30 Sep 2011 14:30
30 September 2011
Insetco plc
Half-yearly results announcement for the period ended 30 June 2011
Settlement of Litigation Claim
Convertible Loan Note Issue
Insetco plc ("Insetco" or the "Company"), a company specialising in the arranging and structuring of securitised products based on senior life settlement policies, is pleased to announce its half-yearly report for the period ended 30 June 2011.
Chairman's statement
The results for the six months ended 30 June 2011 disclose a loss of £376,000 resulting from the Company's operating activities, representing costs that the Company has incurred in pursuing opportunities within the senior fife settlements market, including the acquisition of Saolpoll (Jersey) Limited ("Saolpoll"), together with related business assets, which was completed on 1 March 2011.
This acquisition of Saolpoll has brought valuable expertise to the furtherance of the Company's objectives and development of its commercial strategy.
Earlier this month the Company announced that it had reached agreement to acquire the assets of ARM Asset Backed Securities S.A. ("ARM") and to purchase Catalyst Investment Group Limited ("CIGL"). Whilst these transactions are subject to a number of conditions, the Company considers that the proposed acquisition of ARM provides the potential to develop a significant long term return, achievable through a restructuring of ARM's existing senior life settlements portfolio, as well as increasing the Company's presence in the life settlements market. The acquisition of CIGL (which is dependent on the acquisition of the ARM assets) would provide the Company the opportunity to distribute financial products through CIGL's established network.
The Company has continued to progress its Senior Life Settlements Issuance Programme (the "SLS Issuance Programme") which will remain its core product offering and will continue to seek commercial opportunities within the life settlement and allied markets which have the potential to deliver positive returns for shareholders. A further announcement regarding the SLS issuance Programme will be made in due course.
Litigation claim
As previously disclosed in the Company's admission document for the purchase of Saolpoll, the Company was subject to a potential compensation claim in the United States in relation to a dispute for commissions and fees to be paid for a proposed acquisition of US senior life settlements. On August 31st 2011, the Board agreed to make a payment of US$100,000 in final settlement of this claim.
Financing update
As noted in the Company's preliminary results announcement on 26 April 2011, the directors anticipate that the SLS Issuance Programme will generate the Company's first significant revenues following the re-admission to AIM. Whilst the Company continues to make progress with this programme, it has not as yet in a position to be able to complete the issuance.
As previously disclosed, should the anticipated income from the SLS Issuance Programme be delayed, in accordance with the irrevocable undertakings given by the directors and Investa AG as set out in the Company's admission document for the Saolpoll acquisition, the Company is able to issue further Convertible Loan Note (the "CLN"), to raise up to £200,000.
Since the period end, the Company has continued to review its on-going working capital requirements and whilst it has received certain funds in respect of the proposed acquisition of the ARM assets to offset the Company's expenditure to complete the transaction, it proceeded with the issue of £50,000 of CLN to ADM Investor Services Limited ("ADM") on 15 September 2011. The issue of CLN to ADM has been completed to satisfy the litigation settlement referred to above and the Company remains able to raise up to a further £200,000 pursuant to the irrevocable commitments given by the directors and Investa AG at the time of re-admission to AIM in March 2011, should it need to.
The CLN issued to ADM is due for repayment on 15 September 2012 and pays a coupon of 8 per cent.
Enquiries:
Insetco plc
Clive Cooke (CEO)
Sanjeev Joshi 020 7887 7840
Charles Stanley Securities
Nominated Adviser
Russell Cook / Darren Vickers 020 7149 6000
Statement of comprehensive income
Note | 6 months ended30 June2011 | 6 months ended30 June2010 | 12 months ended31 December 2010 | |||||
unaudited | unaudited | audited | ||||||
£ | £ | £ | ||||||
Operating expenses | 346,925 | 127,520 | 644,779 | |||||
Operating loss | (346,925) | (127,520) | (644,779) | |||||
Finance expense | (29,561) | - | (17,973) | |||||
Finance income | - | - | 218 | |||||
Loss before tax from continuing operations | (376,486) | (127,520) | (662,534) | |||||
Profit from discontinued operations | - | 2,070,311 | 2,070,311 | |||||
(Loss)/profit before tax | (376,486) | 1,942,791 | 1,407,777 | |||||
Income tax expense | - | - | - | |||||
Total comprehensive income | (376,486) | 1,942,791 | 1,407,777 | |||||
Basic (loss)/profit per share (pence) | 5 | (0.3)p | 10.2p | 1.6p | ||||
Fully diluted profit per share (pence) | 5 | (0.3)p | 2.5p | 1.6p |
Statement of financial position
| 30 June2011 | 30 June2010 | 31 December 2010 | |||
unaudited | unaudited | audited | ||||
£ | £ | £ | ||||
