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Half Yearly Report

22nd Aug 2012 14:20

RNS Number : 5777K

Ecclesiastical Insurance Office PLC

22 August 2012

ECCLESIASTICAL INSURANCE OFFICE PLC HALF-YEARLY FINANCIAL REPORT FOR THE PERIOD ENDED 30 JUNE 2012

INTERIM MANAGEMENT REPORT

Financial headlines

The Group has continued to demonstrate resilience in challenging times, maintaining its financial strength over the interim period. Group profit before tax was £8.0m (H1 2011 restated to exclude discontinued operations: £16.8m). This was broadly in line with expectations, despite turmoil in the Eurozone and floods in the UK following the wettest June on record.

Gross written premiums in our general insurance business increased to £240.7m (H1 2011 restated: £235.2m), reflecting steady growth across our underwriting territories and a strengthened underwriting stance in Australia. Progress has continued in our targeted areas, including Property Investors, Charity and Education.

Single premiums from our life insurance business increased from £9.8m to £10.8m. Our broker business also continued to perform strongly with double digit top-line growth in the interim period.

Our on-going general insurance operations produced a £14.4m underwriting loss and a combined operating ratio (COR) of 109.9% (H1 2011 restated: £6.0m loss and COR of 104.0%). The first half results have been affected by flooding in the UK and Canada and an increase in liability claims experience across the UK and Ireland. Increased reinsurance costs in Australia have adversely impacted the results for this territory.

The life insurance business contributed a profit of £0.1m (H1 2011: £1.1m loss) to the Group's profit before tax following actions to restore profitability. Insurance broking activities contributed £1.2m profit (H1 2011: £1.0m profit).

Whilst we experienced month to month volatility, domestic stock markets ended marginally ahead of the year end position, and despite escalating uncertainty around certain European economies, investment operations contributed £22.3m to profit (H1 2011 restated: £24.3m).

The net loss attributable to discontinued operations was £5.7m (H1 2011 restated: £0.8m loss). This includes the cost of disposing of the New Zealand run-off operation, ACS (NZ) Limited, to the Canterbury Earthquake Church and Heritage Trust, an independent trust with similar objectives to that of our ultimate parent, detailed in notes 6 and 8 to the condensed set of financial statements.

As was the case in 2011, the level of charitable grant to Allchurches Trust Limited, the ultimate parent undertaking, will be determined in the second half. The grant recognised during the full year 2011 was £10.3m (£7.5m net of tax relief).

Outlook

The Group remains cautious over the short term outlook: the financial climate is still uncertain, particularly with the Eurozone debt crisis causing volatility on global stock exchanges, and the insurance market remaining highly competitive. However, through continuing to address the specific short term issues of liability performance in the United Kingdom and Ireland and reinsurance costs in Australia, together with growing successfully in core profitable markets, the Group remains confident about the medium to long term outlook.

Related party transactions

Related party transactions and changes to them since the last annual report are disclosed in note 9 to the condensed set of financial statements. The latest annual report is available from the registered office and at www.ecclesiastical.com/general/investorrelations/reportandaccounts.

Principal risks and uncertainties

The principal risks and uncertainties that could have a material impact on the Group's performance, such that actual results differ from expected and historical results, are detailed in note 1 to the condensed set of financial statements. The principal risks and uncertainties that were disclosed in the Risk Report and notes 3 and 4 to our latest annual report still apply. The disposal effected during the period has significantly reduced the Group's insurance reserving risk related to the New Zealand earthquakes, as well as the related credit risk on reinsurance recoverables. The Group's central operations segment includes the purchase of a higher level of reinsurance cover for 2012 to mitigate against global catastrophe events and protect financial strength.

The Group has reviewed its exposures to the Eurozone debt crisis, with no significant impact on the Group's interim financial position. The strong capital base of the Group allows it to take a long term view with its underlying investment strategy and it is therefore willing and able to cope with the effects of periods of volatility.

Going concern

The Group has considerable financial resources and, as a consequence, the directors believe the Group is well placed to manage its business risks successfully and continue in operational existence for the foreseeable future. Accordingly, the Group continues to adopt the going concern basis in preparing the half-yearly financial report.

There have been no material subsequent events to disclose in this report.

Michael Tripp

Group Chief Executive

RESPONSIBILITY STATEMENT

We confirm that to the best of our knowledge:

(a)

the condensed set of financial statements has been prepared in accordance with IAS 34, "Interim Financial Reporting";

(b)

the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

(c)

the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).

