RNS Number:9272D
Culver Holdings PLC
17 September 2007
Culver Holdings plc
Condensed consolidated interim financial information
30 June 2007
CHAIRMAN'S STATEMENT
The results for the six months to 30 June 2007 are attached.
TRADING SUMMARY
The group has again made a modest profit in the period of #20,000 (2006: #8,000)
based on turnover which has increased by approximately 5 per cent. to #1,867,000
(2006:#1,777,000).
Insurance Broking
Fees and commissions in the insurance broking segment have increased to
#1,514,000 (2006: #1,437,000). This is a creditable result given the
reorganisation of the business which, together with staff changes, has seen a
short term and expected loss of some clients and their associated income and
despite the continued softness of insurance premiums across the full spread of
the segment's business.
The segment's new management team, led by David Sullivan, has made encouraging
progress in both reinvigorating the existing teams and making tactical hires to
strengthen and develop those teams, particularly in London. I am gratified that
the new management team has successfully recruited a number of talented
specialist teams operating in those areas targeted for development and
complementary to the segment's existing general commercial business. They will,
in the immediate term and before their full potential is realised, provide
access to markets which would otherwise require the use of third party
facilities.
Employee Benefits
The turnover of the employee benefits segment in the period increased slightly
to #353,000 (2006: #340,000).
During the period, and following a detailed review of the wealth management
market, a specialist wealth management adviser has been appointed to service the
business's high net worth clients. This has strengthened the offering to
customers in the areas of investment and tax and other financial planning. The
nature of a substantial part of the employee benefits business is such that
there is a considerable demand for advice of this nature and it is a natural
fit.
The business has also recruited a development director whose considerable
expertise and track record in establishing connections with professional firms
who do not have financial planning facilities and authorisation is expected to
produce positive results in the second half of the year.
The increased marketing activity and appointment of a group marketing manager to
support both segments is also anticipated to improve the income of the employee
benefits segment.
PROSPECTS
It is still relatively early days in the new team's progress but I am pleased to
see now a business with high motivation and morale and an imaginative and
proactive approach to serving clients. There are considerable opportunities for
the insurance broking segment in the current market that the new management team
are eager and committed to seeking out and seizing.
However, it is clear that in order both to benefit fully from specialist sector
expertise and to maximise available returns it is necessary for our production
staff to have direct access to all markets. We shall be taking steps to ensure
that our colleagues have access to the resources they require to achieve their
potential.
So far as the employee benefits and financial planning segment is concerned, its
growth is largely dependent on the recruitment and retention of sufficient
advisers with the expertise and entrepreneurial spirit required to fuel its
planned growth.
The outcome for the full year will depend crucially on the speed at which new
producers begin to book income. I am confident, however, that the changes and
additions we have made in the last year are leading the Group in the right
direction and that the benefits will be recognised by shareholders over the
years to come.
RMH Read
Chairman
14 September 2007
Condensed consolidated interim income statement
Six months ended 30 June
Note 2007 2006
#'000 #'000
Fees and commissions 1,867 1,777
Direct broking expenses (523) (652)
Administrative expenses (1,271) (1,075)
Operating profit 73 50
Finance costs - net 8 (53) (42)
Profit before income tax 20 8
Income tax expense - -
--- ---
Profit for the period attributable to equity
holders of the Company 20 8
--- ---
Earnings per share for profit attributable to the
equity holders of the Company during the period
expressed in pence per share
- Basic 9 8.73 3.49
---- ----
- Diluted 9 7.26 3.49
---- ----
The attached notes are an integral part of these consolidated interim financial
statements.
