29th Jun 2007 13:50
Gable Holdings Inc29 June 2007 29 June 2007 Gable Holdings Inc ("Gable" or "the Company") Unaudited Preliminary Results for the year ended 31 December 2006 Suspension of trading in the Company's shares Gable Holdings (AIM: GAH), the AIM-listed European insurance company, announcesunaudited results for the year ended 31 December 2006. Summary •Gable Insurance started writing its first business in late January 2006offering products to the construction industry in Great Britain and Ireland. •Gable's internet based quotation system has proved very successfulproviding one of the lowest fixed cost bases in the industry and ascalable platform as the business grows. •Strong level of support from a network comprising over 80brokers (double the number reported at the half year stage) whichcontinues to grow. •Results for the year ended 31 December 2006: •On a pro-forma basis the gross written premium for the year of £6.2 million gives a net profit before additional actuarial reserves of £2.7 million. The basis of the pro-forma figures, illustrating what the Directors believe to be the underlying performance of the Group, is set out in detail in the Chief Executive's review below. •The gross written premium of £6.2 million produces an earned premium of £3.6 million and net profit before additional actuarial reserve of £0.7 million. •As this is the first year of account, the Board has taken a very cautious view on its reserving policy, as a result of which the Group recorded a small loss before tax for the year of £0.24 million. Comment and Outlook William Dewsall, Chief Executive, Gable Holdings Inc., commented: "Despite competitive market conditions, Gable Insurance has performedvery well in 2006 writing profitable business in line with our strategy.The reported numbers should also be considered in the context of thevery cautious view taken with regard to our reserving policy for Gable'sfirst underwriting account period. In the current year the level of new business being offered to GableInsurance remains high and it continues to write business in accordancewith its stated objective of profitable underwriting, with reference toprudent risk management." Suspension of trading in the Company's shares Gable announces that the publication of its 2006 report and accounts hasbeen delayed due to a technical delay in the completion of the audit of itsprincipal operating subsidiary in Liechtenstein, Gable Insurance AG("GIAG"), for the year ended 31 December 2006. This delay has arisen due toGIAG commissioning an actuarial review of its year end reserving to complywith the requirements of its regulator, the Financial Market Authority("FMA"). This actuarial review was undertaken at the request of the FMA tocomply with an imminent change in the regulatory requirements of the FMA inrespect of non-life companies and by doing so GIAG has met with bestpractice at the earliest possible opportunity. However, it has been anunfortunate consequence that the completion of the actuarial review, andhence the Group audit process, has had to be extended. The actuarial reviewitself is now complete and the Company is waiting for the technical handoverof that actuarial review to its auditors in order that the GIAG audit may besigned off. At that point, the Group audit can then be finalised and theaudited report and accounts posted to shareholders. For the reason set out above the Company's annual accounts for its yearended 31 December 2006 can not yet be finalised and will not therefore bepublished by 30 June 2007. Accordingly, the Company will not be in aposition to be able to comply with the requirements of AIM Rule 19. As a result, the Company has therefore requested that trading in its shares be temporarily suspended until the audited report and accounts arepublished. The Company looks forward to posting the audited report andaccounts to shareholders as soon as practicable. Commenting on the delay, William Dewsall, Chief Executive of Gable HoldingsInc. said: "We have endeavoured to meet both the changing requirements of ourregulatory environment and our obligations under the AIM Rules, and thisdelay is therefore very regrettable. I am confident that our unauditednumbers are a representative picture of the progress we have made, and Ilook forward to reporting the continuing growth of the Group to shareholdersduring the current year." Enquiries: William Dewsall, Chief Executive Gable Holdings Inc tel: 0207 337 7460 James Harris Strand Partners Limited tel: 0207 409 3494 John Bick tel: 07802 211 374 Chairman's Statement These are the first annual results of Gable Holdings Inc. ("Gable" or the"Company") to include the results of our insurance subsidiary Gable Insurance AG("GIAG"). The Board is delighted with the results which have been achieved from start-up,the first policy being written in January 2006. It has always and will continueto be our objective to write a highly profitable book of business, through aprudent underwriting policy. We have also benefited from the application of astate-of-the-art policy handling system, which has been well received by ourbrokers and enables