Final Results
RNS Number:2692Y
Leo Insurance Services PLC
13 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 to
a full year's trading of Leo Insurance Services Plc.
In the year ended January 31 2007, the Company made a small consolidated loss
before exceptional administrative expenses of 3,541 (2006: 54,127).
The exceptional administrative expense of 169,912 (2006: 339,821) arose on
adoption of the new accounting standard on share options. The charge is in
relation to the share options granted to the directors as detailed in the AIM
admission document. This is an exceptional charge and there is no impact on
cash or distributable reserves.
As shareholders should be aware, Leo's only investment at present is a 50% share
of Grafton Insurance Services Ltd., a brokerage specialising in property
insurance which has amongst its client portfolio two long term contracts - one
with Safeland Plc and one with Bizspace Plc.
Safeland announced in October 2006 the launch of a property fund with a geared
value of 50m and made a further announcement in January 2007 regarding the
possible extension of this fund by the raising of a minimum of a further 50m of
equity. Bizspace continues to expand its portfolio under the ownership of
Highcross.
I am therefore very pleased with both of these contracts and the future
potential for growth.
As I stated in the interim report, the board has been seeking potential
acquisitions 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 search
for the right acquisition continues I look forward to the future with
confidence.
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's
Less: Share of joint venture's (308,517) -
turnover
GROUP 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 receivable
Group 1,393 639
Joint Venture 4,255 -
5,648 639
Interest payable (group) (4,167) -
LOSS ON ORDINARY ACTIVITIES BEFORE (159,338) (393,948)
TAXATION
Taxation
Group - -
Joint Venture (15,651) -
(15,651) -
LOSS ON ORDINARY ACTIVITIES AFTER (174,989) (393,948)
TAXATION
LOSS PER ORDINARY SHARE
Basic 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 ASSETS
Investment in joint venture
Share of gross assets 7 393,088 50
Share of gross liabilities 7 (327,568) -
65,520 50
CURRENT ASSETS
Debtors 16,111 1,264
Cash 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 RESERVES
Called up share capital 3 72,160 70,624
Share premium account 5,761 5,761
Profit 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 historical
cost convention and in accordance with applicable United Kingdom accounting
standards. 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 January
2006 and in accordance with this standard, the comparative numbers have been
restated accordingly. The impact of this new accounting standard is explained
in 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 preference
shares of 65,000 due to Safeland plc, a related party, which falls due for
redemption in January 2008. Subsequent to 31 January 2007, the directors have
received an undertaking from Safeland plc that these preference shares will only
be redeemable if there is adequate cash resources within the group to enable the
group to meet its liabilities as they fall due for the foreseeable future. On
the basis of this commitment, the directors have prepared the financial
statements on the going concern basis.
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
Joint ventures are accounted for in the consolidated financial statements using
the gross equity method. The consolidated profit and loss account includes the
group's share of operating profit, interest and taxation. The consolidated
balance sheet includes the group's share of gross assets and gross liabilities
within fixed asset investments.
SHARE OPTIONS
The Company has applied the requirements of FRS20 Share-based payment which
requires 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 options
granted is measured on the date at which they are granted by using the
Black-Scholes model, and is expensed to the profit and loss over the appropriate
vesting 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 issued
153,575 1p ordinary shares for 1,536 cash consideration.
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. 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 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 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 2007, the Company had 2,734,374 (2006: 2,887,949) outstanding
unexpired 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 January
2006 and in accordance with this standard, the comparative numbers have been
restated accordingly.
The share based payment charge has been calculated using the Black-Scholes model
to calculate the fair value of the share options. This share option charge is
included in the profit and loss account as an exceptional administrative expense
over the 18 month vesting period from 5 February 2005 to 5 August 2007. The
exceptional 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 At
c 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 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.
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
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