Assets | ||||||
Non-current assets | ||||||
Property and equipment | 5,020 | - | 5,835 | |||
Goodwill | 7,131,165 | - | - | |||
7,136,185 | - | 5,835 | ||||
Current assets | ||||||
Other receivables | 34,636 | 4,476 | 51,763 | |||
Cash and cash equivalents | 72,002 | 185,942 | 175,902 | |||
106,638 | 190,418 | 227,665 | ||||
Total assets | 7,242,823 | 190,418 | 233,500 | |||
Equity and liabilities | ||||||
Equity | ||||||
Ordinary share capital | 1,645 | 566 | 1,153 | |||
Deferred share capital | 1,617,633 | 1,617,633 | 1,617,633 | |||
Share premium | 45,521,738 | 38,444,100 | 38,502,199 | |||
Other reserves | 12,758 | 12,758 | 12,758 | |||
Accumulated deficit | (40,874,761) | (39,963,261) | (40,498,275) | |||
Equity attributable to equity holders | 6,279,013 | 111,796 | (364,532) | |||
Liabilities | ||||||
Current liabilities | ||||||
Trade and other payables | 173,810 | 44,972 | 98,032 | |||
Convertible loan notes | 290,000 | - | - | |||
463,810 | 44,972 | 98,032 | ||||
Non-current liabilities | ||||||
Convertible loan notes | 500,000 | 33,650 | 500,000 | |||
Total liabilities | 963,140 | 78,622 | 598,032 | |||
Total equity and liabilities | 7,242,823 | 190,418 | 233,500 | |||
Statement of changes in equity | |||||||||||||||||
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| Share capital | Share | Other | Accumulated |
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| Ordinary | Deferred | premium | reserve | deficit | Total | ||||||||||
at 1 January 2010 | 1,617,636 | - | 37,412,475 | 364,977 | (42,258,271) | (2,863,183) | |||||||||||
Total comprehensive income for the period | - | - | - | - | 1,942,791 | 1,942,791 | |||||||||||
Re-organization of equity | (1,617,633) | 1,617,633 | - | (352,219) | 352,219 | - | |||||||||||
Issue of shares for cash | 8 | - | 6,425 | - | - | 6,433 | |||||||||||
Other share issues | 10 | - | 773,730 | - | - | 773,740 | |||||||||||
Exercise of warrants | 357 | - | 35,308 | - | - | 35,665 | |||||||||||
Conversion of debt | 188 | - | 216,162 | - | - | 216,350 | |||||||||||
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at 30 June 2010 |
| 566 | 1,617,633 | 38,444,100 | 12,758 | (39,963,261) | 111,796 | ||||||||||
Total comprehensive income for the period | - | - | - | - | (535,014) | (535,014) | |||||||||||
Exercise of warrants | 250 | - | 24,786 | - | - | 25,036 | |||||||||||
Conversion of debt | 337 | - | 33,313 | - | - | 33,650 | |||||||||||
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at 31 December 2010 | 1,153 | 1,617,633 | 38,502,199 | 12,758 | (40,498,275) | (364,532) | |||||||||||
at 1 January 2011 | 1,153 | 1,617,633 | 38,502,199 | 12,758 | (40,498,275) | (364,532) | |||||||||||
Total comprehensive income for the period | - | - | - | - | (376,486) | (376,486) | |||||||||||
Issue of shares in connections with the acquisition of Saolpoll | 492 | - | 7,130,673 | - | - | 7,131,165 | |||||||||||
Share issue costs | - | - | (111,134) | - | - | (111,314) | |||||||||||
at 30 June 2011 | 1,645 | 1,617,633 | 45,521,738 | 12,758 | (40,874,761) | 6,279,013 | |||||||||||
Ordinary and Deferred share capital is the amount subscribed for shares at nominal value
Share premium represents the excess of the amount subscribed for share capital over the nominal value of those shares net of share issue expenses
Other reserve represents a non-distributable reserve arising on the redemption or purchase of a company's own shares
Accumulated deficit represents the cumulative loss of the Group attributable to equity shareholders
Statement of cash flows
6 months ended30 June 2011 | 6 months ended30 June2010 | 12 months ended31 December 2010 | ||||
unaudited | unaudited | audited | ||||
£ | £ | £ | ||||
Cash flow from operating activities | ||||||
Loss before tax from continuing operations | (376,486) | (127,520) | (662,534) | |||
Depreciation | 814 | - | 678 | |||
Finance expense | 29,561 | - | 17,973 | |||
Finance income | - | - | (218) | |||
Net cash outflow from operating activities before changes in working capital | (346,111) | (127,520) | (644,101) | |||
Decrease/(increase) in receivables | 17,127 | (4,476) | (51,763) | |||
Increase in payables | 75,779 | 25,840 | 78,900 | |||
Cash flows absorbed by operating activities | (253,205) | (106,156) | (616,964) | |||
Cash flows from investing activities | ||||||
Payments to acquire plant and equipment | - | - | (6,513) | |||
Cash flows from financing activities | ||||||
Issue of shares for cash | - | 6,433 | 6,433 | |||
Share issue costs | (111,134) | - | - | |||
Exercise of warrants | - | 35,665 | 60,701 | |||
Issues of convertible debt | 290,000 | 250,000 | 750,000 | |||
Finance expense | (29,561) | - | (17,973) | |||
Finance income | - | - | 218 | |||
Net cash from financing activities | 149,305 | 292,098 | 799,379 | |||
Net (decrease)/increase in cash and cash equivalents | (103,900) | 185,942 | 175,902 | |||
Opening cash and cash equivalents | 175,902 | - | - | |||
Closing cash and cash equivalents | 72,002 | 185,942 | 175,902 | |||
Notes to the interim financial statements
1. Corporate information
Insetco plc is a company incorporated in England and Wales, under registration number 05114024. The Company is quoted on the AIM market of the London Stock Exchange.
