GAH.L Regulatory News (GAH)

27 Jun 2006 07:02

Gable Holdings Inc27 June 2006 27 June 2006 Gable Holdings Inc Preliminary Results for the period ended 31 December 2005 Gable Holdings Inc (AIM: GAH) announces its preliminary results covering theperiod from the Company's incorporation on 30 November 2004 to 31 December 2005. During the period, the Company incurred costs of £600,000 which together withnet interest received of £24,000 produced a loss before taxation of £576,000. Gable was admitted to AIM as an investment company on 21 January 2005 when itraised £1,000,000 before expenses, by way of a placing of Ordinary Shares at 5pper share. The Company was established to build, through acquisition, a groupspecialising in the insurance and reinsurance sector. On admission the Company had no trading businesses or subsidiaries and the fundsraised from the placing at that time were used to investigate suitableinvestment opportunities, carry out due diligence on such opportunities and tomeet the Company's initial working capital requirements. In its AIM admission document dated 6 January 2005, the directors of the Companyat that time stated their intention that the Company would invest in insurance,reinsurance and specialised underwriting agency companies based in EEA Statesand that such entities would focus on the property, general and professionalliability and contractor's insurance classes. I am pleased to report that during the period the Company made significantprogress with the execution of its strategy, culminating at the end of Decemberin the completion of the acquisition of Brown Duke AG, a new European-basedinsurance underwriter for £3.9 million which was satisfied through the issue tothe vendors of 31,000,000 new ordinary shares. At the same time Gable raisedapproximately £4.75 million gross (approximately £4.4 million net of expenses)by the issue of, in aggregate, 38,000,000 new ordinary shares at 12.5 pence pershare, representing approximately 34 per cent. of the enlarged share capital ofGable following admission of the shares to trading on AIM. The new funds wereraised to satisfy the minimum solvency capital requirements of the insurancecompany and to provide working capital for the enlarged business. Following completion, Brown Duke's name was changed to Gable Insurance AG and itcommenced trading in January 2006 focusing primarily on writing insurancebusiness in the niche construction and liability insurance markets in the UK andIreland. Brown Duke's highly regarded management team was led by WilliamDewsall who has over 24 years' experience and a successful track record in theLondon insurance market. On completion of the acquisition William joined theBoard of Gable as it's Chief Executive. Board The Company announced on 15 March that John Leat had resigned from the Boardwith immediate effect due to ill health and that the Board is in discussionswith a potential replacement as non-executive Chairman. I am pleased to saythat I will be able to update shareholders in the near future with regard to anew appointment to the Board. During the intervening period I have undertakenthe role of acting chairman and would like to thank my non-executive colleaguesfor their assistance in the execution of the Chairman's duties. The board wishesMr Leat a speedy recovery and thanks him for his support. Outlook I am very encouraged to see that since commencing business in January we havealready quoted over £40m of premium to date and, more importantly, the qualityof the actual business written from that quoted has been of a very high calibreand this is reflected in the zero loss ratio to date. Gable commencedunderwriting at the end of January, albeit slightly later than originallyanticipated. We believe our strategy of writing high quality business gives usthe greatest foundation for building a robust business that holds significantpotential for our first full year of trading in 2007. We clearly have a product which appeals to the construction sector and I ampleased to say that our technology platform has also been well received by thebroking community in the UK where we have seen a consistent flow of brokingrelationships develop with us since the business started. During the last quarter of the current year it is the Company's intention tolaunch the next of its new products. Your Board is very pleased with thesuccessful start that Gable has made and whilst the market is competitive weremain optimistic for the outlook of the Company. William Dewsall Chief Executive and Acting Chairman27 June 2006 www.gableinsurance.com Enquiries: John Bick tel: 07917 649362 GABLE HOLDINGS INC. CONSOLIDATED PROFIT AND LOSS ACCOUNTFor the period ended 31 December 2005 Note Period from 30.11.2004 to 31.12.2005 £'000 Administrative expenses (600) Operating loss (600) Interest receivable 24 Loss on ordinary activities before taxation (576) Taxation 2 - Loss on ordinary activities after taxation and retained loss 4 (576) Loss per ordinary share (pence) 3- basic (1.44)p There were no recognised gains or losses other than the loss for the financialperiod. All of the activities of the Group are classed as continuing. The acquiredbusiness did not have a material impact on the Group's trading results for theperiod. GABLE HOLDINGS INC. CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2005 Note £'000 Fixed assetsIntangible assets 4,250Tangible assets 75 4,325Current assetsDebtors 24Cash at bank 4,858 4,882 Creditors:Amounts falling due within one year (301) Net current assets 4,581 Total assets less current liabilities and net assets 8,906 Capital and reservesCalled up share capital 279Share premium account 5,328 Other reserves 3,875Profit and loss account (576)Equity shareholders' funds 4 8,906 GABLE HOLDINGS INC. CONSOLIDATED CASH FLOW STATEMENTFor the period ended 31 December 2005 Period from 30.11.2004 to 31.12.2005 Note £'000 Net cash outflow from operating activities 5 (323) Returns on investments and servicing of financeInterest received 24 Investing activitiesPurchase of tangible fixed assets (75) Acquisitions and disposalsAcquisition of subsidiary (312)Net cash acquired with subsidiary 15Net cash outflow from acquisitions and disposals (297) Net cash outflow before financing (671) FinancingIssue of shares 5,805Share issue costs (276) Net cash inflow from financing 5,529 Increase in cash 6 4,858 GABLE HOLDINGS