RNS Number:9267K
Windsor PLC
12 May 2003
12 May 2003
Windsor PLC
Interim Results for the six months ended 31 March 2003
"Hard Insurance Market Supports Continued Growth For Windsor"
- Brokerage and fees up by 5.5% to #7.5 million (2002: #7.1 million)
- 4.4% increase in costs reflects growth of business
- Pre-tax profit 8.6% higher at #1.168 million (2002: #1.076 million)
- Successfully completed acquisition of 45% minority interest in WPIL
- Earnings per share 46.5% higher at 1.26p (2002: 0.86p)
- Trading environment remains favourable
Commenting on the results, David Low, Chairman of Windsor, said: "Over the last
six months we have experienced strong demand for Windsor's services and this has
been reflected in the growth in the company's turnover and profitability.
Windsor Professional Indemnity Limited ("WPIL") again made a strong
contribution, reinforcing the company's decision earlier this year to buy out
the remaining 45% minority interest in WPIL. The company has taken advantage of
the opportunities afforded by the hard insurance market and we look to the
second half of our financial year with confidence."
For further details:
Windsor PLC Tel: 020 7133 1200
David Low, Chairman
Christopher Murphy, Finance Director
CardewChancery Tel: 020 7930 0777
Tim Robertson/Olivia Gallimore
Visit our website at www.windsor.co.uk
INTRODUCTION
We are pleased to report another significant increase in profitability for the
first half of our financial year. During this period market conditions have
remained favourable, with shortages of capacity keeping premium levels high in
most sectors. We believe these pressures are unlikely to lift in the medium
term. Underwriters are working hard to improve their solvency levels and, with
low returns on investments forecast for the foreseeable future, underwriting
profits are at a premium. In this environment, Windsor's specialist broking
teams are well placed to prosper in their chosen markets.
RESULTS
Compared to 2002, brokerage and fees increased by 5.5% to #7,502,000, more than
offsetting the reduction in investment income caused by continuing low returns
on investments. Profit before tax for the six months to 31 March 2003 increased
by 8.6% to #1,168,000 (2002: #1,076,000). Earnings per share after tax and
minority interests, reflecting the company's purchase of the 45% minority
interest in Windsor Professional Indemnity Limited ("WPIL") in February 2003,
increased by 46.5% to 1.26p (2002: 0.86p). The group's costs increased by 4.4%,
to #6,742,000, reflecting the growth of the group's business. The group had no
borrowings during the first half of 2003.
As in previous years, the Board has not declared an interim dividend. However,
in the absence of unforeseen circumstances, the Board expects to recommend an
increased final dividend for the year (2002: 1.3p per share).
REVIEW
This is a complex insurance market fed by the global political and economic
uncertainty precipitated by the attacks on the World Trade Centre in New York.
The turbulent market conditions this event created exacerbated insurers' capital
losses of the late 1990's and added to pressures on their solvency levels. At
the same time that insurers have been looking to increase capital and solvency
levels the value of their investments has reduced. This has forced insurers to
focus on making underwriting profits and, as a result, the London and
international insurance markets will have very little scope to reduce premium
levels for the foreseeable future.
In February 2003, we completed the acquisition of the 45% minority interest in
WPIL. Under the terms of the acquisition, the group secured the services of the
key WPIL executives for four years and now retains 100% of WPIL's profits. Part
of the purchase consideration is deferred and contingent on WPIL's trading
performance up until 30 September 2003. WPIL is widely recognised as a market
leader within the professional indemnity industry and is the group's largest
division.
Windsor Insurance Brokers ("WIB") under John Bennett, its new Managing Director,
is being successfully reorganised to ensure it makes a greater contribution to
the group's profitability. As part of the reorganisation, several senior
individuals have been recruited that are capable of generating substantial
income and enhancing the service to WIB's expanding client base. From an
operational perspective, our liability brokers are at the forefront of
responding to the employer's liability crisis being suffered by large sections
of British industry, whilst at an international level our North American and
cargo teams are making solid contributions.
