 30 June 2003
1. Basis of accounting
The unaudited results for the six months ended 30 June 2003 have been prepared
under the historical cost convention and in accordance with the accounting
policies described in the Accountants Report prepared for inclusion in the
listing particulars dated 13 June 2003 (the "Accountants Report") of the
Company.
The financial information for the year ended 31 December 2002 included in this
interim report has been extracted from the Accountants Report. Such financial
information does not constitute financial statements of the Company for that
period for the purposes of section 84 of the Bermuda Companies Act 1981. Copies
of the Accountants Report for the Company, upon which the accountants have given
an unqualified report, can be obtained from the Company Secretary at 55
Bishopsgate, London, EC2N 3BD.
2. Segmental information
Geographical analysis by location of operation:
Turnover Profit before tax
6 months to 6 months to 6 months to 6 months to
30 June 2003 30 June 2002 30 June 2003 30 June 2002
#000 #000 #000 #000
United Kingdom 83,351 81,396 (14,710) (2,035)
North America 55,862 49,823 13,740 (3,406)
Continental Europe 4,165 2,226 411 788
Other 6,663 5,416 2,081 1,921
150,041 138,861 1,522 (2,732)
Operating segments
The analysis of operating revenue and trading result by operating segment set
out below is different from the analysis provided above which has been produced
in accordance with the requirements of Statement of Standard Accounting Practice
25, "Segmental Reporting". Trading result is a non-statutory measure and
comprises operating profit from continuing operations before amortisation of
goodwill, depreciation of tangible fixed assets and exceptional items. This
measure and the analysis by operating segment are presented by way of additional
information which conforms more closely to the manner in which the Group
operates its business and assesses its financial performance.
Trading result
6 months to 30 6 months to 30
June 2003 June 2002
#'000 #'000
International
Operating revenue 89,339 83,573
Operating profit before exceptionals 30,651 25,640
Depreciation 3,096 3,350
Trading result 33,747 28,990
United States
Operating revenue 62,193 56,667
Operating profit before exceptionals 16,622 5,928
Depreciation 1,617 2,605
Trading result 18,239 8,533
Corporate
Operating revenue 2,147 1,712
Operating loss before exceptionals (12,507) (13,029)
Depreciation 341 252
Amortisation 4,768 4,754
Trading result (7,398) (8,023)
Total
Operating revenue 153,679 141,952
Operating profit before exceptionals 34,766 18,539
Depreciation 5,054 6,207
Amortisation 4,768 4,754
Trading result 44,588 29,500
3. Exceptional items 6 months to 6 months to
30 June 2003 30 June 2002
#'000 #'000
Operating
Granting of awards under the 2002 Incentive Plan 22,432 -
Awards granted as part of acquisitions 1,817 2,864
Professional fees 2,178 3,110
Gain on disposal of current asset investments (5,950) -
Costs in respect of the integration of E.W. Blanch - 5,639
20,477 11,613
Non-operating
Gain on disposal of fixed assets (36) (1,065)
Exceptional finance charges 6,050 -
Granting of awards under the 2002 Incentive Plan
Share based awards were made under the 2002 Incentive Plan to certain key
employees of the Group in respect of services provided prior to the Initial
Public Offering in the United Kingdom. No previous awards had been made, and it
is intended that no further awards will be made under the 2002 Incentive Plan.
The cost of awards granted at less than the fair value of the underlying common
shares has been recognised in full in the profit and loss account at the date of
grant as they relate to prior services and no performance criteria (other than
continued employment with the Group) are attached to those awards.
Awards granted as part of acquisitions
On the acquisition of E W Blanch in May 2001 the Group provided share based
awards to certain key employees of the acquired company for which the cost is
being spread over a 17 to 29 month vesting period from the date of acquisition,
resulting in a charge of #1,817,000 and #2,864,000 for the periods ended 30 June
2003 and 30 June 2002 respectively.
Professional fees
Professional fees of #2,178,000 related to the Initial Public Offering in the
United Kingdom were charged to the profit and loss account in the period to 30
June 2003. Professional fees of #3,110,000 in respect of the redomiciliation
from the United Kingdom to Bermuda in October 2002 and the initial intention to
register the securities in the United States were charged in the period to 30
June 2002
Costs in respect of the integration of E W Blanch
During the period ended 30 June 2002 the Group incurred additional costs in
connection with the E W Blanch acquisition, which took place in May 2001,
comprising property rationalisation costs, redundancy payments and costs
associated with the termination of a defined benefit pension scheme.
Exceptional finance charges
On completion and delivery of proceeds of the Initial Public Offering in the
United Kingdom on 18 June 2003, the Group entered into a new credit facilities
agreement. At the same date, the Group's previous credit facilities were
cancelled and repaid. Proceeds from the Initial Public Offering, and funds
available from the new credit facilities, were used to repay the outstanding
borrowings under the cancelled facilities. On cancellation, charges were
incurred in the write off of prepaid facility arrangement fees and termination
of swap and collar interest rate derivative contracts which related to the
cancelled facilities.
