Final Results

13th May 2008 06:00



LEO INSURANCE SERVICES PLC

13 May 2008

Leo Insurance Services plc ("LEO", the "Company" or the "Group")

Preliminary results for the year ended 31 January 2008

Chairman's Statement

In the year ended January 31 2008 the Group made a consolidated loss of £30,799 (2007: loss £174,989 including an exceptional administrative expense of £169,912).

Leo's only investment continues to be a 50% share of Grafton Insurance Services Ltd, a brokerage specialising in property insurance. It was announced during the year that one of Grafton's long term contracts with Bizspace Plc had been terminated. This leaves Safeland Plc as its principle customer with whom it is contracted for the next five years and whose portfolio continues to grow.

The board continues to search for growth both organically and via acquisitions.

LG Lipman

Chairman

 

CONSOLIDATED INCOME STATEMENT for the year ended 31 January 2008

				Unaudited				Audited
		Notes			2008 £				2007 £
Revenue					-				-
Cost of sales					-				-
GROSS PROFIT					-				-
Administrative expenses
- Exceptional					-				(169,912)
- Other					(100,496)				(67,773)
OPERATING LOSS					(100,496)				(237,685)
Share of results of joint venture - post tax					70,543				61,215
LOSS BEFORE INTEREST					(29,953)				(176,470)
Finance income					3,187				5,648
Finance costs					(4,033)				(4,167)
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION					(30,799)				(174,989)
Taxation					-				-
LOSS ON ORDINARY ACTIVITIES AFTER TAXATION					(30,799)				(174,989)
LOSS PER ORDINARY SHARE
Basic and diluted		3			(0.43p)				(2.44p)

The operating loss for the year arises from the group's continuing operations.

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31 January 2008

	Share capital £		Share Premium £		Retained Earnings £		Total Equity £
At 1 February 2006	70,624		5,761		(54,127)		22,258
Issue of share capital	1,536		-		-		1,536
Loss for the year	-		-		(174,989)		(174,989)
Share based payment charge	-		-		169,912		169,912
At 31 January 2007	72,160		5,761		(59,204)		18,717
Loss for the year	-		-		(30,799)		(30,799)
At 31 January 2008	72,160		5,761		(90,003)		(12,082)

CONSOLIDATED BALANCE SHEET 31 January 2008

				Unaudited				Audited
		Notes			2008 £				2007 £
NON CURRENT ASSETS
Interests in joint ventures					16,041				65,520
CURRENT ASSETS
Trade and other receivables					3,759				16,111
Cash and cash equivalents					69,543				18,476
TOTAL CURRENT ASSETS					73,302				34,587
TOTAL ASSETS					89,343				100,107
CURRENT LIABILITIES
Trade and other payables					(101,425)				(81,390)
TOTAL CURRENT LIABILITIES					(101,425)				(81,390)
NET (LIABILITIES) / ASSETS					(12,082)				18,717
					_
EQUITY
Share capital		4			72,160				72,160
Share premium account					5,761				5,761
Retained losses					(90,033)				(59,204)
TOTAL EQUITY					(12,082)				18,717

 

CONSOLIDATED CASH FLOW STATEMENT for the year ended 31 January 2008

		Unaudited		Audited
	Notes	2008 £		2007 £
OPERATING ACTIVITIES
Net cash out from operations	5	(72,142)		(92,174)
Interest paid		-		-
Net cash outflow from operating activities		(72,142)		(92,174)
INVESTING ACTIVITIES
Interest received		709		1,393
Dividends received from joint venture undertaking		122,500		-
Net cash inflow from investing activities		123,209		1,393
FINANCING ACTIVITIES
Proceeds on issue of shares		-		1,536
Net cash inflow from financing activities		-		1,536
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS		51,067		(89,245)
Cash and cash equivalents at beginning of year		18,476		107,221
CASH AND CASH EQUIVALENTS AT END OF YEAR		69,543		18,476

 

NOTES TO THE PRELIMINARY ANNOUNCEMENT for the year ended 31 January 2008

1	BASIS OF PREPARATION
	This preliminary statement is not the Company's statutory accounts for the year ended 31 January 2008 or the period ended 31 January 2007. The statutory accounts for the year ended 31 January 2008 will be finalised based on the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The statutory accounts for the year ended 31 January 2007 have been delivered to the registrar of companies and received an Auditors' Report which was unqualified and did not contain statements under s237 (2) and (3) of the Companies Act 1985. This announcement is prepared applying International Financial Reporting Standards as adopted by the European Union.  The financial information contained within this preliminary announcement was approved by the board on 12 May 2008. Copies of this announcement are available from the company's registered office at 94-96 Great North Road, London, N2 0NL. The Annual Report and Accounts will be sent to shareholders in due course.