By order of the Board,

Michael Tripp

Mark Hews

Group Chief Executive

Chief Financial Officer

22 August 2012

CONDENSED CONSOLIDATED INCOME STATEMENT

for the 6 months to 30 June 2012
			Restated *	Restated *
	Note	30.06.12	30.06.11	31.12.11
		6 Months	6 Months	12 Months
		£000	£000	£000
Revenue
Gross written premiums		251,420	244,925	476,294
Outward reinsurance premiums		(78,348)	(80,907)	(165,727)
Net change in provision for unearned premium		(16,622)	(5,005)	2,541
Net earned premiums		156,450	159,013	313,108

Fees and commission income		26,573	25,082	56,124
Net investment return		25,315	29,692	21,266
Total revenue		208,338	213,787	390,498

Expenses
Claims and change in insurance liabilities		(139,330)	(188,479)	(308,256)
Reinsurance recoveries		24,320	75,538	91,443
Fees, commissions and other acquisition costs		(47,481)	(48,493)	(109,539)
Other operating and administrative expenses		(37,827)	(35,437)	(66,790)
Total operating expenses		(200,318)	(196,871)	(393,142)


Operating profit/(loss)		8,020	16,916	(2,644)
Finance costs		(61)	(130)	(198)
Profit/(loss) before tax		7,959	16,786	(2,842)
Tax expense		(965)	(3,333)	4,443
Profit for the financial period from continuing operations		6,994	13,453	1,601
Net loss attributable to discontinued operations	6	(5,737)	(842)	(4,829)
Profit/(loss) for the financial period attributable to equity holders of the parent		1,257	12,611	(3,228)

* On 15 May 2012, the Group disposed of its wholly owned subsidiary, ACS (NZ) Limited. The prior half-year and full-year periods have been restated to present the results of the disposed business within discontinued operations.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the 6 months to 30 June 2012
	30.06.12	30.06.11	31.12.11
	6 Months	6 Months	12 Months
	£000	£000	£000

Net fair value gain on property	2	-	47
(Loss)/gain on currency translation differences	(2,277)	1,283	(425)
Net (expense)/income recognised directly in equity	(2,275)	1,283	(378)

Profit/(loss) for the period after tax	1,257	12,611	(3,228)
Total comprehensive income attributable to equity holders of the parent	(1,018)	13,894	(3,606)

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the 6 months to 30 June 2012
	Share	Share	Equalisation	Revaluation	Translation	Retained
	capital	premium	reserve	reserve	reserve	earnings	Total
	£000	£000	£000	£000	£000	£000	£000
2012
At 1 January	120,477	4,632	22,719	971	28,195	259,090	436,084
Total comprehensive income attributable to equity holders of the parent	-	-	-	2	(2,277)	1,257	(1,018)
Dividends	-	-	-	-	-	(4,591)	(4,591)
Reserve transfers	-	-	1,880	-	-	(1,880)	-
At 30 June	120,477	4,632	24,599	973	25,918	253,876	430,475

2011
At 1 January	120,477	4,632	18,679	924	28,620	283,575	456,907
Total comprehensive income attributable to equity holders of the parent	-	-	-	-	1,283	12,611	13,894
Dividends	-	-	-	-	-	(4,591)	(4,591)
Reserve transfers	-	-	(1,012)	-	-	1,012	-
At 30 June	120,477	4,632	17,667	924	29,903	292,607	466,210

2011
At 1 January	120,477	4,632	18,679	924	28,620	283,575	456,907
Total comprehensive income attributable to equity holders of the parent	-	-	-	47	(425)	(3,228)	(3,606)
Dividends	-	-	-	-	-	(9,181)	(9,181)
Net charitable grant to ultimate parent	-	-	-	-	-	(7,534)	(7,534)
Group tax relief in excess of standard rate	-	-	-	-	-	(502)	(502)
Reserve transfers	-	-	4,040	-	-	(4,040)	-
At 31 December	120,477	4,632	22,719	971	28,195	259,090	436,084

The equalisation reserve is not distributable and must be kept in compliance with the insurance companies' reserves regulations. The revaluation reserve represents cumulative net fair value gains on owner occupied property. The translation reserve arises on consolidation of the Group's foreign operations.