4. Taxation on profit/(loss) on ordinary activities
6 months to 30 6 months to 30
June 2003 June 2002
#'000 #'000
UK corporation tax
Current tax on income for the period (1,758) 4,304
Deferred taxation 1,457 (130)
Foreign tax
Current tax on income for the period 4,925 1,745
Deferred taxation 924 (499)
Tax on share of operating profit in associates
Current tax on income for the period 2 -
5,550 5,420
Taxation on profit before exceptional items 12,663 8,188
Taxation on exceptional items (7,113) (2,768)
5,550 5,420
5. Dividends
6 months to 6 months to
30 June 2003 30 June 2002
#'000 #'000
Equity
Interim payable 3,331 6,512
Non-equity
Payable 1,541 1,010
Reversal of accrued charge (see note below) (1,153) -
3,719 7,522
The interim dividend of 2p per share (2002: 4p) is payable in November 2003 to
shareholders who were registered at the close of business on 27 May 2003.
The amount accrued in prior periods in respect of the dividend on the cumulative
redeemable convertible preference shares has been adjusted to reflect the fixed
future dividend rate of 6% per annum, which resulted from the Initial Public
Offering in the United Kingdom.
6. Earnings Per Share
Basic earnings per share is calculated by dividing the earnings attributable to
common shareholders by the weighted average number of common shares in issue
during the period, excluding those held in the employee share trusts which are
treated as cancelled. For diluted earnings per share, the weighted average
number of common shares in issue, excluding those held in the employee share
trusts, is adjusted to assume conversion of all dilutive potential common
shares. The Company has had the following three classes of shares which were
potentially dilutive during the periods presented:
(i) cumulative redeemable convertible preference shares;
(ii) those share options granted to employees where the exercise
price is less than the estimated fair value of the Company's common
shares during the relevant period; and
(iii) deferred share units.
6 months to 6 months to
30 June 2003 30 June 2002
Number of Number of
shares shares
Unadjusted weighted average number of shares 168,876,031 161,795,158
Dilution effect of share options 11,145,667 12,193,530
Dilution effect of deferred share units 4,911,815 5,383,971
Dilution effect of cumulative redeemable convertible 18,005,471 -
preference shares
Adjusted weighted average number of shares on a diluted basis 202,938,984 179,372,659
Potentially dilutive securities totalling 12,204,922 shares in respect of
cumulative redeemable convertible preference shares have not been included in
the determination of diluted net loss per share as their inclusion would be
anti-dilutive in the period ended 30 June 2002.
Supplementary basic and diluted earnings per share have been calculated to
exclude the effect of exceptional items, non-operating gains and losses and
goodwill amortisation. The adjusted numbers have been provided in order that the
effects of these charges on reported earnings can be fully appreciated.
6 months to 30 June 2003 6 months to 30 June 2002
Basic Diluted Basic Diluted
pence per pence per pence pence per
share share per share
share
#'000 #'000
Loss attributable to shareholders (4,017) (8,183)
Less preference dividends (388) (1,010)
Losses attributable to common shareholders (4,405) (2.61) (2.61) (9,193) (5.68) (5.68)
Effect of previously anti-dilutive securities - 0.44 - -
Exceptional items and non-operating gains and 26,491 15.69 13.05 10,548 6.52 6.52
losses
Taxation on exceptional items and non-operating (7,113) (4.21) (3.50) (2,768) (1.71) (1.71)
gains and losses
Adjusted earnings/(losses) excluding 14,973 8.87 7.38 (1,413) (0.87) (0.87)
exceptional items and non-operating gains and
losses
Effect of previously anti-dilutive securities - - - - - 0.08
Goodwill amortisation 4,768 2.82 2.35 4,754 2.94 2.65
Adjusted earnings excluding exceptional items, 19,741 11.69 9.73 3,341 2.07 1.86
non-operating gains and losses and goodwill
amortisation
7. Net fiduciary assets
The following fiduciary assets and liabilities held by the Group have been
included in net current assets:
As at 30 As at 30 As at 31
June 2003 June 2002 December 2002
#'000 #'000 #'000
Insurance broking debtors 3,478,705 2,554,538 3,367,670
Fiduciary investments 41,061 39,115 60,891
Fiduciary cash and deposits 198,958 212,311 167,694
Insurance broking creditors (3,698,238) (2,785,216) (3,583,847)
Net fiduciary assets 20,486 20,748 12,408
Included within fiduciary cash and deposits are amounts which are available to
the Group for general corporate purposes of #16,403,000, #16,665,000 and
#8,541,000 at 30 June 2003, 30 June 2002 and 31 December 2002 respectively.