us to operate with one of the lowest expense margins in theUK. The beginning of the current year has started well and we look forward to thecontinued success of the business. Geoffrey Conway-HendersonChairman Chief Executive's Review The Board of Gable is pleased to present its unaudited results for the yearended 31 December 2006. These are the first results announced by the companywhich incorporate the results from Gable's insurance company, Gable Insurance AG("GIAG"). These results are presented under International Financial Reporting Standardsand the effect of this on the prior period results is explained in the notesbelow. Business Review Gable acquired Brown Duke AG in December 2005, an insurance company registeredand regulated in Liechtenstein (subsequently renamed Gable Insurance AG). TheGroup offers the insurance products of GIAG in Great Britain and Ireland. GIAGwrote its first business in January 2006, albeit later than anticipated, as theCompany awaited the receipt of final regulatory approval in the UK to commenceunderwriting business. As a result the Company was not in a position to benefitfrom the early January window for renewals. As a new insurance company, the primary objective is to build a stable andprofitable insurance book and this has been reflected in the results presented,albeit this will not be fully reflected until a full year's earned premium isannounced at the end of the current financial year. Building a new business withthis profit-orientated objective takes time as will the achievement of thisobjective. However, the Board is pleased with the results achieved to date andthe prospects for the current year. In summary, the key features of the group's underwriting performance in 2006 areas follows: •The Group is currently offering products to the construction industry inGreat Britain and Ireland, namely: •Contractors' All Risks (CAR) •Employers' Liability (EL) •Public Liability (PL) •Commercial Combined (COM) •In late 2006 GIAG was also granted licenses to underwrite business inSpain, France, Germany and Italy •A network comprising over 80 brokers has been established and is growing,in fact double the level achieved in the first six months •Gable's internet based quotation system has proved successful and hasbeen very well received by brokers and clients, providing the Group with oneof the lowest fixed cost bases in the industry and a scaleable platform asthe business grows •Gable's system enables full data entry for each prospective risk by thebrokers and enables GIAG to fully manage risk assessment and premiumquotation, through to automatic policy documentation, also providingcontract certainty GIAG purchased its reinsurance programme in January 2006 to provide suitableprotection given its underwriting risk. All the reinsurers supporting theprogramme are A rated or above. GIAG's programme is due for renewal on 1 July2007 and, given that no claim has been made, or notified to reinsurers, GIAG isconfident that its new programme will be more cost effective than its currentprogramme, whilst continuing to meet its underwriting requirements as itsbusiness grows. Results The results for the year ended 31 December 2006 show gross written premium of£6.2 million, but as this is the first period of account, of this amount, £2.6million was unearned at the end of the year. As such, the insurance results arebased on gross earned premium of £3.6 million. However, in presenting theresults below we have shown both the reported result and also an unaudited proforma result prepared on the basis set out below, which the Board believesprovides a more representative basis of presentation for the 2006 underwritingyear. £000s £000s Unaudited Unaudited Pro forma - written Actual - earned Gross premium 3,633 6,214Reinsurance (1,295) (1,025)Acquisition costs (908) (1,554)Claims -paid/notified/reserved (319) (525)Claims - actuarialreserve (698) (1,115)Other directexpenses (434) (434) ---------- -----------------Net insuranceresult (21) 1,561 ---------- -----------------Net insuranceresult beforeclaims reserve 677 2,676 ---------- ----------------- The following explanatory notes should be read in conjunction with the tableabove: • As previously noted this is the first year of account with business onlybeing written from part way through the financial year and, as such, only58.5% of the premium written was earned as at the end of the year. • The reinsurance programme purchased by GIAG in January hasultimately proven to be more expensive than originally envisaged, as itwas formulated on higher levels of premium income. However, this wasGIAG's first period of account and a prudent approach to reinsurance wasdetermined as essential in protecting the Group's capital. With aneighteen-month track record, the 2007/08 programme (12 months) has beenpriced against the premium now forecast to be written in that periodwhilst, at the same time, addressing any perceived over-payment for 2006/07 (18 months). As such, the pro forma result above shows thereinsurance that the Board considers would have been payable if it hadbeen possible to match the reinsurance to the actual