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

at 30 June 2012
	30.06.12	30.06.11	31.12.11
	£000	£000	£000
Assets
Goodwill and other intangible assets	24,920	25,478	25,335
Deferred acquisition costs	34,168	39,880	35,788
Deferred tax assets	6,529	4,762	5,454
Pension assets	34,968	31,222	33,713
Property, plant and equipment	8,585	8,918	9,033
Investment property	29,454	27,026	27,473
Financial investments	842,052	887,391	829,921
Reinsurers' share of contract liabilities	163,529	552,307	541,050
Current tax recoverable	-	2,621	3,882
Other assets	175,679	153,409	147,030
Cash and cash equivalents	148,564	116,117	155,024
Total assets	1,468,448	1,849,131	1,813,703

Equity
Share capital	120,477	120,477	120,477
Share premium account	4,632	4,632	4,632
Retained earnings and other reserves	305,366	341,101	310,975
Total shareholders' equity	430,475	466,210	436,084

Liabilities
Insurance contract liabilities	912,102	1,252,630	1,249,625
Finance lease obligations	1,736	1,889	1,886
Provisions for other liabilities	7,744	10,162	8,717
Retirement benefit obligations	13,001	9,714	12,760
Deferred tax liabilities	35,191	41,979	35,877
Current tax liabilities	2,921	5,412	1,396
Deferred income	15,743	19,690	17,557
Other liabilities	49,535	41,445	49,801
Total liabilities	1,037,973	1,382,921	1,377,619

Total shareholders' equity and liabilities	1,468,448	1,849,131	1,813,703

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

for the 6 months to 30 June 2012
		Restated	Restated
	30.06.12	30.06.11	31.12.11
	6 Months	6 Months	12 Months
	£000	£000	£000

Profit/(loss) before tax	7,959	16,786	(2,842)
Adjustments for:
Loss before tax on discontinued operations	(834)	(1,213)	(4,829)
Depreciation of property, plant and equipment	974	1,134	2,302
Loss on disposal of property, plant and equipment	50	77	85
Amortisation of intangible assets	991	1,057	2,101
Loss on disposal of intangible assets	14	-	-
Net fair value (gains)/losses on financial instruments and investment property	(2,555)	(8,698)	18,496
Dividend and interest income	(21,737)	(19,014)	(37,948)
Finance and share issue expenses	61	130	198

Changes in operating assets and liabilities:
Net (decrease)/increase in insurance contract liabilities	(4,883)	268,137	281,087
Net decrease/(increase) in reinsurers' share of contract liabilities	50,419	(250,002)	(251,366)
Net decrease in deferred acquisition costs	1,531	1,793	5,555
Net increase in other assets	(28,519)	(17,042)	(13,452)
Net decrease in operating liabilities	(655)	(8,030)	(3,149)
Net (decrease)/increase in other liabilities	(685)	(10)	1,595
Cash generated/(used) by operations	2,131	(14,895)	(2,167)

Dividends received	5,732	4,494	8,327
Interest received	14,613	13,751	28,715
Interest paid	(61)	(130)	(198)
Tax recovered/(paid)	2,955	(3,183)	(4,724)
Net cash from operating activities	25,370	37	29,953

Cash flows from investing activities
Purchases of property, plant and equipment	(499)	(401)	(1,458)
Proceeds from the sale of property, plant and equipment	-	8	8
Purchases of intangible assets	(595)	(607)	(1,518)
Disposal of business, net of cash transferred	(12,734)	-	-
Purchases of financial instruments and investment property	(101,719)	(251,186)	(365,815)
Sale of financial instruments and investment property	87,985	207,502	349,223
Net cash used by investing activities	(27,562)	(44,684)	(19,560)

Cash flows from financing activities
Payment of finance lease liabilities	(251)	(295)	(519)
Payment of group tax relief in excess of standard rate	-	-	(909)
Dividends paid to company's shareholders	(4,591)	(4,591)	(9,181)
Donations paid to ultimate parent undertaking	-	-	(10,250)
Net cash used by financing activities	(4,842)	(4,886)	(20,859)

Net decrease in cash and cash equivalents	(7,034)	(49,533)	(10,466)
Cash and cash equivalents at the beginning of the period	155,024	164,805	164,805
Exchange gains on cash and cash equivalents	574	845	685
Cash and cash equivalents at the end of the period	148,564	116,117	155,024

NOTES TO THE HALF-YEARLY FINANCIAL REPORT FOR THE PERIOD ENDED 30 JUNE 2012

1. General information

The information for the year ended 31 December 2011 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor reported on those accounts: its report was unqualified, did not draw attention to any matters by way of emphasis without qualifying the report, and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

The half-yearly financial report was approved by the board on 22 August 2012. The Group results for the six month periods to 30 June 2012 and 30 June 2011 are unaudited, but have been reviewed by Deloitte LLP whose review report is at the end of this report.