8. Debtors
As at 30 As at 30 As at 31
June 2003 June 2002 December 2002
#'000 #'000 #'000
Due within one year
Insurance broking debtors 3,478,705 2,554,538 3,367,670
Amounts owed by associated undertakings 605 - 134
Taxation recoverable 6,293 7,500 11,051
Deferred taxation 600 4,257 3,914
Other debtors 39,081 23,252 30,266
Prepayments and accrued income 8,405 10,643 15,190
3,533,689 2,600,190 3,428,225
Due after one year
Deferred taxation 6,431 5,498 7,981
3,540,120 2,605,688 3,436,206
9. Creditors - amounts falling due within one year
As at 30 As at 30 As at 31
June 2003 June 2002 December 2002
#'000 #'000 #'000
Bank and other borrowings 19,453 21,351 19,379
Loan notes 334 7,596 9,037
Insurance broking creditors 3,698,238 2,785,216 3,583,847
Corporation tax 7,859 11,088 15,613
Social security payable 12,669 2,132 3,146
Other creditors and accruals 33,931 32,095 46,302
Dividends accrued and proposed 4,961 14,130 5,475
3,777,445 2,873,608 3,682,799
10. Creditors - amounts falling due after more than one year
As at 30 As at 30 As at 31
June 2003 June 2002 December 2002
#'000 #'000 #'000
Bank and other borrowings 56,066 171,410 161,322
Loan notes 200 6,500 200
Other creditors and accruals 866 4,678 1,040
57,132 182,588 162,562
11. Provisions for liabilities and charges
Vacant Litigation
properties and disputes Other Total
#000 #000 #000 #000
At 1 January 2003 4,527 22,424 1,000 27,951
Exchange adjustments (61) (487) - (548)
Charged to the profit and loss - 606 - 606
account
Utilised in the period (956) (1,426) - (2,382)
At 30 June 2003 3,510 21,117 1,000 25,627
12. Cash Flow
(a) Cash flow from operating activities
Reconciliation of operating profit to net cash inflow from operating activities:
6 months to 6 months to
30 June 2003 30 June 2002
#'000 #'000
Continuing operations
Operating profit 14,289 6,926
Amortisation of intangible assets 4,768 4,754
Depreciation of tangible fixed assets 5,054 6,207
Gain on sale of current asset investments (5,950) -
Cost of shares gifted during the period 109 361
Cost of share options issued 24,249 3,501
Decrease/(increase) in debtors 12,817 (3,193)
Decrease in creditors (11,204) (14,249)
Decrease in provisions for liabilities and charges (2,324) (78)
Exchange translation differences (1,470) (536)
Net cash inflow from operating activities 40,338 3,693
(b) Reconciliation of movements in net cash
As at 1 Other
January non-cash Exchange As at 30
2003 Cashflow changes movements June 2003
#'000 #'000 #'000 #'000 #'000
Cash at bank and in 203,474 62,054 - (707) 264,821
hand
Deposits classified as (103,001) (26,784) - 2,288 (127,497)
liquid assets
100,473 35,270 - 1,581 137,324
Debt due after more
than 1 year
- bank loans 161,322 (92,395) (8,859) (4,002) 56,066
- loan notes 200 - - - 200
161,522 (92,395) (8,859) (4,002) 56,266
Debt due within 1 year
- bank loans 19,379 (11,894) 11,968 - 19,453
- loan notes 9,037 (8,703) - - 334
28,416 (20,597) 11,968 - 19,787
189,938 (112,992) 3,109 (4,002) 76,053
Liquid resources 183,295 6,700 (10,858) (2,288) 176,849
Net cash including 93,830 154,962 (13,967) 3,295 238,120
fiduciary funds
(c) Movement in borrowings
6 months to 6 months to
30 June 2003 30 June 2002
#'000 #'000
Debt due within 1 year:
New secured bank loan and loan notes 20,388 -
Repayment of part of borrowings (40,004) (26,773)
Debt due after 1 year:
New secured bank loan and loan notes 58,580 40,141
Repayment of part of borrowings (150,975) (49,445)
Decrease in borrowings (112,011) (36,077)
Arrangement costs of bank loans (981) -
Cash outflow (112,992) (36,077)
13. Contingent liabilities
The Accountants Report disclosed details of two contingent liabilities, one
relating to potential tax liabilities in connection with a Funded Unapproved
Retirement Benefit Scheme ("FURBS") and the other relating to arbitration
proceedings (to which the Group is not a party) including a former client of E W
Blanch, Superior National Insurance Company.
In the FURBS matter, having taken professional advice, the Directors do not
consider that a material liability will arise. In the Superior National matter,
the Group could be pursued for return of reinsurance brokerage or for damages in
connection with an errors and omissions claim, but no claims or threats of
claims against any member of the Group have been made to date.
There has been no significant change in the status of these contingencies
between the date of the listing particulars and these interim financial
statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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