2. Basis of preparation
These interim financial statements for the six months ended 30 June 2011 have been prepared using accounting policies consistent with International Financial Reporting Standards ("IFRSs") and comply with the requirements of IAS 34 "Interim Financial Statements".
The same accounting policies, presentation and methods of computation as utilised in the audited financial statements for the year ended 31 December 2010 have been applied consistently in these condensed financial statements.
These condensed financial statements do not constitute statutory financial statements under the Companies Act 2006, have not been audited and do not include all information required for full annual financial statements.
The statutory financial statements for the year ended 31 December 2010, which included a qualification of opinion by the auditors on the comparative amounts for the 18 month period ended 31 December 2009, have been delivered to the Registrar of Companies.
3. Total comprehensive income
There are no additional items of income or expense which are not included in the total comprehensive expense statement for the period.
4. Segmental analysis
A segment is a defined component of the Company that is engaged in providing products or services to a particular business sector (business segment), or in providing products or services to a particular economic environment (geographic segment), which is subject to risks and rewards that are different in those other segments.
In the period, the Company operated in one segment, the development of business within financial products, with a particular focus on the life insurance settlement market, and in one geographical market, the United Kingdom. The disclosures required by IFRS8 relating to profits, losses, assets and liabilities of the segment are therefore disclosed by the financial statements as a whole.
5. (Loss)/profit per share
The calculation of the basic (loss)/profit per share is as follows:
6 months ended30 June2011 | 6 months ended30 June2010 | 12 months ended31 December 2010 | ||||
unaudited | unaudited | audited | ||||
£ | £ | £ | ||||
(Loss)/profit after taxation attributable to equity shareholders | (376,486) | 1,942,791 | 1,407,777 | |||
Weighted average number of shares in issue | 148,451,901 | 19,146,906 | 88,719,041 | |||
The calculation of the fully diluted profit per share is as follows:
| 6 months ended30 June 2010 | 12 months ended31 December 2010 | |||
unaudited | audited | ||||
£ | £ | ||||
(Loss)/profit after taxation attributable to equity shareholders | 1,942,791 | 1,425,750 | |||
Weighted average number of shares in issue | 77,832,685 | 89,969,041 |
The calculation of the diluted loss per share for the 6 months ended 30 June 2011 has not been disclosed as it is the same as the basic loss per share calculation, the loss for the period being anti-dilutive.
6. Events after the reporting period
On 1 September 2011, the Company announced the proposed acquisition of the assets of ARM Asset Backed Securities S.A, ("ARM") and Catalyst Investment Group Limited ("CIGL"), subject to certain conditions.
The assets of ARM comprise the entitlement to cash from maturing senior life settlement policies (the "ARM Portfolio"), which have a face value of approximately $320 million (£196 million) which, together with uninvested cash to be acquired, has a present estimated market value of approximately $81 million (£50 million).
The consideration for the acquisition of the assets of ARM will be met through the issuance of new Insetco 7.5% Perpetual Limited Recourse Bonds (the "Insetco Bonds"). Subject to the adjustment referred to below, it is intended that the current ARM liabilities of $220m (£135m), arising from a series of bonds issued by ARM with various fixed maturity dates and coupons, will be exchanged in full for the Insetco Bonds. The Insetco Bonds will therefore have an initial maximum nominal value of $220m.
It is also anticipated that Insetco will issue new ordinary shares ("New Ordinary Shares"), representing up to 10 per cent. of the Company's enlarged issued share capital.
On completion of the proposed acquisition of the assets of ARM, which is subject to the acquisition conditions referred to in the Company's announcement on 1 September, the senior life settlement policies within the ARM Portfolio will be independently valued, and the ultimate number of Insetco Bonds and the total number of New Ordinary Shares issued, will be adjusted to reflect significant deviations to the estimated asset value and to reflect the actual cash balances at completion of the acquisition. This adjustment will be applied to the total nominal value of the Insetco Bonds of $220m.
The acquisition of CIGL, again subject to certain conditions, is expected to be satisfied through the issue of New Ordinary Shares representing up to 19.9 per cent. of the Company's enlarged issued share capital.
7. Availability of the interim results statement
Copies of the interim results statement for the six months ended 30 June 2011 will be available from the Company's website www.insetco.com.