OUTLOOK
I am pleased to report that our staff are reacting well to the competitive
challenges they face and I would like to thank them for their hard work and
continued loyalty to the company.
The outlook for Windsor is positive and we remain optimistic about our full year
prospects. Over the last five years the group has delivered consistent growth in
brokerage and double digit growth in pre-tax profit. More recently, this success
has been matched by our share price, which has outperformed the FTSE All Share
index by approximately 140% since May 2001.
Internally, our success has been reflected in a growing confidence across all of
our business units. Externally, our enhanced market reputation is opening up
valuable new business opportunities for the company. Windsor is therefore able
to look to the future with confidence.
David Low
Chairman
Unaudited consolidated profit and loss account
For the six months ended 31 March 2003 Year to
30 Sept
2003 2002 2002
Notes #000 #000 #000
Revenue
Brokerage and fees 7,502 7,111 17,375
Interest and investment income 408 423 828
---------- ---------- ----------
7,910 7,534 18,203
Administrative expenses (6,742) (6,458) (14,852)
---------- ---------- -----------
Operating profit being profit
on ordinary activities before taxation 1,168 1,076 3,351
Taxation on profit on ordinary (350) (323) (959)
activities
----------- ----------- -----------
Profit on ordinary activities
after taxation 818 753 2,392
Equity minority interest (123) (286) (968)
----------- ----------- -----------
Profit attributable to
shareholders 695 467 1,424
====== ====== ======
Earnings per share 2 1.26p 0.86p 2.62p
Earnings per share - diluted 2 1.23p 0.84p 2.55p
All results derive from continuing operations
Unaudited consolidated balance sheet
As at 31 March 2003 31 Mar 31 Mar 30 Sept
2003 2002 2002
Notes #000 #000 #000
Assets employed
Fixed assets
Intangible assets 3 9,210 - -
Tangible assets 1,196 3,091 1,286
Investments 63 63 63
------------ ----------- ----------
10,469 3,154 1,349
------------ ----------- ----------
Current assets
Debtors 100,861 107,799 98,370
Cash at bank and in hand 22,410 25,727 27,284
------------ ----------- ----------
123,271 133,526 125,654
Creditors: amounts falling 127,991 132,060 122,308
due within one year
------------ ----------- ----------
Net current (liabilities)/ (4,720) 1,466 3,346
assets
------------ ----------- ----------
5,749 4,620 4,695
======= ====== ======
Financed by
Called-up share capital 1,433 1,363 1,371
Share premium 3,495 2,870 2,914
Shares to be issued 468 468 468
Profit and loss account 353 (580) (342)
------------ ----------- ----------
Equity shareholders' funds 5,749 4,121 4,411
Equity minority interests - 499 284
------------ ----------- ----------
5,749 4,620 4,695
======= ====== ======
Unaudited consolidated cash flow statement
For the six months ended 31 March 2003
Year to Year to
30 Sept 30 Sept
2003 2003 2002 2002 2002 2002
Notes #000 #000 #000 #000 #000 #000
Net cash 5.1 878 1,410 2,189
inflow from
operating
activities
Returns on
investments
and servicing
of finance
Interest 408 423 828
received
Dividends (775) (367) (491) (68) (614) 214
paid to
minorities
------- ------ --------
Taxation
UK (567) (267) (865)
Corporation
tax paid
UK - (567) 3 (264) 26 (839)
Corporation
tax
refunded
------- ------ --------
Capital
expenditure
and
financial
investment
Purchase of (210) (166) (570)
tangible
fixed
assets
Sale of 25 32 2,108
tangible
fixed
assets
Purchase of - (185) (2) (136) (2) 1,536
fixed asset
investment
------- ------ --------
Acquisitions
and
disposals
Purchase of 3 (4,776) - -
minority
interest
Equity - - (653)
dividends
paid
-------- -------- --------
Cash
(outflow)/
inflow
before use
of liquid
resources (5,017) 942 2,447
and
financing
Management
of liquid
resources
Decrease/ 5.2 398 (403) (1,086)
(increase)
in term
deposits
Financing
Issue of 143 60 112
ordinary
share
capital
-------- -------- --------
(Decrease)/ 5.2 (4,476) 599 1,473
increase in
cash in the
period
===== ===== =====
Notes to the interim report
1 Basis of preparation of unaudited interim information
The results for the six months ended 31 March 2003 have neither been
audited nor reviewed and have been prepared on the basis of the
accounting policies set out in the 30 September 2002 consolidated
financial statements. The comparatives for the year ended 30 September
2002 have been extracted from the audited consolidated financial
statements, which have been filed with the Registrar of Companies, and
include an unqualified audit report. The comparatives included in this
report do not constitute statutory accounts within the meaning of
section 240 of the Companies Act 1985.