premium written atthe outset. • As part of the evolution of regulation in Liechtenstein fornon-life insurance companies and to reflect imminent changes inthese regulations, the Financial Market Authority requested thatGIAG obtain an independent actuarial evaluation of its potentialreserving requirements at the end of the period. However, theexercise of evaluating a reserving position after eighteen months,given no realistically comparable track record, is fraught withuncertainty. Management within the Group and the claims handlingexperts engaged, have significant expertise in this regard and theyear end position (before the actuarial reserve) was determinedfollowing a prudent and pragmatic evaluation process. However, forthe purposes of the reported financial statements, the additionalactuarial reserve has been acknowledged in formulating the reportedyear end position. GIAG's solvency position remains very strong and exceeds therequirement for our current and currently anticipated growthstrategies. The reported result for the year shows a loss of £0.2 million (2005:loss of £0.6 million). At the end of the period net assets were £8.8million (2005: £8.9 million). Cash balances at the end of the periodwere £1.0 million, of which £0.9 million was held by third partieson the Group's behalf as a result of premium collection, and inaddition financial assets held in respect of insurance capital inLiechtenstein were £3.7 million. Board During the year Geoffrey Conway-Henderson was appointed to the Boardas non-executive Chairman and Tim Moss was appointed as FinanceDirector. In addition, John Leat stepped down as Chairman and theBoard would like to take this opportunity to re-iterate its thanksto John for his contribution to the development of the Group. Since the Year End Gable has introduced a RoSPA certified Risk Management programme which isoffered to all policy holders. This is a free of charge web based systemthat helps policy holders comply with the ever increasing demands of Healthand Safety legislation, at no extra cost to them. Outlook The Board believes that the principal challenge it faces in building on itsexcellent start over the first year is to continue to write profitable businessin a competitive market place. Construction insurance remains competitive, however, the Board believes that itsnetwork of brokers is very strong and continues to expand. The Group is workingclosely with them to ensure that its range of products meets the requirements ofcustomers. GIAG has enhanced its product offering and is continuing to update itthrough cover offered and add-on products. GIAG has also launched its product"Select" for smaller contractors and is offering risk management (geared toHealth and Safety Requirements) as part of its cover. It is also important forthe Company that the systems utilised by GIAG offer contract certainty and GIAGhas been at the forefront of the insurance sector as one of the first to be ableto provide contract certainty. The level of new business being offered to the Company remains high and Gablecontinues to increase the business written in accordance with its statedobjective of profitable underwriting alongside prudent risk management. Gablewill not write business for premium sake or to utilise its surplus capital,which would be a misguided short term objective which can only result in higherloss ratios and poor profit performance. As part of its growth, the Group will continue to appraise new products bothwithin and outside its existing markets. Gable intends to continue to securegood levels of overall performance in the business through both organic growthand the introduction of new products. The Group will also look at acquisitionopportunities. In summary, the Board is delighted with the progress the Group has made over thelast year and the solid start it has made in the current financial year andremains confident that it is well placed to meet its own growth expectations. William Dewsall Chief Executive Unaudited Consolidated Income Statement For the year ended 31 December 2006 Thirteen Year months ended ended 31 December 31 December 2006 2005 Notes £000s £000s Gross written premiums 6,214 -Change in provision for gross unearned premiums (2,581) - ---------- ----------Gross earned premiums 3,633 - Outward reinsurance premiums (2,195) -Change in provision for unearnedpremiums - reinsurers' share 900 - ---------- ----------Net earned premiums 2,338 - Net investment return 104 24Other operating income 40 - ---------- ----------Total revenue from operations 2,482 24 Gross claims paid (29) -Movement in gross technical provisions (988) - ---------- ----------Gross claims incurred (1,017) - Reinsurers' share of gross claims paid - -Movement in reinsurers' share of technical - -provisions ---------- ---------- Reinsurers share of claims incurred - - ---------- ----------Net claims incurred (1,017) - Expenses incurred in insurance activities (908) -Other operating expenses (799) (600) ---------- ----------Total operating charges (1,707) (600) ---------- ----------Loss from operations and before taxation (242) (576) Taxation (10) - ---------- ----------Loss