Condensed consolidated interim balance sheet
31 December
30 June 2007 30 June 2006 2006
#'000 #'000 #'000
ASSETS
Non-current assets
Property, plant and equipment 82 51 40
Goodwill 2,115 2,115 2,115
Financial receivables 7 7 7
----- ----- -----
2,204 2,173 2,162
----- ----- -----
Current assets
Trade and other receivables 10 2,479 2,623 2,540
Cash and cash equivalents 11 1,502 1,811 1,451
----- ----- -----
3,981 4,434 3,991
----- ----- -----
Total assets 6,185 6,607 6,153
----- ----- -----
EQUITY
Capital and reserves attributable
to equity holders
Share capital 12 2,859 2,859 2,859
Share premium 4,403 4,403 4,403
Other reserves 48 30 48
Retained earnings (7,790) (7,854) (7,810)
------ ------ ------
Total equity (480) (562) (500)
------ ------ ------
LIABILITIES
Non-current liabilities
Borrowings 690 835 778
Retirement benefit obligations 27 23 32
Provisions 14 8 95 -
--- --- ---
725 953 810
--- --- ---
Current liabilities
Trade and other payables 13 4,831 5,353 4,561
Borrowings 1,032 801 1,194
Current income tax liabilities 6 - 6
Provisions 14 71 62 82
----- ----- -----
5,940 6,216 5,843
----- ----- -----
Total liabilities 6,665 7,169 6,653
----- ----- -----
Total equity and liabilities 6,185 6,607 6,153
----- ----- -----
The attached notes are an integral part of these consolidated interim financial
statements.
Condensed consolidated interim statement of changes in shareholders' equity
Attributable to equity holders of the
Company
Share Share Other Retained Total
capital premium Reserves earnings Equity
#'000 #'000 #'000 #'000 #'000
Balance at 1 January 2006 2,859 4,403 30 (7,862) (570)
Profit for the period - - - 8 8
----- ----- --- ------ -----
Balance at 30 June 2006 2,859 4,403 30 (7,854) (562)
----- ----- --- ------ -----
Balance at 1 July 2006 2,859 4,403 30 (7,854) (562)
Recognition of increase in
net equity value on
exchange of loan stock - - 18 - 18
Profit for the period - - - 44 44
--- --- --- --- ---
Total recognised income and
expense for the period - - 18 44 62
----- ----- --- ------- ------
Balance at 31 December 2006 2,859 4,403 48 (7,810) (500)
----- ----- --- ------ ------
Balance at 1 January 2007 2,859 4,403 48 (7,810) (500)
Profit for the period - - - 20 20
----- ----- --- ----- -----
Balance at 30 June 2007 2,859 4,403 48 (7,790) (480)
----- ----- --- ----- -----
The attached notes form an integral part of this condensed consolidated interim
financial information.
Condensed consolidated interim cash flow statement
Six months ended 30 June
Note 2007 2006
#'000 #'000
Cash flows from operating activities
Cash generated from operations 15 374 566
Interest paid (52) (46)
---- ----
Net cash generated from operating activities 322 520
---- ----
Cash flows from investing activities
Purchases of property, plant and equipment (PPE) (56) (2)
Proceeds from sale of PPE 1 -
Interest received 30 29
--- ---
Net cash (used in)/generated from investing
activities (25) 27
--- ---
Cash flows from financing activities
Proceeds from borrowings 40 -
Repayments of borrowings (169) (124)
---- ----
Net cash used in financing activities (129) (124)
---- ----
Net increase in cash and cash equivalents 168 423
Cash and cash equivalents at beginning of period 572 850
---- -----
Cash and cash equivalents at end of period 11 740 1,273
---- -----
Group cash and cash equivalents include amounts of #954,000 (2006 - #1,510,000)
in respect of balances held in trust which are not available for use by the
Group.
Selected notes to the condensed consolidated interim financial information
1. General information
Culver Holdings plc (the Company) and its subsidiaries (together 'Culver
Holdings' or 'the Group') provide a full range of insurance broking and employee
benefits and independent financial advisory services to businesses and high net
worth individuals in the UK and other parts of the world.
The Company is a limited liability company incorporated and domiciled in the UK.
The address of its registered office is Llanmaes, St Fagans, CF5 6DU.
The Company has its primary listing on the London Stock Exchange.
This condensed consolidated interim financial information was approved for issue
on 14 September 2007.
