26 Apr 2011 07:00
26 April 2011
INSETCO PLC
Preliminary announcement of results for the year to 31 December 2010
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 results for the year ending 31 December 2010.
Key points
·; Results in line with management's expectations
·; Acquisition of Saolpoll (Jersey) Limited ("Saolpoll") brings additional expertise
·; Further commercial relationships established within the Life Settlements sector
·; Company moving towards distribution of its first securitised product
Chief Executive, Clive Cooke, commented:
"The latter part of 2010 has seen the Company establish a firm foundation in its technical infrastructure and has added valuable expertise through its recent acquisition of Saolpoll and related business assets. As the era of low interest rates continues, despite recent minimal rate increases, the opportunities to issue securitised high-yielding instruments will meet with strong demand. I look forward to reporting to the market in the coming months as to our progress as we near our first offering."
Enquiries:
Insetco plc
Clive Cooke
Sanjeev Joshi 020 7887 7841
Charles Stanley Securities
Nominated Adviser
Russell Cook / Darren Vickers 020 7149 6000
Chief Executive's Statement
The results for the year to December 2010 produced a profit of £1.41m (period to December 2009: loss £9.66m). The reported profit arises after the write-off of convertible loans relating to the discontinued ASG Media plc business, which totalled £2.1m, following completion of the CVA which was approved in April 2011. However, the Company did not report any revenue for the year and, as a result of operating and financing costs, reported an operating loss of £663,000 (2009: loss £53,000) on continuing operations.
The Company has been through a transitional period following the restructuring of the ASG Media plc business and the subsequent acquisition of Saolpoll (Jersey) Limited and related business assets which was announced on 11 February 2011. The Board believes that the Company is well positioned to develop its business in the US Life Settlements sector.
The auditors qualified the financial statements for the period ended 31 December 2009 because of the possible effect of the limitation of evidence available to them. As the amounts for the period ended 31 December 2009 and the balance sheet as at that date are included as comparatives in the financial statements for the year ended 31 December 2010, the audit qualification is likewise included due to the potential effect on the comparability of the current year's and comparative amounts.
It should be emphasised that the audit qualification arose out of the limitations encountered in the 18 month period ended 31 December 2009 and in no way reflects on the audit for the year ended 31 December 2010, nor on current management.
Acquisition of Saolpoll
As previously announced on 11 February 2011, the Company has completed the purchase of Saolpoll and related business assets (collectively the "SLS Programme") through this issue of 49.2m new ordinary shares. This transaction was a reverse takeover pursuant to the AIM Rules for Companies and the enlarged Company re-admitted to trading on AIM on 1 March 2011.
The acquisition of Saolpoll brings additional management expertise to the Company in the arranging and structuring of securitised products based on senior life settlement policies. This has allowed the Company to make progress with its stated business objectives of participating in the structuring of financial products for the Life Settlements market.
Dividend
The Company will not be paying a dividend for the current financial year (2009: £nil).
Current trading and Outlook
The acquisition of Saolpoll will accelerate the securitisation processes previously being undertaken by Insetco. The Company anticipates that it will be in a position to issue its first instrument during the second quarter of 2011 with further structured products to follow.
Statement of comprehensive income
Note | 12 months ended 31 December 2010 £ | 18 months ended 31 December 2009 £ | ||
Operating costs | 3 | 644,779 | 53,443 | |
Operating loss | (644,779) | (53,443) | ||
Finance expense | (17,973) | - | ||
Finance income | 218 | - | ||
Loss before tax from continuing operations | (662,534) | (53,443) | ||
Profit/(loss) from discontinued operations | 4 | 2,070,311 | (9,608,325) | |
Profit/(loss) before tax | 1,407,777 | (9,661,768) | ||
Income tax expense | - | - | ||
Total comprehensive income for the year | 1,407,777 | (9,661,768) | ||
Basic profit/(loss) per share (pence) | 1.6 | (10.2) | ||
Fully diluted profit/(loss) per share (pence) | 1.6 | - |
Statement of financial position
As at31 December 2010 £ | As at31 December 2009 £ | |||
Assets | ||||
Non-current assets | ||||
Property and equipment | 5,835 | - | ||
Current assets | ||||
Other receivables | 51,763 | 110,000 | ||
Cash and cash equivalents | 175,902 | - | ||
227,665 | 110,000 | |||
Total assets | 233,500 | 110,000 | ||
Equity and liabilities | ||||
Equity | ||||
Ordinary share capital | 1,153 | 1,617,636 | ||
Deferred share capital | 1,617,633 | - | ||
Share premium | 38,502,199 | 37,412,475 | ||
Share based payment reserve | - | 345,254 | ||
Capital redemption reserve | 12,758 | 12,758 | ||
Convertible loan reserve | - | 6,965 | ||
Accumulated deficit | (40,498,275) | (42,258,271) | ||
Equity attributable to equity holders | (364,532) | (2,863,183) | ||
Current liabilities | ||||
Trade and other payables | 98,032 | 2,973,183 | ||
Non-current liabilities | ||||
Convertible loan | 500,000 | - | ||
Total liabilities | 598,032 | 2,973,183 | ||
Total equity and liabilities | 233,500 | 110,000 |
Statement of changes in equity 12 months ended 31 December 2010
Ordinary share capital | Deferred Share capital | Share premium | Share based payment reserve | Capital Redemption reserve | Convertible loan reserve | Accumulated deficit | Total | |