The principal risks and uncertainties of the Group are in respect of insurance risk and financial risk. The principal risk that the Group faces under its insurance contracts is that the actual claims and benefit payments exceed the carrying amount of the insurance liabilities, which may occur if the frequency or severity of claims and benefits are greater than estimated. Insurance events are unpredictable and the actual level of claims and benefits may vary from year to year from the estimates established using statistical techniques. The Group's insurance underwriting strategy aims to diversify the type of insurance risks accepted in order to reduce the variability of the expected outcome. The Group also manages insurance risk through a comprehensive reinsurance programme and proactive claims handling.

The most important components of financial risk are interest rate risk, credit risk, currency risk and equity price risk. The Group is exposed to equity price risk because of financial investments held by the Group and stated at fair value through profit or loss. The Group mitigates this risk by holding a diversified portfolio across geographical regions and market sectors, and through the use of options and futures contracts from time to time which would limit losses in the event of a fall in equity markets. These principal risks and uncertainties, together with details of the financial risk management objectives and policies of the Group, are disclosed in the latest annual report.

The Group derives insurance premiums from a range of geographical locations and classes of business. Depending on the location and class of the risk, there may be a seasonal pattern to the incidence of claims. However, given the mix of business that the Group writes, overall the half-yearly results are not subject to any significant impact arising from the seasonality or cyclicality of operations.

The Group has considerable financial resources and, as a consequence, the directors believe the Group is well placed to manage its business risks successfully and continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the half-yearly financial report.

2. Accounting policies

Ecclesiastical Insurance Office plc (hereafter referred to as the "Company"), a public limited company incorporated and domiciled in England, together with its subsidiaries (collectively the "Group") operates principally as a provider of general insurance in addition to offering a range of financial services with offices in the UK, Ireland, Canada and Australia.

The annual financial statements are prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34, Interim Financial Reporting.

The same accounting policies and methods of computation are followed in the condensed set of financial statements as applied in the Group's latest audited annual financial statements. There have been no newly issued standards or changes to existing standards during the interim period which impact on the condensed set of financial statements.

3. Segment information

The Group segments its business activities on the basis of differences in the products and services offered and, for general insurance, the underwriting territory. This reflects the management and internal Group reporting structure. Group activities that are not reportable operating segments on the basis of size are included within an 'Other activities' category. Changes have been made to segments during 2012 as follows:

The Ireland general insurance branch has been moved from 'United Kingdom and Ireland' (subsequently renamed 'United Kingdom') to become a discrete segment.

The New Zealand general insurance run-off operation, which became discontinued in the period, has been removed from 'Australia and New Zealand' (subsequently renamed 'Australia'). Discontinued operations are disclosed separately in note 6 and excluded from the segmental analysis.

'Investment management' has been introduced as a discrete segment from 'Other activities'.

Prior periods have been restated to the revised basis, including the restatement of the prior interim period for changes to segments made in the 2011 annual report:

The London Market general insurance run-off operation was reclassified from 'United Kingdom' to 'Other general insurance' (subsequently renamed 'Central operations').

'Broking' was introduced as a discrete segment from 'Other activities'.

The activities of each operating segment are described below.

General business

United Kingdom

The Group's principal general insurance business operation is in the UK, where it operates under the Ecclesiastical and Ansvar brands.

Ireland

The Group operates an Ecclesiastical branch underwriting general business in the Republic of Ireland and Northern Ireland.

Australia

The Group has a wholly owned subsidiary in Australia undertaking general insurance business under the Ansvar brand.

Canada

The Group operates a general insurance Ecclesiastical branch in Canada.

Central operations

This includes the Group's internal reinsurance function, corporate underwriting costs and operations that are in run-off or not reportable due to their immateriality.

Life business

Ecclesiastical Life Limited provides long-term insurance policies to support funeral planning products.

Investment management

The Group provides investment management services both internally and to third parties through Ecclesiastical Investment Management Limited.

Broking

The Group provides insurance broking through South Essex Insurance Brokers Limited.

Other activities

This includes the financial advisory services business, which is not a reportable operating segment due to immateriality, and corporate costs relating to acquisition and disposal of businesses.

