RNS Number:3159K
Beazley Group PLC
24 April 2003
24 April 2003
Beazley Group plc
Preliminary results
Beazley Group plc (Beazley), a leading independent Lloyd's vehicle, today
announces its maiden results for the six months to 31 December 2002. Beazley was
admitted to the official list on 12 November 2002.
The Beazley Group acted as a Lloyd's managing agent in the period and the format
of the financial statements reflects this. The group participates in the
underwriting of the syndicate 2623 from 1 January 2003 so for future periods
will prepare financial statements appropriate for insurance groups. In light of
its importance to shareholders going forward, a review of the syndicate results
and prospects is included in this report.
Highlights
Group
* Successful flotation on London Stock Exchange on
12 November 2002, raising #150m
* Operating profit before tax and exceptional items for the
six months period - #0.8m
* Net assets of #144.9m, 63p net assets per share
* Capacity at #660m (2002: #403m), Beazley Group now has a
50% participation
Syndicate*
* Gross premiums written of #438m (2001: #355m)
* Net premiums earned of #292m (2001: #179m)
* Combined ratio 94% (2001: 108%)
* Limited exposure to previous year losses due to limited
participation
* Profit for the period of #22m reflecting strong insurance
market (2001: #(17)m)
* 33% year-on-year renewal rate increase for 2002
*NB: These figures are for syndicates managed by the group and are for the full
year, rather than six months (syndicate 623 for 2000 and 2001 and combined
syndicates 623 and 2623 for 2002).
Andrew Beazley, Chief Executive said:
"It is with great pleasure that I am publishing our first set of accounts as a
public company. Beazley has an excellent market profile as a specialist
underwriter and our syndicate results reflect this. 2002 has been an exceptional
year in terms of premium growth, rate increases and underwriting results and our
outlook remains positive for 2003."
Contacts
Beazley Group plc Tel: 020 7667 0623
Andrew Beazley
Arthur Manners
Nicholas Furlonge
Finsbury Tel: 020 7251 3801
Melanie Gerlis
Anthony Silverman
Chief Executive's statement
This is my first opportunity to present you with a detailed account of our key
operating activities. I would like to start first by presenting the Group's
financial results and then explaining the reasons for our success.
No underwriting activities for Beazley Underwriting Limited are included in the
result for the six-month period as participation on syndicate 2623 only
commenced on 1 January 2003.
Beazley Group results
The Beazley Group achieved a profit of #770,133 before tax and exceptional
items. This is before exceptional expenses of #1,932,816 which relate to one-off
advisor fees and debt redemption costs incurred in the lead up to the IPO, and
which were charged to the profit and loss account during this period. During the
same period, the proceeds from the IPO have significantly increased the net
assets position of the group. The net assets per share at 31 December 2002 was
63p. The reporting period is for the six months ended 31 December 2002, as the
accounting reference date was changed to 31 December.
Underwriting results
As can be seen in the table below, 2002 has been a strong year in terms of
premium growth and underwriting results for the syndicate. Average rate
increases of 33% have been achieved on renewal business compared with the prior
year. In addition, we have seen a particularly low loss climate. Quota share
reinsurance was purchased during 2002 for capacity management purposes, which
has reduced the net premiums written.
Managed syndicate results
2002 2001 2000
#m #m #m
Gross premiums written 438 355 187
Net premiums written 289 269 129
Net premiums earned 292 179 115
Net claims incurred (174) (134) (67)
Net operating expenses (102) (71) (47)
Balance on technical account 22 (16) 10
Profit/(loss) for the period 22 (17) 10
Claims ratio 60% 75% 58%
Expense ratio 34% 33% 39%
Combined ratio 94% 108% 97%
A specialist approach
Through our specialist approach to underwriting, we aim to leverage our
expertise in the existing lines through vertical growth and continued sound risk
management. We believe that our skilled underwriting and high standards of
service make us a market of choice.
To facilitate and complement our approach to risk taking, we have built a robust
distribution network. The sophisticated network enables us to take full
advantage of the broad skill-base and licenses to trade both domestically and
internationally. This has also been helped by fostering strong relationships
with brokers and using cutting-edge technology.