£ | £ | £ | £ | £ | £ | £ | £ | |
Balance at1 January 2010 | 1,617,636 | - | 37,412,475 | 345,254 | 12,758 | 6,965 | (42,258,271) | (2,863,183) |
Total comprehensive income for the year | - | - | - | - | - | - | 1,407,777 | 1,407,777 |
Re-organization of equity | (1,617,633) | 1,617,633 | - | (345,254) | - | (6,965) | 352,219 | - |
Issue of shares for cash | 8 | - | 6,425 | - | - | - | - | 6,433 |
Other share issues | 10 | - | 773,730 | - | - | - | - | 773,740 |
Exercise of warrants | 607 | - | 60,094 | - | - | - | - | 60,701 |
Conversion of debt | 525 | - | 249,475 | - | - | - | - | 250,000 |
Balance at31 December 2010 | 1,153 | 1,617,633 | 38,502,199 | - | 12,758 | - | (40,498,275) | (364,532) |
Statement of changes in equity 18 months ended 31 December 2009
Ordinary share capital | Deferred Share capital | Share premium | Share based payment reserve | Capital Redemption reserve | Convertible loan reserve | Accumulated deficit | Total | |
£ | £ | £ | £ | £ | £ | £ | £ | |
Balance at 1 July 2008 | 411,861 | - | 37,317,111 | 345,254 | 12,758 | 6,965 | (32,596,503) | 5,497,446 |
Total comprehensive income for the period | - | - | - | - | - | - | (9,661,768) | (9,661,768) |
Issue of shares for cash | 176,364 | - | 66,136 | - | - | - | - | 242,500 |
Other share issues | 1,029,411 | - | 31,728 | - | - | - | - | 1,061,139 |
Share issue costs | - | - | (2,500) | - | - | - | - | (2,500) |
Balance at 31 December 2009 | 1,617,636 | - | 37,412,475 | 345,254 | 12,758 | 6,965 | (42,258,271) | (2,863,183) |
Statement of cash flow
12 months ended31 December 2010 £ | 18 months ended31 December 2009 £ | |||
Cash flow from operating activities | ||||
Loss before tax from continuing operations | (662,534) | (53,443) | ||
Depreciation | 678 | - | ||
Finance expense | 17,973 | - | ||
Finance income | (218) | - | ||
Write-offs and provisions | - | (3,630,897) | ||
Net cash outflow from operating activities before changes in working capital | (644,101) | (3,684,340) | ||
Increase in receivables | (51,763) | (109,311) | ||
Increase in payables | 78,900 | 480,542 | ||
Cash flows absorbed by operating activities | (616,964) | (3,313,109) | ||
Cash flows from investing activities | ||||
Payments to acquire property, plant and equipment | (6,513) | - | ||
Cash flows from financing activities | ||||
Issue of shares | 6,433 | 242,500 | ||
Share issue costs | - | (2,500) | ||
Exercise of warrants | 60,701 | - | ||
Issues of convertible debt | 750,000 | 2,402,983 | ||
Finance expense | (17,973) | - | ||
Finance income | 218 | - | ||
Net cash from financing activities | 799,379 | 2,642,983 | ||
Net increase/(decrease) in cash and cash equivalents | 175,902 | (670,126) | ||
Cash and cash equivalents at 1 January 2010 | - | 670,126 | ||
Cash and cash equivalents at 31 December 2010 | 175,902 | - |
Notes
1. The Company is a public limited company incorporated and domiciled in England & Wales. The Company's ordinary shares are traded on the AIM market of the London Stock Exchange. The financial statements for 2010 have been prepared in accordance with the Company's accounting policies under International Financial Reporting Standards (IFRSs) as adopted by the European Union
The financial information set out in this announcement does not constitute the statutory accounts of the Company for the year to 31 December 2010 or for the period to 31 December 2009 but is derived from the 2010 Annual Report and Accounts. The Annual Report and Accounts for 2009 have been delivered to the Registrar of Companies and the Company's Annual Report and Accounts for 2010 will be delivered to the Registrar of Companies in due course.
2. Basis for qualified auditors' opinion
The Company's auditor is Jefferys Henry LLP. Jefferys Henry were unable to form an audit opinion on the financial statements for the period ended 31 December 2009 because of the possible effect of the limitation in evidence available to them. This was as a result of the previous board of directors being unable to provide complete accounting records following the disposal of a subsidiary undertaking and because consolidated financial statements were not prepared on the basis of costs, the Company being in administration at that time. As a consequence, the audit opinion on the 2010 financial statements is also qualified because of the possible effect of this matter on the comparability of the 2010 amounts and the comparative amounts.
3. Operating costs
Operating costs comprised the following principal amounts:
12 months ended31 December 2010 £ | 18 months ended31 December 2009 £ | |||
Administrative costs | 166,507 | 2,681 | ||
Legal and professional costs | 147,011 | 50,762 | ||
Payroll costs | 331,261 | - | ||
644,779 | 53,443 |
4. Non-recurring income/(expenditure)
12 months ended31 December 2010 £ | 18 months ended31 December 2009 £ | |||
Write-off of net liabilities on re-organization 1 | 2,070,311 | - | ||
Provision for investments in subsidiary undertakings and related loans 2 | - | (9,608,325) |
1 Following the general meeting held on 1 April 2010, the following assets and liabilities as disclosed in the balance sheet of ASG Media plc at that date were written-off as their fair value was deemed to be nil:
£ | |
Other receivables | (110,000) |
Accruals | 34,311 |
Convertible loans | 2,146,000 |
2,070,311 |
2 On the sale of the trade and assets of subsidiary undertakings, the investment in the ordinary share capital of these subsidiaries and the amounts due on intercompany receivables was written down to nil, the charge recognized being £9,628,325. Certain assets of the subsidiary undertakings were sold for £20,000, resulting in a net charge of £9,608,325.
5. Report and accounts
Copies of the Annual Report will be distributed to shareholders and available on the Company's website: www.insetco.com; and from the Company's registered office at Finsgate, 5-7 Cranwood Street, London, EC1V 9EE.