2	ACCOUNTING POLICIES

STANDARDS ISSUED BUT NOT YET EFFECTIVE

At the date of authorisation of these financial statements the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective:

IFRS 2	Share Based Payment - Amendment relating to vesting conditions and cancellations
IFRS 3	Business Combinations - Comprehensive revision on applying the acquisition method
IFRS 8	Operating Segments
IFRIC 11	IFRS 2 - Group and Treasury Share Transactions
IFRIC 12	Service Concession Arrangements
IFRIC 13	Customer Loyalty Programmes
IFRIC 14	IAS 19 - The limit on a Defined Benefit Asset Minimum Funding Requirements and their interaction
IAS 1	Presentation of Financial Statements - Comprehensive revision including requiring a statement of comprehensive income
IAS 23	Borrowing costs - Comprehensive revision to prohibit immediate expensing
IAS 27	Consolidated and Separate Financial Statements - Consequential amendments arising from amendments to IFRS 3
IAS 28	Investments in Associates - Consequential amendments arising from amendments to IFRS 3
IAS 31	Interests in Joint Ventures - Consequential amendments arising from amendments to IFRS 3
IAS 32	Financial Instruments Presentation - Amendments relating to puttable instruments and obligations arising on liquidation

The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the Group when the relevant standards and interpretations come into effect.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

FIRST TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS

In preparing these financial statements, the group has elected to apply the transitional arrangements permitted by IFRS 1 "First-time adoption of International Financial Reporting Standards" as detailed below:

business combinations prior to 1 February 2006 have not been restated  to comply with IFRS 3 "Business Combinations";

BASIS OF CONSOLIDATION

The consolidated financial statements incorporate the financial statements of Leo Insurance Services plc, its subsidiary undertaking and the Group's share of profits and losses and net assets of its joint venture made up to 31 January each year.

JOINT VENTURES

A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control.

Jointly controlled entities are accounted for using the equity method. Investments in joint ventures are carried in the balance sheet at the Group's share of the net assets of the joint venture.

OPERATING PROFIT

Operating profit is stated before share of results of joint ventures, interest and tax.

FINANCIAL INSTRUMENTS

Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group has become a party to the contractual priorities of the instrument.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash balances and deposits held at call with banks. 

BORROWINGS

All borrowing costs are recognised in the income statement in the period in which they are incurred.

FINANCIAL LIABILITIES AND EQUITY

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.

EQUITY INSTRUMENTS

Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs.

TRADE RECEIVABLES

Trade receivables are classified as 'loans and receivables', are measured on initial recognition at fair value and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in the income statement when there is objective evidence that the asset is impaired.

TRADE PAYABLES

Trade payables are classified as 'other financial liabilities', are measured on initial recognition at fair value and are subsequently measured at amortised cost using the effective interest rate method.

DEFERRED TAXATION

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

SHARE BASED PAYMENT

The Group has applied the requirements of IFRS 2 Share based payment. The Group issues equity settled share based payments to certain employees and third parties. Equity settled share based payments are measured at fair value at the date of the grant. The fair value determined at the grant date of the equity settled share based payments is expensed on a straight line basis over the vesting period, based on the Group's estimate of shares that will eventually vest and adjusted for the effect of non-market based vesting conditions.

Fair value is measured by use of the Black Scholes model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects on non-transferability, exercise restrictions and behavioural considerations.

SEGMENTAL REPORTING

A business segment is a group of assets and operations that provide a product or service and that is subject to risks and returns that are different from other business segments. A geographic segment is a group of assets and operations that provide a product or service within a particular economic environment and that is subject to risks and returns that are different from segments operating in different economic environments.

CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION AND UNCERTAINITY

There are no critical accounting judgements or key sources of estimation and uncertainty.

				Unaudited				Audited
3	LOSS PER ORDINARY SHARE			2008 £				2007 £
	The calculations of loss per share are based on the following losses and number of shares:
	Loss for the financial period			(30,799)				(174,989)
				Number				Number
	Weighted average number of shares for basic and diluted loss per share			7,215,956				7,177,247
	As there is a loss for the year, there is no dilutive effect of the share options and therefore no difference between the basic and diluted loss per share.
4		SHARE CAPITAL	Unaudited				Audited
			2008 £				2007 £
		Authorised:
		20,000,000 ordinary shares of 1p each	200,000				200,000
		65,000 preference shares of £1 each	65,000				65,000
			265,000				265,000
		Allotted, issued and fully paid:
		7,215,956 ordinary shares of 1p each	72,160				72,160

Share rights

The redeemable preference shares provide for a fixed cumulative dividend at a rate of 6% per annum which accrued on a daily basis. The preference shares can be redeemed by the Company at any time on seven days written notice. The preference shares can be redeemed by the holder if the dividend is in arrears for at least 12 months or, in any event the shares are redeemable, upon the second anniversary of issue. If the preference shares are not redeemed by the appropriate date, the dividend rate will increase to 9% per annum. The preference shares do not confer a right to attend, speak or vote at any general meeting of the Company.

Share options:

On 3 February 2005 L Lipman, E Lipman and P Davis were each conditionally granted options over 911,458 ordinary shares worth £175,000 as valued by reference to the average closing middle market quotation for an ordinary share for the three dealing days following admission. Each option is exercisable at the market value at the date of the grant, being the par value of 1p per share, at any time after 18 months and before 10 years following the date of grant. 