2. Basis of preparation
This condensed interim financial information for the half year ended 30 June
2007 has been prepared in accordance with IAS 34, 'Interim financial reporting'.
The interim condensed financial report should be read in conjunction with the
annual financial statements for the year ended 31 December 2006.
The comparative figures for the financial year ended 31 December 2006 are not
the company's statutory accounts for that year. Those accounts have been
reported on by the company's auditors and delivered to the registrar of
companies. The report of the auditors was (i) unqualified, (ii) did not contain
a reference to any matters to which the auditors drew attention by emphasis of
matter without qualifying their report, and (iii) did not contain any statement
under Section 237 of the Companies Act 1985.
3. Accounting policies
The accounting policies adopted are consistent with those of the annual
financial statements for the year ended 31 December 2006, as described in the
annual financial statements for the year ended 31 December 2006.
4. Insurance broking assets and liabilities
A subsidiary of the Company acts as an agent in broking the insurable risks of
its clients and is generally not liable as principal for premiums due to
underwriters or for claims payable to clients. Notwithstanding the legal
relationship with clients and underwriters and since, in practice, premium and
claim monies are usually accounted for by insurance intermediaries, the Group
has followed generally accepted accounting practice by showing cash, debtors and
creditors relating to insurance business as gross assets and liabilities of the
Group itself.
Separate balances are maintained and are included in the respective trade
receivables and payables balances where the Group transacts business with a
party in more than one capacity.
5. Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with
banks, other short-term highly liquid investments with original maturities of
three months or less, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities on the balance sheet.
Cash and cash equivalents includes cash received from insurance-broking clients
and insurers referred to in note 4 above and held within a number of
non-statutory trusts for the benefit of the clients and insurers so entitled.
6. Provisions
Provisions for pensions review, unpaid salaries and other claims are recognised
when: the Group has a present legal or constructive obligation as a result of
past events; it is more likely than not that an outflow of resources will be
required to settle the obligation; and the amount has been reliably estimated.
Where there are a number of similar obligations, the likelihood that an outflow
will be required in settlement is determined by considering the class of
obligations as a whole. A provision is recognised even if the likelihood of an
outflow with respect to any one item included in the same class of obligations
may be small.
Provisions are measured at management's best estimate of the expenditure
required to settle the obligation at the balance sheet date.
7. Segment information
At 30 June 2007, the Group is organised into two main business segments,
insurance broking; and employee benefits including the provision of independent
financial advice.
There is no secondary reporting format for the Group. All Group business arose
in the United Kingdom.
The segment results for the six months ended 30 June 2007 are as follows:
Insurance Employee
broking benefits Unallocated Group
#'000 #'000 #'000 #'000
Fees and commissions 1,514 353 - 1,867
Direct broking expenses (419) (104) - (523)
Administrative expenses (923) (256) (92) (1,271)
Operating profit/(loss) 172 (7) (92) 73
Finance costs - net 16 (7) (62) (53)
--- --- ---- -----
Profit/(loss) before income tax 188 (14) (154) 20
--- --- ---- -----
Depreciation of tangible fixed
assets 12 2 - 14
--- --- --- ---
Capital expenditure 52 4 - 56
--- --- --- ---
Segment assets 4,568 91 1,526 6,185
Segment liabilities 4,481 426 1,758 6,665
----- ---- ----- ------
Net assets/(liabilities) 87 (335) (232) (480)
----- ---- ----- ------
The segment results for the six months ended 30 June 2006 are as follows:
Insurance Employee
broking benefits Unallocated Group
#'000 #'000 #'000 #'000
Fees and commissions 1,437 340 - 1,777
Direct broking expenses (534) (118) - (652)
Administrative expenses (748) (211) (116) (1,075)
Operating profit/(loss) 155 11 (116) 50
Finance costs - net 8 (6) (44) (42)
--- --- ---- ----
Profit/(loss) before income tax 163 5 (160) 8
--- --- ---- ----
Depreciation of tangible fixed
assets 10 2 - 12
--- --- --- ---
Capital expenditure 1 1 - 2
--- --- --- ---
Segment assets 5,345 96 1,166 6,607
Segment liabilities 5,098 625 1,446 7,169
----- ----- ----- -----
Net assets/(liabilities) 247 (529) (280) (562)
----- ----- ----- -----
Unallocated costs represent corporate expenses together with investment income
and finance costs.
