Alternative Liq Regulatory News (ALF)

Allanfield Group Plc

Preliminary Results for the year ended 31 December 2011

Allanfield Group Plc (AIM: ALF), the specialist real estate insurance broker, is pleased to announce its preliminary results for the year ended 31 December 2011.

Financial & Operational Highlights:

§ Revenue increased by 50.7% to £2.28m (2010 £1.51m)

§ Operating margin (before amortisation and exceptional items) of 38%

§ EBITDAE increased by 19.8% to £0.9m (2010 £0.7m)

§ Acquisition of Industrial & Commercial Property Insurance Consultants Limited (ICP)

§ Admission to AIM on 18 August 2011

Commenting on the Group's results, John Dembitz, Chairman, said:

"The year ended 31 December 2011 was a game-changing year in the life of the Company and included its Admission to AIM. The Company also made its first acquisition, ICP, which has been successfully integrated into the Group and is operating off a single database platform.

"Allanfield is focused on providing our clients with great service, innovative solutions and in-house claims management. Despite the many ill-winds in the global economic environment, we look forward to the challenges and opportunities for continued growth and development of the business through 2012."

Enquiries:

Notes to Editors:

§ Allanfield Group Plc manages insurance premiums in excess of £18 million.

§ The Group offers an innovative loyalty scheme to encourage clients to retain and grow insurance cover managed by the Group by "rewarding" them for their business by giving them shares in a subsidiary of Allanfield, which may be exchanged for cash and/or shares in Allanfield at the end of a three year period subject to certain conditions. 

§ Allanfield's business model is based on having fewer larger clients, supported by leading industry technology and retaining clients through good service management.

Extract from the Chairman's Statement

The year ended 31st December 2011 was a game changing year in the life of the Group. It undertook its first acquisition by purchasing Industrial & Commercial Property Insurance Consultants Limited (ICP), a real estate broking specialist; and immediately on completion of the acquisition successfully gaining Admission to AIM (18th August 2011 - ALF).

The Group's model is based on servicing a relatively smaller number of larger clients with significant real estate portfolios generating larger annual premiums, supported by a relatively small team of highly experienced staff and industry leading technology. This allows the team to provide our clients with great service, innovative solutions and in-house claims management. This model ensures that the running costs of the business are focussed substantially on the client side. This translates into healthy margins with an operating margin (before amortisation and exceptional items) of 38% (2010:47%). The decrease in margin is attributable to the cost of governance relating to becoming a listed vehicle. We expect this margin to improve in 2012 as revenue increases and governance costs remain static.

Total premiums acquired were in excess of £6 million for a consideration of £3.5 million, 20% equity in Allanfield Group Plc (as at the date of Admission), deferred consideration of £1 million and up to a further £2.5 million earn out consideration.

The Group has continued to strengthen its infrastructure ensuring that its technology is at the forefront of its sector; searching and recruiting senior talent to increase management's bandwidth; and on-going development of its people. For example, the Group has recently employed a senior broking team from the real estate insurance market bringing specialist skills to the business and enhancing the client service element.

We look forward to 2012, despite the many ill winds in the global economic environment, to the challenges and opportunities for continued growth and development of your business.

John Dembitz

Chairman

CEO's Review

The 2011 financial year was an exciting and challenging period in the evolution of the Group, which was launched in 2007 with a strategy focussed on real estate insurance. The acquisition of ICP, a pure real estate insurance broker further enhanced the proposition and added premiums of £6 million to the Group. Furthermore the Group listed on AIM on 18 August 2011.

Both of these events have brought challenges to the business and the management team has worked with the Board to increase the levels of governance expected and to integrate the acquisition.

The listing of the Group has enhanced the image of the Group leading to an improved prospects list and increased rate of client conversion.

We invested in its personnel and infrastructure in anticipation of the acquisition and Admission to AIM. Allanfield's strategy of having a fewer number of larger clients supported by an experienced broking team and industry leading technology has allowed it to absorb these additional overheads and to deliver improved profits and cash flow.

I am pleased to report that ICP has been successfully integrated into the Group, all administration is performed on a single database across the group and, although ICP is a separate brand, everyone works together as one large team. Future acquisitions will be dealt with in the same way.

We continue to enhance the product suite, one that is innovative and new to the market. This includes our equity loyalty scheme rewarding clients with equity in the Group and the launch of a new captive insurance product through which clients can share in the underwriting profits of their risk without investing capital and with no risk to the Group's balance sheet.

My management team and I look forward to an exciting 2012/13 in which we will work to bring new acquisitions, innovative products and improved returns.

Gary Field

Chief Executive OfficerConsolidated Statement of Comprehensive Income

For the year ended 31 December 2011

All activities relate to continuing operations. No other comprehensive income was recognised during the year.