Segment revenue
The Group uses gross written premiums as the measure for turnover of the general and life insurance business segments. Turnover of all other segments comprises fees and commissions earned for services provided. Segment revenues do not include net investment return or general business fee and commission income, which are reported within revenue in the consolidated income statement.

Group revenues are not materially concentrated on any single external customer.

				Restated
	6 months ended			6 months ended
	30.06.12			30.06.11
	Gross written			Gross written
	premiums	Other	Total	premiums	Other	Total
	£000	£000	£000	£000	£000	£000
General business
United Kingdom	176,991	-	176,991	170,298	-	170,298
Ireland	7,344	-	7,344	7,185	-	7,185
Australia	35,182	-	35,182	40,293	-	40,293
Canada	15,513	-	15,513	14,750	-	14,750
Central operations	5,627	-	5,627	2,626	-	2,626
	240,657	-	240,657	235,152	-	235,152
Life business	10,763	-	10,763	9,773	-	9,773
Investment management	-	4,040	4,040	-	3,525	3,525
Broking	-	3,508	3,508	-	3,086	3,086
Other activities	-	329	329	-	295	295
Group Turnover	251,420	7,877	259,297	244,925	6,906	251,831


				Restated
				12 months ended
				31.12.11
				Gross written
				premiums	Other	Total
				£000	£000	£000
General business
United Kingdom				326,326	-	326,326
Ireland				13,466	-	13,466
Australia				76,900	-	76,900
Canada				34,219	-	34,219
Central operations				6,261	-	6,261
				457,172	-	457,172
Life business				19,122	-	19,122
Investment management				-	7,367	7,367
Broking				-	6,635	6,635
Other activities				-	637	637
Group Turnover				476,294	14,639	490,933

Segment result
General business segment results comprise the underwriting profit or loss, investment return and other expenses of each underwriting territory. The Group uses the industry standard net combined operating ratio (COR) as a measure of underwriting efficiency. The COR expresses the total of net claims costs, commission and underwriting expenses as a percentage of net earned premiums.

The life business segment result comprises the profit or loss on insurance contracts, investment return and other expenses attributable to shareholders.

All other segment results consist of the profit or loss before tax measured in accordance with IFRS.

6 months ended	Combined
30 June 2012	operating	Insurance	Investments	Other	Total
	ratio	£000	£000	£000	£000
General business
United Kingdom	100.2%	(240)	14,423	(59)	14,124
Ireland	126.0%	(1,246)	563	-	(683)
Australia	155.5%	(8,115)	5,400	-	(2,715)
Canada	104.6%	(580)	503	(2)	(79)
Central operations		(4,213)	10	-	(4,203)
	109.9%	(14,394)	20,899	(61)	6,444
Life business		73	839	(2)	910
Investment management		-	604	-	604
Broking		-	-	1,190	1,190
Other activities		-	-	(1,189)	(1,189)
Profit before tax		(14,321)	22,342	(62)	7,959


Restated
6 months ended	Combined
30 June 2011	operating	Insurance	Investments	Other	Total
	ratio	£000	£000	£000	£000
General business
United Kingdom	94.4%	5,891	17,146	(97)	22,940
Ireland	92.2%	374	(51)	-	323
Australia	133.7%	(7,186)	4,684	-	(2,502)
Canada	121.9%	(2,513)	925	(33)	(1,621)
Central operations		(2,594)	6	-	(2,588)
	104.0%	(6,028)	22,710	(130)	16,552
Life business		(1,132)	1,060	(7)	(79)
Investment management		-	568	-	568
Broking		-	-	1,046	1,046
Other activities		-	-	(1,301)	(1,301)
Profit before tax		(7,160)	24,338	(392)	16,786

Restated
12 months ended	Combined
31 December 2011	operating	Insurance	Investments	Other	Total
	ratio	£000	£000	£000	£000
General business
United Kingdom	96.2%	8,162	(5,149)	(208)	2,805
Ireland	97.6%	235	947	-	1,182
Australia	129.6%	(11,803)	9,815	-	(1,988)
Canada	101.4%	(344)	2,219	(35)	1,840
Central operations		(7,258)	10	-	(7,248)
	103.7%	(11,008)	7,842	(243)	(3,409)
Life business		721	(787)	(12)	(78)
Investment management		-	1,152		1,152
Broking		-	-	2,202	2,202
Other activities		-	-	(2,709)	(2,709)
Loss before tax		(10,287)	8,207	(762)	(2,842)

4. Changes in estimates
The estimation of the ultimate liability arising from claims made under general insurance business contracts is a critical accounting estimate. There are various sources of uncertainty as to how much the Group will ultimately pay with respect to such contracts. There is uncertainty as to the total number of claims made on each class of business, the amounts that such claims will be settled for and the timing of any payments. During the six month period, changes to claims reserve estimates made in prior years as a result of reserve development resulted in a release of £18m (H1 2011: £19m).