Our underwriters spend time each year travelling to meet brokers and their
clients around the world. We believe this is the best way to understand their
businesses, service issues and the ever-changing risks concerning them.
Technology
We are constantly looking for ways to improve the way we do business. For
example, Beazley IQ is a unique and exclusive electronic, interactive queuing
system for the box at Lloyd's, that drastically cuts broker waiting times. We
are also the only syndicate to use webcams to put our trading box on public view
at www.beazley.com so that brokers can easily check the availability of an
underwriter. Our website also enables clients to access the latest news and
product information.
The Beazley Information Centre (BIC) is an innovative management information
system, which we have used over the last five years. BIC is based on OLAP
technology and brings data to the desktop. It lets underwriters easily access
data and reports online so that they can make more timely and more informed
decisions.
A further example of our focus on technology is our early endorsement of the
Project Blue Mountain initiative to help streamline data.
The Lloyd's advantage
Being a member of Lloyd's gives us many advantages and we have certainly made
the most of the association through the distribution and branding. Lloyd's
offers a broad product line that is attractive to clients throughout the world.
As a member, we have the ability to write business in over 140 countries. We are
also able to focus on what we are good at - risk taking. This has enabled us to
write gross premium income of #438m with just 80 employees.
A further benefit is that we can change the mix of business immediately
according to market conditions. The flexibility within our underwriting teams
allows us to respond quickly to a change in market conditions.
Market opportunities
We are in a strong position because we have been able to raise capital to
develop new business. Even though the world has seen uncertainty since the
tragic events of September 11, we have been able to take advantage of market
opportunities.
Our underwriting has seen significant rate increases in a period where contract
terms and conditions have also tightened. Both these factors have been
favourable to the operations.
Operating structure
Beazley Furlonge is the principal operating subsidiary that manages the
underwriting operations. As a Lloyd's managing agent, Beazley Furlonge derives
its operating revenue from agency fees charged to the underwriting members
participating on the syndicate, and from profit commission which are based on
the underwriting results of the syndicate. Agency fees currently amount to 0.6%
of capacity and profit commission amount to 17.5% of the net profit of the
syndicate. Beazley Underwriting participates as the sole underwriting member of
syndicate 2623. This syndicate has underwritten in parallel with syndicate 623
from 1 January 2003. Under the parallel syndicate arrangement, Beazley Furlonge
manages both syndicates as a single underwriting unit. All premiums, claims and
any reinsurance to close of a prior year of account will be split between the
syndicates pro rata to each syndicate's underwriting capacity for the relevant
year of account, resulting in identical risk profiles and underwriting
profitability levels. For the 2003 year, the split of business between the two
syndicates is 50%/50%.
The structure of our business means we are not hindered by excessive bureaucracy
as we outsource many of our non-core main activities, so that we can focus on
risk taking and settling claims. These outsourced functions include data input,
asset management, human resources and IT maintenance. Using external suppliers
has other advantages: we stand to benefit from their fresh thinking, specialist
knowledge and excellent quality of service.
Capacity structure
The syndicate experienced little capacity growth during a disciplined period
before 2000. From that date, prospects for underwriting improved and the market
began to grow. Since then, the market has dislocated and grown which therefore
required increases in capacity. Consequently, the underwriting capacity managed
by the Beazley Group increased to #660m for the 2003 year of account.
The different sources of capital up until the end of 2002 comprised individual
names, controlled corporate members and third party corporate members. The
Beazley Group had a limited participation up to 31 December 2002 in syndicate
623. In view of the current underwriting opportunities, the Beazley Group now
has participation of #330m in 2003. The capital for that additional capacity was
provided through the proceeds from the share issue in November 2002.
The group has available a letter of credit facility to enable it to increase its
Funds at Lloyd's (FAL) by up to #30m. Based on our existing risk based capital
ratio of 40%, this facility allows syndicate 2623 to write up to #405m of
capacity in future years of account.