Inter-segment transfers or transactions are entered into under the normal
commercial terms and conditions that would also be available to unrelated third
parties.
8. Finance costs - net
Six months ended 30 June
2007 2006
#'000 #'000
Interest expense:-
Bank borrowings (39) (19)
Hire purchase (1) (3)
Other loans (12) (15)
Loan stock (28) (30)
Unwinding of interest on Loan Stock (3) (4)
---- ----
(83) (71)
---- ----
Interest income:-
Bank deposits 30 29
---- ----
Finance costs - net (53) (42)
---- ----
9. Earnings per share
(a) Basic
Basic earnings per share is calculated by dividing the profit attributable to
equity holders of the Company by the weighted average number of ordinary shares
in issue during the period.
30 June
2007 2006
#'000 #'000
Profit attributable to equity holders of the Company 20 8
Weighted average number of ordinary shares in issue 229 229
(thousands)
Earnings per share (pence per share) 8.73 3.49
(b) Diluted
Diluted earnings per share is calculated adjusting the weighted average number
of ordinary shares outstanding to assume conversion of all dilutive potential
ordinary shares. The Company has four categories of dilutive potential ordinary
shares:
(i) Warrants
(ii) Share options
(iii) Convertible Loan Stock 2009
(iv) Convertible Loan Stock 2011
The exercise of the share options and certain of the warrants is conditional and
any dilutive effect has been ignored. Any conversion of the remaining warrants
or the convertible loan stock 2009 would have an anti-dilutive effect on
earnings per share.
The calculation is performed for the convertible loan stock 2011 to determine
the number of shares that could have been acquired based on the conversion
rights attached to that stock. The number of shares calculated as above is
compared with the number of shares that would have been issued assuming the
conversion of the Loan Stock.
In 2006 the conversion of convertible loan stock 2011 would also have had an
anti-dilutive effect on earnings per share. As result, the basic and diluted
earnings per share were the same in accordance with IAS 33.
30 June
Note 2007 2006
#'000 #'000
Profit attributable to equity holders of the Company 20 8
Effect of conversion of loan stock 26 -
---- ----
Profit attributable to equity holders of the Company
(diluted) 46 8
---- ----
Weighted average number of ordinary shares in issue
(thousands) 229 229
Effect of conversion of loan stock (thousands) 405 -
---- ----
Weighted average number of ordinary shares for diluted
earnings per share (thousands) 634 229
---- ----
Diluted earnings per share (pence per share) 7.26 3.49
---- ----
10. Trade and other receivables
Note 2007 2006
#'000 #'000
Insurance debtors 4 2,122 2,184
Other debtors 201 284
Prepayments 156 155
----- ------
Total 2,479 2,623
----- ------
11. Cash and cash equivalents
Notes 2007 2006
#'000 #'000
Cash held in trust accounts 4, 5 954 1,510
Other cash balances 548 301
------ ------
Total 1,502 1,811
------ ------
Cash and cash equivalents include the following for the purposes of the cash
flow statement.
Cash as above 1,502 1,811
Bank overdrafts (762) (538)
----- ------
Total 740 1,273
----- ------
12. Share capital
2007 2006 2007 2006
Number Number #'000 #'000
Authorised
Ordinary shares of 25p each 5,590,863 5,590,863 1,398 1,398
Deferred ordinary shares of 25p each 11,209,137 11,209,137 2,802 2,802
----- -----
4,200 4,200
----- -----
Allotted, called up and fully paid
Ordinary shares of 25p each 228,757 228,757 57 57
Deferred ordinary shares of 25p each 11,209,137 11,209,137 2,802 2,802
----- -----
2,859 2,859
----- -----
The deferred shares bear no right to dividends, to notice of meetings (or to
attendance or to voting thereat) or to participate in surplus assets of the
Company on a winding up of the Company until ordinary shareholders have received
#100,000 per share. The Company also has the right to repurchase the entire
issued class of the deferred shares for a nominal consideration without seeking
holders' consent.
