13th Jun 2007 10:36
Leo Insurance Services PLC13 June 2007 LEO INSURANCE SERVICES PLC 13 JUNE 2007 Leo Insurance Services plc ("LEO" or the "Company") Chairman's Statement This is the first opportunity I have had to write to shareholders with regard toa full year's trading of Leo Insurance Services Plc. In the year ended January 31 2007, the Company made a small consolidated lossbefore exceptional administrative expenses of £3,541 (2006: £54,127). The exceptional administrative expense of £169,912 (2006: £339,821) arose onadoption of the new accounting standard on share options. The charge is inrelation to the share options granted to the directors as detailed in the AIMadmission document. This is an exceptional charge and there is no impact oncash or distributable reserves. As shareholders should be aware, Leo's only investment at present is a 50% shareof Grafton Insurance Services Ltd., a brokerage specialising in propertyinsurance which has amongst its client portfolio two long term contracts - onewith Safeland Plc and one with Bizspace Plc. Safeland announced in October 2006 the launch of a property fund with a gearedvalue of £50m and made a further announcement in January 2007 regarding thepossible extension of this fund by the raising of a minimum of a further £50m ofequity. Bizspace continues to expand its portfolio under the ownership ofHighcross. I am therefore very pleased with both of these contracts and the futurepotential for growth. As I stated in the interim report, the board has been seeking potentialacquisitions and continues to do so, but no deal has as yet been concluded. During the coming year I expect continued organic growth and whilst our searchfor the right acquisition continues I look forward to the future withconfidence. LG Lipman Chairman 13 June 2007 CONSOLIDATED PROFIT AND LOSS ACCOUNT for the year ended 31 January 2007 Unaudited Audited Notes Restated 2007 2006 £ £ £ £ Turnover: Group and share of joint 308,517 -venture'sLess: Share of joint venture's (308,517) -turnoverGROUP TURNOVER - - Administrative expenses - Exceptional 3 169,912 339,821 - Other 67,773 54,766 (237,685) (394,587) GROUP OPERATING LOSS (237,685) (394,587)Share of operating profit from joint 76,866 -venture TOTAL OPERATING LOSS (160,819) (394,587) Interest receivableGroup 1,393 639Joint Venture 4,255 - 5,648 639Interest payable (group) (4,167) - LOSS ON ORDINARY ACTIVITIES BEFORE (159,338) (393,948)TAXATION TaxationGroup - -Joint Venture (15,651) - (15,651) - LOSS ON ORDINARY ACTIVITIES AFTER (174,989) (393,948)TAXATION LOSS PER ORDINARY SHAREBasic and diluted 2 (2.44p) (7.06p) The operating loss for the year arises from the group's continuing operations. CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES - 31 January 2007 Notes Unaudited Audited Restated 2007 2006 £ £ Loss for the year (174,989) (393,948) Total recognised gains and losses relating to the financial (174,989) (393,948)year Prior year adjustment 3 (339,821) Total gains and losses recognised since the last financial (514,810)statements CONSOLIDATED BALANCE SHEET 31 January 2007 Unaudited Audited Notes 2007 2006 Restated £ £ FIXED ASSETSInvestment in joint ventureShare of gross assets 7 393,088 50Share of gross liabilities 7 (327,568) - 65,520 50CURRENT ASSETSDebtors 16,111 1,264Cash at bank 18,476 107,721 34,587 108,985 CREDITORS: amounts falling due within (81,390) (21,777)one year NET CURRENT (LIABILITIES)/ASSETS (46,803) 87,208 TOTAL ASSETS LESS CURRENT LIABILITIES 18,717 87,258 CREDITORS: amounts falling due after - (65,000)more than one year NET ASSETS 18,717 22,258 _ CAPITAL AND RESERVESCalled up share capital 3 72,160 70,624Share premium account 5,761 5,761Profit and loss account 4 (59,204) (54,127) EQUITY SHAREHOLDERS' FUNDS 5 18,717 22,258 CONSOLIDATED CASH FLOW STATEMENT for the year ended 31 January 2007 Unaudited Audited Notes 2007 2006 £ £ Cash flow from operating activities 6a (92,174) (29,253) Returns on investments and servicing of finance 6b 1,393 639 Acquisitions and disposals 6b - (50) Taxation - - CASH OUTFLOW BEFORE FINANCING (90,781) (28,664) Financing 6b 1,536 136,385 (DECREASE) / INCREASE IN CASH IN THE YEAR (89,245) 107,721 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS Unaudited Audited