The Company has also granted options to subscribe for ordinary shares in the Company equivalent to 1% of the issued share capital on completion of an acquisition which exceeds 75% in any class test within the AIM rules. These options are only exercisable during the period from date of acquisition to the period ending 18 months after that date at a price equivalent to the issue price in connection with the acquisition.

As at 31 January 2008, the Company had 2,734,374 (2007: 2,734,374) outstanding unexpired options that are exercisable at 1p per ordinary share.

5	CASH FLOWS	Unaudited		Audited
		2008 £		2007 £
	Operating loss	(100,496)		(237,685)
	Adjustments for:
	Share option charge	-		169,912
	Changes in working capital:
	Decrease / (Increase) in trade and other receivables	8,319		(14,797)
	Increase / (Decrease) in trade and other payables	20,035		(9,604)
	Net cash flow from operations	(72,142)		(92,174)

 6 INVESTMENT IN JOINT VENTURE

On 5 January 2006, the Company acquired 50 £1 "B" ordinary shares in Grafton Insurance Services Limited at par. The Company owns 100% of the "B" ordinary shares which represents 50% of the issued ordinary shares.

The principal activity of Grafton Insurance Services Limited is to trade as a property insurance broker.

The Group's share of the joint venture results and net assets are set out below.

		Unaudited		Audited
		2008 £		2007 £
	Turnover	197,029		308,517
	Operating profit	88,350		76,866
	Interest received	2,478		4,255
	Profit before tax	90,828		81,121
	Tax	(18,664)		15,651
	Profit after tax	72,164		65,470
		2008 £		2007 £
	Interest in joint venture at 1 February	65,520		4,309
	Share of profit for the year	73,021		61,215
	Dividends	(122,500)		-
	Interest in joint venture at 31 January	16,041		65,520

7	EXPLANATION OF TRANSITION TO IFRS

This is the first year that the Group has presented its financial statements under IFRS. The following disclosures are required in the year of transition. The last financial statements under UK GAAP were for the year ended 31 January 2008 and the date of transition to IFRSs was therefore 1 February 2007. 

(a) Reconciliation of equity at 1 February 2007	Notes	UK GAAP £	Effect of transition to IFRS £	IFRS £
Non-current assets
Investment in joint ventures		50	-	50
Total non-current assets		50	-	50
Current assets
Trade and other receivables		1,264	-	1,264
Cash and cash equivalents		107,721	-	107,721
Total current assets		108,985	-	108,985
Total assets		109,035	-	109,035
Current liabilities
Trade and other payables		21,777	-	21,777
Total current liabilities		21,777	-	21,777
Non-current liabilities
Preference shares		65,000	-	65,000
Total non-current liabilities		65,000	-	65,000
Total liabilities		86,777	-	86,777
Net assets		22,258	-	22,258
Equity
Share capital		70,624	-	70,624
Share premium		5,761	-	5,761
Retained earnings		(54,127)	-	(54,127)
Total equity		22,258	-	22,258

(b) Reconciliation of equity at 31 January 2008		Notes	UK GAAP £	Effect of transition to IFRS £	IFRS £
Non-current assets
Investment in joint ventures			65,520	-	65,520
Total non-current assets			65,520	-	65,520
Current assets
Trade and other receivables			16,111	-	16,111
Cash and cash equivalents			18,476	-	18,476
Total current assets			34,587	-	34,587
Total assets			100,107	-	100,107
Current liabilities
Trade and other payables			16,390	-	16,390
Preference shares			65,000	-	65,000
Total current liabilities			81,390	-	81,390
Total liabilities			81,390	-	81,390
Net assets			18,717	-	18,717
Equity
Share capital			72,160	-	72,160
Share premium			5,761	-	5,761
Retained earnings			(59,204)	-	(59,204)
Total equity			18,717	-	18,717
(c) Reconciliation of the Income Statement for the year ended 31 January 2008	Notes	UK GAAP £	Effect of transition to IFRS £	IFRS £
Revenue: Group and share of joint venture's	i	308,517	(308,517)	-
Less: share of joint ventures		(308,517)	308,517	-
		-	-	-
Cost of sales		-	-	-
Gross profit		-	-	-
Administrative expenses		67,773	-	67,773
Exceptional administrative expenses		169,912	-	169,912
Operating loss		(237,685)	-	(237,685)
Share of results of associate and joint ventures - post tax		76,866	(15,651)	(61,215)
Loss before interest and tax		(160,819)	(15,651)	(176,470)
Finance income		5,648	-	5,648
Finance costs		(4,167)	-	(4,167)
Loss before tax		(159,338)	(15,651)	(174,989)
Tax		(15,651)	15,651	-
Loss for the period		(174,989)	-	(174,989)
Basic and diluted earnings per share (pence) 2		(2.44)p	-	(2.44)p

i IAS 31 - Change in presentation within the Income Statement regarding accounting for Joint Ventures.

ENDFR FKBKQOBKDOPD

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