Investments
Of the net proceeds from the share issue of #138m, #132m has been used as FAL
for syndicate 2623, with the balance being used to fund working capital of the
new syndicate. FAL is invested in short dated government bonds and commercial
paper with an average duration of six months.
The overall investment strategy is to maximise investment returns while
stressing diversification of risk, preservation of capital and market liquidity
with reference to the overall underwriting profitability of the group. The group
has used a conservative approach to its investments in the past.
Dividend policy
The directors do not recommend the payment of a dividend.
As stated in the company's prospectus dated 7 November 2002, it is anticipated
that the company will commence paying dividends with effect from the interim
results for the six months to 30 June 2003, which are expected to be announced
in September 2003.
Specialist Underwriting: Divisional Review
Property Group
The Property Group has the expertise and experience to provide consistent
management of both price and capacity, and clients have access to the decision
makers at all stages of the underwriting process.
The team emphasises service as a means to product enhancement and achieves this
through high underwriting skill levels accompanied by in-house technical
support. This is provided by a specialist claims and policy wordings team and
underwriting administration. At Beazley, we believe that by understanding our
customers' businesses, we can find solutions to their needs.
During 2002, the Lloyd's market was a market of choice for US brokers. This
enabled us to increase the volume of risks underwritten and premium per risk.
The claims ratio has improved due to the low frequency of losses in 2002 and
from the effect from the improvement in the terms and conditions, while the 2001
result was impacted by an involvement in WTC.
Current market conditions continue to be favourable. Rate increases are still
being achieved although competition is increasing from international markets,
particularly in the US. For 2003 the Property Group will expand in the UK
following the recruitment of a dedicated underwriting team.
Underwriting
results
12 months ending 12 months ending
31 December 2002 31 December 2001
---------------------------------------------------------------------------
Gross premiums written (#m) 145 123
Net premiums written (#m) 115 108
Net premiums earned (#m) 114 66
---------------------------------------------------------------------------
Claims ratio 41% 72%
---------------------------------------------------------------------------
Rate increase achieved 27% 20%
Percentage of business led* 51% 51%
*based on gross premium written
Specialty Lines
Specialty Lines has focused on writing specialty-risk insurance in selected
markets and is an established lead underwriter in many of its areas of
expertise. A significant proportion of this business is written in the US excess
and surplus lines market and is predominately structured on a claims-made,
rather than losses occurring, basis. The aim is to provide very high service
levels - having the necessary skills and experience to write the business,
produce the policy and settle the claims.
Rate increases achieved accelerated throughout 2002 as the number of competitors
reduced. As part of the overall syndicate capacity management, quota share
reinsurance was purchased on this account which reduced the net premium written
in 2002. It is not anticipated that we purchase similar levels of quota share
reinsurance in 2003.
The account maintains its conservative reserving strategy in line with recent
years.
During 2003, we will continue to recruit additional specialist underwriters to
build existing lines of business. We expect the rating environment to continue
to improve.
Underwriting results
12 months ending 12 months ending
31 December 2002 31 December 2001
---------------------------------------------------------------------------
Gross premiums written (#m) 166 152
Net premiums written (#m) 79 111
Net premiums earned (#m) 93 77
---------------------------------------------------------------------------
Claims ratio 80% 72%
---------------------------------------------------------------------------
Rate increase achieved 38% 13%
Percentage of business led* 77% 68%
*based on gross premium written
Reinsurance
Our Reinsurance underwriters employ the most up-to-date software programmes and
analytical tools to assist risk assessment and help utilise available capacity
more effectively. At Beazley, we believe that by understanding our customers'
businesses, we can find solutions to their needs.
The growth in the Reinsurance account comes from taking larger participations on
core accounts in addition to rate increases.
The 2001 result was affected by the WTC loss. The underlying impact of the WTC
loss for the syndicate was #20m. The estimates for the ultimate gross and net
WTC loss have not been changed.
During 2003, the rating depends upon the client's loss record and exposure but,
on average, rate levels are expected to be maintained in 2003.