2. Earnings per share
Earnings per share is calculated on the profit of #695,000 (2002:
#467,000) and on 55,202,000
(2002: 54,236,000) ordinary shares being the weighted average number of
shares in issue during the period.
Diluted earnings per share is calculated on the basis of 56,601,000
(2002: 55,619,000) shares in accordance with the requirements of FRS
14.
The actual number of shares in issue at 31 March 2003 was 57,319,000
(2002: 54,503,000), including 1,626,000 shares issued in respect of the
acquisition set out in note 3 below.
3. Acquisition of minority interest
On 5 February 2003 the group acquired the 45% minority interest in its
subsidiary undertaking Windsor Professional Indemnity Limited ("WPIL").
The maximum consideration payable, part of which is deferred and
contingent upon future trading results, is #9,000,000. During the period
the group paid #4,548,000 in cash and allotted 1,626,000 shares in
respect of the transaction. The maximum potential goodwill that could
arise on the acquisition has been capitalised and is being amortised in
accordance with the requirements of FRS 10 over a period of 20 years.
4. Pension Schemes
The group operates two defined contribution schemes and one defined
benefit scheme. The defined benefit scheme has two members and had a
surplus at its last valuation. In the opinion of the directors, the
information that would be disclosed under FRS 17 or SSAP 24 in respect
of this scheme is not material for an appreciation of the financial
position of the group.
5 Cash flow information
5.1 Reconciliation of profit on ordinary activities before taxation to net
cash inflow from operating activities
Year to
30 Sept
2003 2002 2002
#000 #000 #000
Profit on ordinary activities 1,168 1,076 3,351
before taxation
Interest received (408) (423) (828)
Depreciation, amortisation and 280 273 465
loss/(profit) on disposal
Net (decrease)/increase in (41) 1,531 (248)
fiduciary debtors and
creditors
Net decrease in other debtors (121) (1,047) (551)
and creditors
-------- -------- --------
Net cash inflow from operating 878 1,410 2,189
activities
===== ===== =====
5.2 Reconciliation of net cash flow
to movement in net funds
Year to
30 Sept
2003 2002 2002
#000 #000 #000
(Decrease)/increase in cash in (4,476) 599 1,473
the period
Cash (outflow)/inflow from (398) 403 1,086
(decrease)/increase in liquid
resources
-------- -------- --------
(Decrease)/increase in cash and (4,874) 1,002 2,559
liquid resources
===== ===== =====
Opening net funds 27,284 24,725 24,725
===== ===== =====
Closing net funds 22,410 25,727 27,284
===== ===== =====
5.3 Analysis of net funds
At 31 Mar Cash At 1 Oct
2003 flow 2002
#000 #000 #000
Cash 3,936 (4,476) 8,412
Liquid resources 18,474 (398) 18,872
-------- -------- --------
Cash at bank and in hand 22,410 (4,874) 27,284
======= ======= =======
6. Interim statement
Copies of the interim statement will be available from the registered
office, 2 America Square, London, EC3N 2LU, and at the group's website,
www.windsor.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
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