5. Tax
Income tax for the six month period is calculated at rates representing the best estimate of the average annual effective income tax rate expected for the full year, applied to the pre-tax result of the six month period.

6. Discontinued operations
During the period, the Group disposed of its wholly owned subsidiary, ACS (NZ) Limited, transferring its holdings of ordinary shares in ACS (NZ) Limited to the Canterbury Earthquake Church and Heritage Trust, an independent trust constituted in New Zealand, with objectives similar to those of the Group. The loss on disposal includes a contribution made to the Trust of NZ$10.0m.




The disposal was effected in order to reduce the insurance and financial risks associated with the run-off of claims in relation to the series of earthquakes in Canterbury, New Zealand.


The results and cash flows of the discontinued operations, which have been included in the consolidated income statement and consolidated statement of cash flows respectively, were as follows:


	Period to			30.06.11	31.12.11
	15 May 2012			6 Months	12 Months
			£000	£000	£000

Total revenue			246	3,042	6,177

Claims and change in insurance liabilities			(41,226)	(244,309)	(339,931)
Reinsurance recoveries			40,751	241,410	333,409
Other expenses			(605)	(1,356)	(4,484)
Total expenses			(1,080)	(4,255)	(11,006)

Loss before tax			(834)	(1,213)	(4,829)
Attributable tax			-	371	-
Loss on disposal, net of selling costs			(5,219)	-	-
Attributable tax			316	-	-
Net loss attributable to discontinued operations			(5,737)	(842)	(4,829)

Net cash used by operating activities			(2,466)	(2,021)	(3,739)
Net cash from investing activities			-	232	5,786
Net cash from/(used by) financing activities*			5,863	(249)	(253)

* Net cash from financing activities for the period to 15 May 2012 relates to loans provided by Group companies which are eliminated on consolidation. The full balance was repaid prior to 30 June 2012.

7. Dividends
Dividends paid on the 8.625% Non-Cumulative Irredeemable Preference shares amounted to £4.6m (H1 2011: £4.6m).


No interim ordinary dividend was paid in the current or prior period.

8. Disposal of business
As referred to in note 6, on 15 May 2012 the Group disposed of ACS (NZ) Limited to the Canterbury Earthquake Church and Heritage Trust.


The net assets at the date of disposal, the prior period interim reporting date and at 31 December 2011 were as follows:

		15 May 2012		30.06.11	31.12.11
			£000	£000	£000

Deferred acquisition costs			-	1,044	-
Property, plant and equipment			-	146	-
Financial investments			280	1,919	277
Reinsurers' share of contract liabilities			333,745	312,118	351,534
Current tax recoverable			-	392	-
Other assets			5,290	2,839	8,148
Cash and cash equivalents			6,405	3,819	3,008
Insurance contract liabilities			(337,489)	(315,448)	(356,323)
Provisions for other liabilities			(46)	(46)	(45)
Deferred tax liabilities			-	(45)	(44)
Deferred income			-	(563)	-
Other liabilities			(1,755)	(1,498)	(6,057)
			6,430	4,677	498
Consideration and costs of sale:

Loan and trading balances receivable by the Group			(6,194)
Contribution paid to the Trust, plus selling costs			6,329
Currency translation equity reserves recycled to profit			(1,346)
Loss on disposal, net of selling costs			5,219

Net cash outflow arising on disposal			(12,734)

9. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation.


Charitable grants to the ultimate parent company are disclosed in the condensed consolidated statement of changes in equity.



There have been no other changes to related party transactions in the period which require disclosure.

10. Holding company
The ultimate holding company is Allchurches Trust Limited, a company limited by guarantee and a registered charity.

INDEPENDENT REVIEW REPORT TO ECCLESIASTICAL INSURANCE OFFICE PLC

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2012, which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of changes in equity, the condensed consolidated statement of financial position, the condensed consolidated statement of cash flows and related notes 1 to 10. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2012 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditor

London, United Kingdom

22 August 2012

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR MMGZRFZRGZZM

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