Underwriting results
12 months ending 12 months ending
31 December 2002 31 December 2001
---------------- ---------------- ----------------
Gross premiums written (#m) 67 42
Net premiums written (#m) 49 18
Net premiums earned (#m) 46 18
---------------- ---------------- ----------------
Claims ratio 68% 105%
---------------- ---------------- ----------------
Rate increase achieved 44% 14%
Percentage of business led* 20% 21%
*based on gross premium written
Marine
The Marine team is an acknowledged leader of traditionally difficult areas such
as Greek trampship operators, demolition and towage business and the insurance
of older vessels.
The Marine account has shown positive premium growth this year and was not
materially affected by the significant marine losses of late 2002.
We expect significant growth in the energy account following the recruitment of
a specialist underwriter, an area that has seen dramatic rate rises over the
last eighteen months.
Although rate rises in the portfolio were lower than other markets, further
rises of a similar level are expected during 2003. There continue to be good
prospects for underwriting returns in the short and medium term.
Underwriting
results
12 months ending 12 months ending
31 December 2002 31 December 2001
---------------- ---------------- ----------------
Gross premiums written (#m) 60 38
Net premiums written (#m) 46 31
Net premiums earned (#m) 39 17
---------------- ---------------- ----------------
Claims ratio 55% 63%
---------------- ---------------- ----------------
Rate increase achieved 16% 11%
Percentage of business led* 51% 57%
*based on gross premium written
Outlook
Our strategy is to capitalise on the current market conditions to position
ourselves with a high quality portfolio in a financially efficient environment.
We will achieve this by continuing to focus on risk taking and access. We
believe this will result in good long-term returns for our shareholders.
We strongly feel that prospects for the foreseeable future are good. Rates
continue to increase in certain areas. This rating environment offers the
potential for healthy underwriting returns.
Recent trading conditions have been very favourable for premium rates during a
period where there has been a particularly low loss climate.
We believe there is a significant opportunity to grow the business within our
existing areas of expertise. In addition, as the market dislocation continues,
there will be opportunities to attract underwriting talent in specific areas
that are complementary to the existing portfolio.
PROFIT & LOSS ACCOUNT
6 months Year
ended ended
31 December 30 June
2002 2002
Note # #
Turnover 2 2,199,484 2,968,568
Administrative
expenses:
- ordinary items 5 (2,713,414) (1,071,397)
- exceptional items 5 (1,189,816) (710,800)
--------- ---------
(3,903,230) (1,782,197)
--------- ---------
Operating profit/(loss) (1,703,746) 1,186,371
Share of operating
income in associate
undertakings 471,668 137,561
Profit on sale
of investments 3 516,458 -
--------- ---------
(715,620) 1,323,932
Interest and
dividends receivable 724,504 23,862
Interest payable and
similar charges:
- ordinary items 4 (428,567) (487,259)
- exceptional items 4 (743,000) - -
--------- ---------
(1,171,567) (487,259)
--------- ---------
Profit/(loss) on
ordinary activities
before taxation 5 (1,162,683) 860,535
Taxation on
ordinary activities 6 (91,633) (616,673)
Taxation on 6 179,905 213,240
exceptional items --------- ---------
Profit/(loss)
on ordinary
activities
after taxation (1,074,411) 457,102
Dividends received - -
--------- ---------
Retained profit/(loss)
for the Period (1,074,411) 457,102
--------- ---------
Earnings per share
- basic 7 (1.7p) N/A
- diluted 7 (1.7p) N/A
The group's and company's turnover and expenses all relate to the continuing
operations. There were no recognised gains or losses during the period other
than those passing through the profit and loss account.