Notes 2007 2006 £ £ (Decrease) / Increase in cash in the year (89,245) 107,721 NET FUNDS AT 1 FEBRUARY 2006 107,721 - NET FUNDS AT 31 January 2007 6c 18,476 107,721 ACCOUNTING POLICIES for the year ended 31 January 2007 (unaudited) BASIS OF ACCOUNTING The consolidated financial statements have been prepared under the historicalcost convention and in accordance with applicable United Kingdom accountingstandards. The material accounting policies adopted are set out below. CHANGE IN ACCOUNTING POLICY The Company has adopted Financial Reporting Standard No. 20 "Share Based Payment" which is mandatory for accounting periods commencing on or after 1 January2006 and in accordance with this standard, the comparative numbers have beenrestated accordingly. The impact of this new accounting standard is explainedin note 3. GOING CONCERN As at 31 January 2007, the group had net current liabilities of £46,803.Included in creditors falling due within one year are redeemable preferenceshares of £65,000 due to Safeland plc, a related party, which falls due forredemption in January 2008. Subsequent to 31 January 2007, the directors havereceived an undertaking from Safeland plc that these preference shares will onlybe redeemable if there is adequate cash resources within the group to enable thegroup to meet its liabilities as they fall due for the foreseeable future. Onthe basis of this commitment, the directors have prepared the financialstatements on the going concern basis. BASIS OF CONSOLIDATION The consolidated financial statements incorporate the financial statements ofLeo Insurance Services plc, its subsidiary undertaking and the group's share ofprofits and losses and net assets of its joint venture made up to 31 Januaryeach year. JOINT VENTURES Joint ventures are accounted for in the consolidated financial statements usingthe gross equity method. The consolidated profit and loss account includes thegroup's share of operating profit, interest and taxation. The consolidatedbalance sheet includes the group's share of gross assets and gross liabilitieswithin fixed asset investments. SHARE OPTIONS The Company has applied the requirements of FRS20 Share-based payment whichrequires the fair value of share based payments to be recognised as an expense.This standard has been applied to share options. The fair value of the optionsgranted is measured on the date at which they are granted by using theBlack-Scholes model, and is expensed to the profit and loss over the appropriatevesting period. NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 January 2007 1 ANNOUNCEMENT BASED ON DRAFT ACCOUNTS This preliminary statement is not the Company's statutory accounts for the year ended 31 January 2007 or the period ended 31 January 2006. The statutory accounts for the year ended 31 January 2007 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 2006 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. The financial information contained within this preliminary announcement was approved by the board on 13 June 2007. Unaudited Audited 2 LOSS PER ORDINARY SHARE Restated 2007 2006 £ £ The calculations of loss per share are based on the following losses and number of shares: Loss for the financial period (174,989) (393,948) Number Number Weighted average number of shares for basic and diluted 7,177,247 5,579,152 loss per share 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. Unaudited Audited 3 SHARE CAPITAL 2007 2006 £ £ 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 (2006: 7,062,381) ordinary shares of 1p each 72,160 70,624 Share issue On 4 May 2006, following the exercise of a share option, the Company issued153,575 1p ordinary shares for £1,536 cash consideration. Share rights The redeemable preference shares provide for a fixed cumulative dividend at arate of 6% per annum which accrued on a daily basis. The preference shares canbe redeemed by the Company at any time on seven days written notice. Thepreference shares can be redeemed by the holder if the dividend is in arrearsfor at least 12 months or, in any event the shares are redeemable, upon thesecond anniversary of issue. If the preference shares are not redeemed by theappropriate date, the dividend rate will increase to 9% per annum. Thepreference