for the period attributableto equity holders of the Company (252) (576) ---------- ---------- Profit/(loss) per share - basic & diluted 2 (0.23)p (1.44)p All operations are continuing. Unaudited Consolidated Balance Sheet At 31 December 2006 31 December 31 December 2006 2005 £000s £000s AssetsIntangible assets 4,443 4,250Tangible fixed assets 369 75Reinsurers' share of technical provisions - -Deferred acquisition and reinsurance costs 1,606 -Prepayments and accrued income 806 -Trade and other receivables 734 24Financial assets 3,703 -Cash and cash equivalents 968 4,858 ----------- ---------Total assets 12,629 9,207 ----------- --------- EquityShare capital 281 279Share premium account 5,406 5,308Share based premium reserve 20 20Other reserves 3,875 3,875Retained earnings (828) (576) ----------- ---------Total equity attributable to equity holders andtotal equity 8,754 8,906 LiabilitiesTechnical provisions 3,582 -Accruals and deferred income 34 -Trade and other payables 259 301 ----------- ---------Total liabilities 3,875 301 ----------- ---------Total liabilities and shareholders' funds 12,629 9,207 ----------- --------- Net asset value per ordinary share 7.80p 7.99p Unaudited Consolidated Cash Flow Statement For the year ended 31 December 2006 Thirteen Year months ended ended 31 December 31 December 2006 2005 Notes £000s £000s Cash flows from operating activitiesCash generated from operations 3 (42) (323)Interest received 104 24 ----------- ----------Net cash flows from operating activities 62 (299) Cash flows from investing activitiesPurchases of financial assets (3,704) -Purchase of tangible fixed assets (348) (75) ----------- ----------Net cash flows from investing activities (4,052) (75) Acquisitions and disposalsAcquisition of subsidiary - (312)Net cash acquired with subsidiary - 15 ----------- ----------Net cash flows from acquisitions and disposals - (297) Cash flows from financing activitiesShares issued 100 5,805Share issue costs - (276) ----------- ----------Net cash flows from financing activities 100 5,529 ----------- ----------Net (decrease)/increase in cash and cashequivalents (3,890) 4,858 Cash and cash equivalents at period beginning 4,858 - ----------- ----------Cash and cash equivalents at period end 968 4,858 ----------- ---------- Notes to the Unaudited Consolidated Financial Statements For the year ended 31 December 2006 1. Basis of preparation The Company was incorporated as a Corporation in the Cayman Islands which doesnot prescribe the adoption of any particular accounting framework. The Board hadpreviously resolved that the Group would follow UK Accounting Standards andapply the Companies Act 1985 when preparing its annual financial statements. Forthe period ended 31 December 2005, Gable adopted International FinancialReporting Standards ("IFRS") in its Group financial statements for the firsttime. These financial statements have been prepared under the historical costconvention and in accordance with the requirements of International FinancialReporting Standards. The transition to IFRS reporting resulted in a number of changes in the reportedfinancial statements for 2005, notes thereto and accounting principals comparedto the previous annual report. Note 3 provides further details on the transitionfrom UK GAAP to IFRS. 2. Loss and net asset value per share The calculation of the basic loss per share is based on the net loss of £252,000(period ended 31 December 2005 : loss £576,000) divided by the weighted averagenumber of shares in issue during the year of 111,700,274 (period ended 31December 2005 : 39,892,929). The net asset value per share is calculated by dividing the shareholders' fundsof £8,754,000 (31 December 2005: £8,906,000) by the number of shares in issue atthe end of the period - 112,200,000 (31 December 2005: 111,400,000). 3. Reconciliation of loss for the period before taxation to net cash flows fromoperating activities Thirteen Year months Ended ended 31 December 31 December 2006 2005 £000s £000s Loss for the period (252) (576)Interest received (104) (24)Depreciation of tangible fixed assets 52 -Net exchange movements (192) -Net Increase in technical provisions 3,582 -Increase in deferred acquisition and reinsurancecosts (1,606) -Increase in debtors (1,517) (24)(Decrease)/increase in creditors (5) 301 ----------- ---------- (42) (323) ----------- ---------- 4. General information The financial information for the year ended 31 December 2006 does notconstitute statutory accounts as defined in Section 240 of the Companies Act1985 and has not been audited, as explained above. The figures for the periodended 31 December 2005 have been extracted from the 2005 statutory financialstatements prepared under UK GAAP and adjusted where necessary in order tocomply with IFRS as shown in note 3. The auditors' report on those accounts wasunqualified and did not contain a statement under section 237(2) of theCompanies Act 1985. Audited financial statements for the year ended 31 December2006 will be sent to shareholders as soon as practicable following auditsign-off. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
GAH.L