BALANCE SHEET AS AT 31 DECEMBER 2002
31 December 2002 30 June 2002
---------------- --------------
Note # #
Fixed assets:
Intangible assets 8 6,268,071 6,440,107
Investments 132,418,235 19,923
--------- --------
Investments in associated
undertakings 5,241,573 4,911,405
--------- --------
143,927,879 11,371,435
--------- --------
Current assets:
Debtors 3,577,629 1,794,264
Investments - 83,807
Cash at bank 4,990,202 780,668
--------- --------
8,567,831 2,658,739
Creditors:
Amounts falling due within one year (7,557,622) (7,061,599)
--------- --------
Net current assets / (liabilities) 1,010,209 (4,402,860)
Creditors:
Amounts falling due after one year - (4,057,000)
--------- --------
Provisions for liabilities and charges (30,244) (276,387)
--------- --------
Total net assets 144,907,844 2,635,188
--------- --------
Capital and reserves:
Called up share capital 9 11,473,973 504,172
Share Premium 10 132,377,266 -
Merger Reserve 10 1,675,328 1,675,328
Profit and loss account 10 (618,723) 455,688
--------- --------
144,907,844 2,635,188
--------- --------
Net tangible assets value per share 60p N/A
Net assets value per share 63p N/A
The financial statements were approved by the board of directors on 23 April
2003.
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
6 months ended Year to
31 December 2002 30 June 2002
# #
Profit/(loss) on ordinary activities after
taxation (1,074,411) 457,102
Prior year adjustment - (410,027)
------------- ------------
Shareholders' consolidated gains and losses
recognised during the period (1,074,411) 47,075
------------- ------------
Reconciliation of movement in shareholders'funds
Shareholders' funds at beginning of period
(as reported) 2,635,188 2,476,613
Prior year adjustment - (410,027)
------------- ------------
Shareholders' funds at beginning of period
(as restated) 2,635,188 2,066,586
Profit/(loss) for the financial year (1,074,411) 457,102
Issue of shares net of issue costs 143,347,067 111,500
------------- ------------
Shareholders' funds at period end 144,907,844 2,635,188
------------- ------------
CONSOLIDATED CASH FLOW STATEMENT
6 months to Year to
31 December 2002 30 June 2002
Note # #
Net cash flow from operating
activities 11 (1,603,981) 1,415,475
Return on investments and servicing of finance
Interest received 694,504 23,862
Interest paid (1,171,567) (487,259)
Taxation
Corporation tax paid (1,176) (144,803)
Capital expenditure and financial investments
Sale of current asset investments - 6,212
Fixed asset investments 32,398,313) -
------------- -----------
(134,480,533) 813,487
Financing
(Decrease) in debt (4,657,000) (818,001)
Issue of ordinary share capital 143,347,067 111,500
------------- -----------
Increase in cash 4,209,534 106,986
------------- -----------
Reconciliation of net cash flow to
movement in net funds/(debt)
Increase in cash during the period 4,209,534 106,986
Decrease in debt 4,657,000 818,001
------------- -----------
8,866,534 924,987
Opening net (debt) (3,876,332) (4,801,319)
------------- -----------
Closing net funds 4,990,202 (3,876,332)
------------- -----------
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies
Basis of preparation
The preliminary financial statements, which do not comprise full accounts, have
been prepared on the basis of the accounting policies set out in the accounts
for the group for the year ended 30 June 2002 which were reproduced in the
prospectus dated 6 November 2002. The preliminary financial statements have been
prepared in accordance with applicable accounting standards in the United
Kingdom. The financial information contained in these preliminary financial
statements does not constitute statutory accounts of the group within the
meaning of section 240 of the Companies Act 1985. Statutory accounts for the
year ended 30 June 2002 have been delivered to the Registrar of Companies and
statutory accounts for the six months ended 31 December 2002 will be delivered
in due course. The auditors have reported on the accounts, their report was not
qualified and did not contain a statement under Section 237(2)or (3) of the
Companies Act 1985.
Basis of consolidation
The group financial statements consolidate those of the company and its
subsidiaries following acquisition accounting principles. The investment in the
associate is accounted for on the equity basis.
Investments
Investments in group undertakings and associates are stated at cost less
permanent diminution in value. The investment in APUA is shown at the lower of
cost and the directors' valuation. Other fixed asset investments are shown at
cost.
Turnover
Turnover represents agency salaries and profit commission derived from
underwriting Names at Lloyd's. Agency salaries represent net retained salaries
and have been accounted for on an accruals basis. Profit commission is accounted
for on an accruals basis.
Results from associated companies
The Group's interest in the results of the underwriting activities of an
associated company, which is a corporate member of Syndicate 623 is accounted
for on an annual basis.