shares do not confer a right to attend, speak or vote at any generalmeeting of the Company. In accordance with Financial Reporting Standard No. 25,these redeemable preference shares are included within creditors. Share options: On 3 February 2005 L Lipman, E Lipman and P Davis were each conditionallygranted options over 911,458 ordinary shares worth £175,000 as valued byreference to the average closing middle market quotation for an ordinary sharefor the three dealing days following admission. Each option is exercisable atthe 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 granted options to subscribe for ordinary shares in the Companyequivalent to 1% of the issued share capital on completion of an acquisitionwhich exceeds 75% in any class test within the AIM rules. These options areonly exercisable during the period from date of acquisition to the period ending18 months after that date at a price equivalent to the issue price in connectionwith the acquisition. As at 31 January 2007, the Company had 2,734,374 (2006: 2,887,949) outstandingunexpired options that are exercisable at 1p per ordinary share. Share based payment: The Company has adopted Financial Reporting Standard No. 20 "Share Based Payment" which is mandatory for accounting periods commencing on or after 1 January2006 and in accordance with this standard, the comparative numbers have beenrestated accordingly. The share based payment charge has been calculated using the Black-Scholes modelto calculate the fair value of the share options. This share option charge isincluded in the profit and loss account as an exceptional administrative expenseover the 18 month vesting period from 5 February 2005 to 5 August 2007. Theexceptional charge for the year was £169,912 (2006: £339,821). Unaudited Audited 4 PROFIT AND LOSS ACCOUNT 2007 2006 £ £ 1 February 2006 as previously reported (54,127) - Prior year adjustment (339,821) - 1 February 2006 as restated (54,127) - Loss for the year (174,989) (393,948) Share option charge 169,912 339,821 31 January 2007 (59,204) (54,127) Unaudited Audited 5 RECONCILIATION OF MOVEMENT IN EQUITY SHAREHOLDERS' FUNDS Restated 2007 2006 £ £ Shares issued in period (net of expenses) 1,536 76,385 Share option charge 169,912 339,821 Loss for the year (174,989) (393,948) Net (reduction in)equity shareholders' funds (3,541) 22,258 Opening equity shareholders' funds 22,258 - Closing equity shareholders' funds 18,717 22,258 Unaudited Audited 6 CASH FLOWS Restated 2007 2006 £ £ a Reconciliation of operating loss to net cash flow from operating activities Operating loss (237,685) (394,587) Increase in debtors (14,797) (1,314) (Decrease)/ Increase in creditors (9,604) 21,777 Share option charge 169,912 339,821 Shares issued to settle expenses - 5,000 Net cash flow from operating activities (92,174) (29,253) Unaudited Audited 2007 2006 £ £ b Analysis of cash flows for headings netted in the cash flow statement Returns on investments and servicing of finance Interest received 1,393 639 Net cash inflow from returns on investments and servicing 1,393 639 of finance Acquisitions and disposals Purchase of interest in joint venture - (50) Net cash outflow from acquisitions and disposals - (50) Financing Issue of ordinary share capital (net of expenses) 1,536 71,385 Issue of preference share capital - 65,000 Net cash inflow from financing 1,536 136,385 At Atc Analysis of net funds 01 February 31 January 2006 Cash flows 2007 £ £ £ Cash at bank and in 107,721 (89,245) 18,476 hand 7 INVESTMENT IN JOINT VENTURE On 5 January 2006, the Company acquired 50 £1 "B" ordinary shares in GraftonInsurance Services Limited at par. The Company owns 100% of the "B" ordinaryshares which represents 50% of the issued ordinary shares. The principal activity of Grafton Insurance Services Limited is to trade as aproperty insurance broker. The group's share of the joint venture results and net assets are set out below. Audited Unaudited 2007 2006 £ £ Turnover 308,517 - Operating profit 76,866 - Interest received 4,255 - Profit before tax 81,121 - Tax 15,651 - Profit after tax 65,470 - 2007 2006 £ £ Current assets 393,088 50 Current liabilities (327,568) - Net assets 65,520 50 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Palace Capital