Consolidated Earnings per share

Consolidated EBITDAE per share

Consolidated and Company Statement of Financial Position

For the year ended 31 December 2011

Consolidated Statement of Changes in Equity

As at 31 December 2011

Consolidated and Company Statement of Cash Flows

For the year ended 31 December 2011

Notes to the Financial Information

For the year ended 31 December 2011

1 General information

The principal activity of Allanfield Group Plc ("the Company") and its subsidiaries (together "the Group") is insurance broking focused on the commercial real estate market.

The Company was incorporated on 31 May 2011 and is a public limited liability company incorporated and domiciled in the United Kingdom, with its shares listed on AIM. The address of its registered office is 99 Heath Street, London, NW3 6ST.

These financial statements are presented in sterling as all transactions are denominated in sterling and it is the functional currency of each group company as all the businesses are located in the United Kingdom.

2. Basis of preparation

The Consolidated and Company financial statements of Allanfield Group Plc have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ('IFRSs as adopted by the EU'), IFRIC interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. The Consolidated and Company financial statements have been prepared under the historical cost convention.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 4.

The Group has applied IFRS 1 (Revised) 'First time adoption of International Financial Reporting Standards' in preparing these consolidated financial statements. The Group's transition date is 1 January 2010 and the opening IFRS statement of financial position has been prepared at this date.

In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued by the International Accounting Standards Board (the IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to its operations and effective for accounting periods beginning on 1 January 2011.

The transition from UK GAAP to IFRS has resulted in solely presentation differences. There is no impact on reported profit, net assets, cashflows or equity in either 2010 or 2011.

None of the amendments to Standards below had an impact on the Group.

3. Basis of consolidation

The consolidated financials of the Group incorporate the financial statements of the Company and its subsidiaries (entities controlled by the Company) made up to 31 December 2011.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Acquisition related costs are generally recognised in the Statement of Comprehensive Income as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their values at the acquisition date.

The excess of the costs of acquisition over the fair value of the Group's share of the identifiable net assets acquired is regarded as goodwill.

The acquisition by the Company of Allanfield Property Insurance Services Limited during the year has however been accounted for as a reorganisation (see note 17 Business Combinations).

Also predecessor accounting has been used in respect of the comparatives as the business combination which took place in 2010 involved two entities under common control (Allanfield Property Insurance Services Limited and Allanfield Property Insurance Services (No 2) Limited). The results and financial position of the two entities have therefore been combined and presented as if the two entities had always been combined.

All intra-group transactions, balances and unrealised gains and losses on transactions between group companies are eliminated on consolidation.

4. Exceptional items included in administrative expenses

5. Earnings before interest, tax, depreciation, amortisation and exceptional items (EBITDAE)

6. Earnings per share

The post tax earnings, all of which relate to continuing operations in the period, and weighted average number of ordinary shares used in the calculation of basic and diluted earnings per share are as follows:

The weighted average number of shares in issue has been used to calculate the earnings per share for 2010. Although the Company was not incorporated until 31 May 2011, due to the Group reorganisation as described in note 2.3, the shares have been treated as if in existence for both periods.

7. Business Combinations

The excess of the fair value of the costs of the acquisition over the fair value of the identifiable net assets acquired is recorded as goodwill.

The acquired client contracts have been separately identified as intangible assets.

The goodwill arising from the acquisition is attributable to other intangible assets that cannot be separately identified and measured, and relates to growth prospects and synergies. None of the goodwill recognised is expected to be deductible for income tax purposes.

The acquisition related costs totalling £303,697 have been expensed and are classified within Administrative expenses in the Consolidated Statement of Comprehensive Income.

The revenue included in the Consolidated Statement of Comprehensive Income since 18 August 2011 contributed by Industrial & Commercial Property Insurance Consultants Limited was £512,817. The subsidiary also contributed profit before income tax and amortisation charges relating to the acquired client contracts of £410,988 over the same period.

Had Industrial & Commercial Property Insurance Consultants Limited been consolidated from 1 January 2011, the Consolidated Statement of Comprehensive Income for the Group would show total revenue of £3,253,527, and profit before income tax and amortisation charges relating to the acquired client contracts of £834,457.

8. Borrowings

The bank borrowings bear interest at the rate offered by the bank to leading banks in the London Interbank

Market (LIBOR rate) plus 3.375%.

The bank overdraft and borrowings are secured by a fixed and floating charge over all of the current and future assets of the Company and all other Group companies. They are also secured by the assignment over life policies relating to G S Field and T R Allan, company directors, and also by a personal guarantee by G S Field, limited to £500,000.

The fair value of current borrowings equals their carrying amount, and the impact of discounting is not significant. All bank borrowings are denominated in pounds sterling.