Operating leases
Rentals payable under operating leases are charged on a straight line basis over
the term of the lease.
Deferred taxation
Except where otherwise required by accounting standards, full provision without
discounting is made for all timing differences which have arisen but not
reversed at the balance sheet date.
Pension costs
The expected cost of providing pensions is recognised in accordance with
Statement of Standard Accounting Practice 24 on a systematic and rational basis
over the period from which the benefit from the employee's service is derived.
Contributions are assessed in accordance with advice of a qualified actuary,
using the projected unit method of funding.
Goodwill
Purchased goodwill (representing the excess of the fair value of the
consideration given over the fair value of the separable net assets acquired)
arising on consolidation in respect of acquisitions is capitalised. Positive
goodwill is amortised to nil by equal annual instalments over the directors'
estimate of its useful life, 20 years.
On the subsequent disposal or termination of a business, the profit or loss on
disposal or termination is calculated after charging the unamortised amount of
any related goodwill.
In the company's financial statements, investments in subsidiary undertakings,
associates and joint ventures are stated at cost less amounts written off.
2. Turnover
6 months Year
ended ended
31 December 2002 30 June 2002
------------------ ------------------
Group Group
# #
Profit commission 759,484 1,354,239
Agency fees 1,440,000 1,614,329
------------ ------------
2,199,484 2,968,568
------------ ------------
Turnover and profit before taxation arise in the United Kingdom, from business
underwritten at Lloyd's on behalf of Names resident in the United Kingdom and
overseas.
3. Profit on sale of investments
Profit arises from a subsidiary's disposal of its entire holding of 819,672
shares of 5p each in Beazley Group plc. The shares were sold at a price of 73p
each for a gross receipt of #598,361 on a holding with an original cost of
#81,903, resulting in a profit of #516,458 (year to 30 June 2002: #Nil).
4. Interest payable and similar charges
6 months Year
ended ended
31 December 2002 30 June 2002
------------------ --------------
Group Group
# #
Bank loans 332,046 101,843
9.5% convertible loan notes 96,521 385,416
--------------- ------------
428,567 487,259
Redemption premium on 9.5% convertible loan notes 743,000 -
--------------- ------------
1,171,567 487,259
--------------- ------------
5. Profit on ordinary activities before taxation
6 months Year
ended ended
31 December 2002 30 June 2002
---------------- --------------
Group Group
Profit on ordinary activities before # #
taxation is stated after charging and
crediting the following:
Depreciation - tangible fixed assets - 36,481
Amortisation of goodwill 172,036 344,072
Auditors' remuneration
- audit 88,151 33,091
- other 36,300 19,750
Staff costs 4,768,414 6,093,625
Short term incentive payments 1,509,848 61,037
Rental payments under operating leases
- buildings 130,154 124,936
- motor vehicles 63,156 143,483
-------------- -------------
6,768,059 6,856,475
Other costs 1,933,151 1,127,261
Recharged to managed syndicate (5,987,796) (6,912,339)
-------------- -------------
Administrative expenses 2,713,414 1,071,397
Exceptional items: professional fees
in respect of capital raising 1,189,816 710,800
Exceptional items: redemption premium 9.5%
convertible loan notes 743,000 -
Interest payable
- bank loans 332,046 101,843
- other loans 96,521 385,416
-------------- -------------
5,074,797 2,269,456
-------------- -------------
In addition to the amounts shown above as auditor's remuneration for non audit
services, #763,962 (year to 30 June 2002: #258,000) was paid to KPMG Audit Plc
in respect of services provided in connection with capital raising. #149,357
(year to 30 June 2002: #258,000) of this is included in the exceptional item,
the remaining #614,605 (year to 30 June 2002: #nil) has been charged against the
share premium created as part of the capital raised.