13. Trade and other payables
Note 2007 2006
#'000 #'000
Insurance creditors 4 3,152 3,883
Other creditors 884 1,126
Accruals 795 344
----- -----
Total 4,831 5,353
----- -----
14. Provisions and other liabilities
Other Salaries
Pension Redress and
Mis-selling Claims Benefits Other Total
#'000 #'000 #'000 #'000 #'000
Balance at 1 January 2006 119 85 37 40 281
Movements in period (98) (30) (1) 5 (124)
---- ---- ---- ---- ----
Balance at 30 June 2006 21 55 36 45 157
Movements in period (21) 4 (13) (45) (75)
---- ---- ---- ---- ----
Balance at 31 December 2006 - 59 23 - 82
Movements in period - (3) - - (3)
---- ---- ---- ---- ----
Current - 48 23 - 71
Non-current - 8 - - 8
---- ---- ---- ---- ----
Balance at 30 June 2007 - 56 23 - 79
---- ---- ---- ---- ----
Provisions categorised as current liabilities represent provisions for
liabilities which are expected to be settled within one year.
Provisions categorised as non-current liabilities represent provisions for
liabilities which are not expected to be settled within one year.
In common with other intermediaries and life offices in the United Kingdom which
have written pension transfer, pension opt out and endowment business, the Group
has followed the Financial Services Authority ("FSA") guidelines, to review and
secure redress for policyholders wrongly sold such business. No further
provisions (2006:#Nil) in respect of pensions business or other business (2006:
#Nil) have been made in the accounts for potential payments which may be made to
policyholders in respect of inappropriate advice given and costs in relation to
sales of certain policies. No payments (2006:#128,000) have been made to
policyholders during the period.
These provisions have been calculated using data derived both from detailed file
reviews of specific cases, valuations received from actuaries and from a
statistical review based on the entire pension related business. The approach
adopted is in accordance with FSA guidelines both in the analysis of cases into
priority and non-priority categories and in the method of calculation of
compensation. Necessarily, in a number of cases reasonable estimates have had to
be made on the basis of information available. The calculation of the provision
for the remaining cases has been based on the proportion of reviewable cases
where rectification will be due and the average costs of rectification and
review which has been based on experience to date. The provision is made on a
gross basis and the related recovery under the Group's professional indemnity
insurance of #25,000 (2006: #25,000) is dealt with separately in the accounts
within debtors.
While the directors consider that the provision is a reasonable estimate of the
ultimate cost, given the assumptions that must be made, there remain a number of
areas of uncertainty which may result in the ultimate cost being different.
Claims continue to be made.
The provision for unpaid salaries and consultancy fees at the year end is
#23,000 (2006:#36,000).
In 2006 the Group resolved the uncertainty surrounding the quantum of certain
liabilities incurred by the Group by making arrangements with a third party for
that third party to indemnify the Group against any claim arising in respect of
those balances, which totalled #224,000, for a consideration of #49,000. The
surplus arising was credited to administrative expenses in the second half of
2006.
15. Cash generated from operations
Six months ended 30 June
2007 2006
#'000 #'000
Cash flows from operating activities
Profit before tax 20 8
Interest receivable (30) (29)
Interest payable 83 71
Depreciation of tangible fixed assets: 14 12
Unwinding of fair value discounting 3 4
Payments to pensions mis-selling creditors and
other redress claimants - (128)
Decrease/(increase) in debtors 64 (566)
Increase in creditors 223 1,187
(Decrease)/increase in provisions (3) 7
---- ----
Net cash inflow from operating activities 374 566
---- ----
This information is provided by RNS
The company news service from the London Stock Exchange
END
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