INC. NOTES TO THE PRELIMINARY ANNOUNCEMENT For the period ended 31 December 2005 1 BASIS OF PREPARATION The financial statements have been prepared under the historical cost conventionand in accordance with United Kingdom Generally Accepted Accounting Principles.The Company was incorporated in the Cayman Islands which does not prescribe theadoption of any particular accounting framework. Accordingly, the Board ofDirectors have resolved that the Company will follow United Kingdom accountingstandards and apply the Companies Act 1985 when preparing its financialstatements. The principal accounting policies of the Group are set out below. FIXED ASSETS AND DEPRECIATION Depreciation is calculated so as to write off the cost of an asset, less itsestimated residual value, over the useful economic life of that asset asfollows: IT systems and software - 5 years BASIS OF CONSOLIDATION The Group financial statements consolidate those of the Company and of itssubsidiary undertakings drawn up to 31 December 2005. Acquisitions ofsubsidiaries are dealt with by the acquisition method of accounting. The Company has prepared its accounts on the basis that "merger relief" isavailable (similar to that which, for UK based companies, is offered by Section131 of the Companies Act 1985) in respect of the consideration received inexcess of the nominal value of the equity shares issued in connection with theacquisition of Brown Duke AG. Accordingly, in such circumstances the cost ofinvestments will represent the nominal value of shares issued, together with thefair value of any additional consideration given and costs. GOODWILL Goodwill arising on consolidation, representing the excess of the fair value ofthe consideration given over the fair value of the identifiable net assetsacquired is capitalised and amortised over its useful economic life. DEFERRED TAXATION Deferred tax is recognised on all timing differences where the transactions orevents that give the Group an obligation to pay more tax in the future, or aright to pay less tax in the future, have occurred by the balance sheet date.Deferred tax assets are recognised when it is more likely than not that theywill be recovered. Deferred tax is measured using rates of tax that have beenenacted or substantially enacted by the balance sheet date. FOREIGN CURRENCIES Transactions in foreign currencies are translated at the exchange rate ruling atthe date of the transaction. Monetary assets and liabilities in foreigncurrencies are translated at the rates of exchange ruling at the balance sheetdate. The financial statements of foreign subsidiaries are translated at therate of exchange ruling at the balance sheet date. The exchange differencesarising from the retranslation of the opening net investment in subsidiaries aretaken directly to reserves. All other exchange differences are dealt withthrough the profit and loss account. FINANCIAL INSTRUMENTS Income and expenditure arising on financial instruments is recognised on theaccruals basis and credited or charged to the profit and loss account in thefinancial period to which it relates. 2 TAXATION ON LOSS ON ORDINARY ACTIVITIES There is no tax charge for the period. The Group does not operate within the UKand there is no tax arising on its operations. The tax assessed for the period differs from the standard rate of corporationtax in the UK as follows: Period from 30.11.2004 to 31.12.05 £'000 Loss on ordinary activities before tax ' (576)Loss on ordinary activities multiplied by standard rate (173)of corporation tax in the UK of 30% Effect ofExpenses not deductible for UK tax purposes 173 Current tax charge for period - 3 LOSS PER SHARE The calculation of the basic loss per share is based on the loss on ordinaryactivities after tax of £576,000 divided by the weighted average number ofordinary shares in issue during the period of 39,892,929. The impact of thewarrants on the loss per share is anti-dilutive. 4 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Period from 30.11.2004 to 31.12.05 £'000 Loss for financial period (576)Issue of ordinary share capital (net of issue costs) 9,482Net increase in shareholders' funds 8,906Equity shareholders' funds brought forward -Equity shareholders' funds carried forward 8,906 5 RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES Period from 30.11.2004 to 31.12.05 £'000 Operating loss (600)Increase in debtors (24)Increase in creditors 301Net cash outflow from operating activities (323) 6 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS Period from 30.11.2004 to 31.12.05 £'000 Increase in cash for the period 4,858 Change in net funds resulting from cashflows 4,858 Net funds brought forward -Net funds carried forward 4,858 7 ACQUISITIONS On 23 December 2005 the Company acquired the entire issued share capital ofBrown Duke AG for consideration of £3,952,500 settled in shares. Goodwillarising on the acquisition has been capitalised. The purchase of Brown Duke AGhas been accounted for by the acquisition method of accounting. Advantage has been taken by the Company of merger relief (similar to thatavailable to companies incorporated in the UK under Section 131 of the CompaniesAct 1985) in respect of the premium on the issue of shares to finance theacquisition. The assets and liabilities of Brown Duke AG acquired were as follows: £'000 Bank and cash 15Purchased goodwill capitalised 4,250 4,265 Satisfied by:Issue of shares 3,953Expenses relating to the acquisition 312 4,265 No adjustments are required to the book value of assets acquired in order todetermine fair values. Brown Duke AG was incorporated in Liechtenstein on 6 October 2005, had notcommenced trading prior to acquisition and did not have any material impact onthe Group results for the period. 8 PUBLICATION OF NON-STATUTORY ACCOUNTS The financial information set out in this preliminary announcement does notconstitute statutory accounts as defined in Section 240 of the Companies Act1985. The balance sheet at 31 December 2005 and the profit and loss account, cash flowstatement and associated notes for the period then ended have been extractedfrom the Group's 2005 statutory financial statements upon which the auditorsopinion is unqualified and does not include any statement under Section 237 ofthe Companies Act 1985. This information is provided by RNS The company news service from the London Stock Exchange