6 months Year
ended ended
31 December 2002 30 June 2002
---------------- ---------------
Group Group
Reconciliation of operating profit/(loss) # #
before tax to operating profit/(loss)
before tax and exceptional items:
Operating profit/(loss) before tax as
presented in the profit and loss account (1,162,683) 860,535
Add back exceptional items 1,932,816 710,800
------------- ------------
770,133 1,571,335
------------- ------------
6. Taxation
6 months Year
ended ended
31 December 2002 30 June 2002
------------------ -------------
Group Group
# #
UK corporation tax on:
Profit on ordinary activities at 30% - 136,142
Prior period adjustments 14,320 (5,381)
------------ -------------
14,320 130,761
Deferred tax
Timing differences in respect of
capital allowances 2,050 (4,065)
Timing differences in respect of profit
recognition (246,143) 227,737
Share of associate tax 141,501 49,000
------------ -------------
(88,272) 403,433
------------ ------------
Factors affecting the tax charge for the current period
The corporation tax liability is higher than the standard rate of corporation
tax in the UK due to the differences explained below:
6 months Year
ended ended
31 December 2002 30 June 2002
---------------- --------------
# #
Profit on ordinary activities before tax (1,162,683) 860,535
------------ -----------
Current tax at 30% (year to 30 June 2002 30%) (348,805) 258,160
Effect of;
Expenses not deductible for tax 194,602 55,562
Capital allowances for the period lower than
depreciation (2,050) (4,065)
Amortisation 51,611 103,222
Timing differences in respect of profit
recognition 104,642 (276,737)
------------ -----------
Tax on profit on ordinary activities - 136,142
----------- -----------
7. Earnings per share
The calculation of basic earnings per share is based on earnings of #
(1,074,411), being the loss for the six month period and on 63,092,885 shares,
being the weighted average number of shares in issue during the period.
The earnings and number of shares used for the purposes of calculating diluted
earnings per share are identical to those used for basic earnings per share.
This is because the exercise of share options would have the effect of reducing
the loss per share and is therefore not diluting under the terms of FRS 14.
8. Intangible fixed assets
Group 31 December 2002 30 June 2002
------- ------------------ --------------
Goodwill Goodwill
---------- ----------
# #
Cost:
Opening balance 6,881,450 6,881,450
Additions - -
--------------- -------------
At period end 6,881,450 6,881,450
--------------- -------------
Amortisation:
Opening balance 441,343 97,271
Charge for period / year 172,036 344,072
--------------- -------------
At period end 613,379 441,343
--------------- -------------
Net book amount:
Opening balance 6,440,107 6,784,179
Closing balance 6,268,071 6,440,107
--------------- ------------
9. Share capital
Allotted Allotted
Authorised and called-up Authorised and called-up
------------ --------------- ------------ ---------------
31 Dec 2002 31 Dec 2002 30 June 2002 30 June 2002
# # # #
Equity Interests:
500,000 'B'
shares of 50p each - - 250,000 -
1,015,358/
1,008,344 'D'
shares of 50p each - - 507,679 504,172
300,000,000/
229,479,452
ordinary shares
of 5p each 15,000,000 11,473,973 - -
Non Equity Interests:
6,600 'A'
shares of 50p each - - 3,300 -
3,400 'C'
shares of 50p each - - 1,700 -
---------- ---------- ---------- ----------
15,000,000 11,473,973 762,679 504,172
---------- ---------- ---------- ----------
On 12 November 2002 the existing authorised share capital in Beazley Group plc
was redesignated as 1,525,358 ordinary shares and a ten for one split performed
to revalue the shares at 5p each.
The authorised share capital was increased to 300,000,000 shares of 5p each and
a bonus issue amounting to 13.8013925 new shares for each original "D" share
held resulted in the issued number of shares rising to 24,000,000.
205,479,452 ordinary shares of 5p each were issued at the IPO at 73p per share
for a total consideration of #150,000,000, resulting in a total number of shares
in issue of 229,479,452.
The ordinary shares of 5p each have the right to receive notice of and to attend
and vote at General Meetings. They are entitled to the reserves, both in
relation to income distribution and to the distribution of capital.
10. Reserves
Group
Share Profit &
Total Merger premium loss
reserves reserve account account
# # # #
Balance brought
forward 2,131,016 1,675,328 - 455,688
Retained profit/(loss)
for the period (1,074,411) - - (1,074,411)
Share premium on issue
of shares 139,030,199 - 139,030,199 -
Capitalised listing costs (6,652,933) - 6,652,933) -
--------- --------- --------- ---------
At 31 December 2002 133,433,871 1,675,328 132,377,266 (618,723)
--------- --------- --------- ---------
Company
Share Profit &
Total Merger premium loss
reserves reserve account account
# # # #
Balance brought forward 144,137 - - 144,137
Retained profit/(loss)
for the year (1,201,411) - - (1,201,411)
Share premium on issue of
shares 139,030,199 - 139,030,199 -
Capitalised listing
costs (6,652,933) - (6,652,933) -
--------- --------- --------- ---------
At 31 December 2002 131,319,992 - 132,377,266 (1,057,274)
--------- --------- --------- ---------
11. Reconciliation of operating profit to net cash inflow from operating
activities
6 months Year
ended ended
31 December 2002 30 June 2002
------------ ------------
# #
Operating profit/(loss) (1,703,746) 1,186,371
Amortisation of goodwill 172,036 344,072
Depreciation charge - 36,481
Decrease/(increase) in debtors (1,155,150) (1,190,324)
(Decrease)/increase in creditors 1,082,879 1,038,875
------------ ------------
(1,603,981) 1,415,475
------------ ------------
12. Analysis of net funds/(debt)
At 1 July Cash flow At 31 December
2002 2002
# # #
Cash at bank and in hand 780,668 4,209,534 4,990,202
Bank overdraft - - -
--------- --------- ---------
780,668 4,209,534 4,990,202
--------- --------- ---------
Debt due within one year (600,000) 600,000 -
Debt due after one year (4,057,000) 4,057,000 -
--------- --------- ---------
(4,657,000) 4,657,000 -
--------- --------- ---------
Total (3,876,332) 8,866,534 4,990,202
--------- --------- ---------
13. Pension commitments
The valuation of the schemes was calculated by the actuary on the Financial
Reporting Standard 17 "Retirement benefits", basis as at 31 December 2002 and 30
June 2002. The major assumptions used in these valuations were:
31 December 2002 30 June 2002
-------------------------------------------------------------------------------
Rate of increase in salaries 4.0% 4.5%
Rate of increase in pensions 2.0% 2.5%
Discount rate applied to scheme liabilities 5.5% 6.0%
Inflation assumption 2.0% 2.5%
-------------------------------------------------------------------------------
The assumptions used by the actuary are the best estimates chosen from a range
of possible actuarial assumptions which, due to the timescale covered, may not
necessarily be borne out in practice.
Scheme assets
The fair value of the scheme's assets, which are not intended to be realised in
the short term and may be subject to significant change before they are
realised, and the present value of the scheme's liabilities, which are derived
from cash flow projections over long periods and thus inherently uncertain,
were:
Long term Value at
rate of 31 Long term Value at
return 31 December rate of 30 June
December 2002 return 30 2002
2002 #000 June 2002 #000
-------------------------------------------------------------------------------
Equities 6.5% 2,572 7.3% 3,133
Bonds 4.5% 705 5.3% 563
Cash 2.5% 552 0.0%
-------- -------
Fair value of assets 3,829 3,696
Present value of scheme's
liabilities (6,240) (5,309)
-------- -------
Gross pension liability (2,411) (1,613)
Deferred tax asset
arising on pension 484
liability -------- -------
Net pension liability (2,411) (1,129)
-------- -------
------------------------------------------------------------------------------
Although a proportion of the pension costs are rechargeable to the managed
syndicate, the amount of this net pension liability would have a consequential
effect on the Group's reserves.
Movement in deficit during the year
Value at 31
December Value at 30
2002 June 2002
#000 #000
------------------------------------------------------- ----------
Deficit in the scheme at
beginning of year (1,613) (621)
Current service cost (287) (710)
Contributions paid 544 565
Past service cost - -
Other finance income/cost (21) 19
Actuarial gain/loss (1,034) (866)
---------- ----------
Deficit in the scheme at end of year (2,411) (1,613)
---------- ----------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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