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LITCOMP PLC AND SUBSIDIARY UNDERTAKINGS

FINAL RESULTS FOR THE TWELVE MONTHS ENDED 31 MARCH 2009

CHAIRMAN'S REPORT

FOR THE YEAR ENDED 31 MARCH 2009

I am pleased to announce the final results for the 12 months ended 31 March 2009. 

 

The Group has had a good year showing an increase in profit before taxation from £1.11m to £1.94m. This represents a strong performance in a difficult environment

 

Elite has shown strong growth in the period under review, with the Medico Legal trading companies showing a slight improvement over previous year.

    

Financial Summary

Group revenues have increased by 157% from £11.45m to £29.41m and adjusted net profit pre tax * by 75% from £1.11m to £1.94m. Headline earnings per share has increased by 77% from 12.80p to 22.62p and fully diluted earnings per share by 70% from 5.83p to 9.92p.

An analysis schedule of earnings, profits, changes and EPS is shown below.

A significant proportion of the uplift has come from Elite Insurance Company Limited which has increased its revenues, after reinsurance, during the year by 185% from £9.68m to £27.60m.

Net cash (after adjusting for Invoice Discount balances) is £2.68m (2008: £2.99m). 

The reduction in cash is principally attributable to the increased emphasis on deferred premium business within Elite Insurance Company Limited.

The format of the accounts, and the comparables for last year, continues to comply with International Financial Reporting Standards ('IFRS'). Also the Consolidated Income Statement reflects a charge for share based payments, which are principally share options, in accordance with IFRS 2 (Share-based Payments). The calculation of fully diluted earnings per share reflects the conversion of all Convertible Loan Notes, Share Options and Warrants.

*Adjusted net profit pre tax is calculated before IFRS 2 share based payments, Loan Note Interest and AIM related costs amortisation.

Review and Current Prospects

Elite Insurance Company Limited

Revenues from these operations for the full year have increased by 185% to £27.60m (2008: £9.68m) and net profit before tax by 10% to £2.38m (2008: £2.16m).

Elite's net profit margin has reduced during the year as a result of an increased proportion of low margin, low risk business; increased operating costs and reduced investment income, because of lower global interest rates.

Elite has significantly increased its lines of distribution to market during the year under review and also benefited from a large tranche of 'windfall' business during the first half of the year which comprised a large one-off Bordereaux of low margin policies representing circa £7.2m of turnover. This 'windfall' business is not likely to recur.

Elite has continued to add to its range of insurance products and to build and secure its sources of business. During the year under review Elite has:

• Significantly increased its underwriting resources;

• Added new financial and legal insurance products to its portfolio;

• Commenced two non ATE lines of insurance business;

• Increased the number of active brokers from 20 to 38;

Since the year end Elite has:

• Appointed Christopher Collins as Non Executive Director. Chris has previously held a variety of Senior International Regulatory and other positions in the International Insurance Industry;

• Appointed Charles Wright as Managing Director of Elite Business Development Limited. Charles has many years experience at a Senior Management level within the insurance industry, with specific experience of ATE;

• Entered into new reinsurance treaties with two leading International re-insurers which will provide Elite with additional underwriting capacity as well as improving its risk profile;

Principal business risks continue to be major unexpected claims, which are a risk for any insurance company, and legislative changes which could reduce demand for the Company's products.

Although the Directors' principal effort is concentrated on building business organically, the Directors will consider acquisitions or strategic partnerships which demonstrably add value to Elite.

LitComp UK

LitComp UK comprises LitComp plc (company only) and the Medico Legal trading companies.

LitComp UK achieved total revenues of £1.82m (2008: £1.76m) an increase of 3%. Operating profit before LitComp plc costs was £0.269m (2008: loss of £0.187m). This result and the Medico Legal businesses made a profit contribution before central office costs. 

The Medico Legal trading companies have continued to trade well following the year end.

            LitComp Plc 10% Secured Convertible Loan Notes

As at 31 March 2009 there were £2.55m of 10% Secured Convertible Loan Notes ('Loan Notes') outstanding. The Loan Notes are convertible into LitComp plc Ordinary Shares at a price of 30p which represents a discount to the market price at the time of writing. Any Loan Notes not converted by 31st of October 2009 will be repayable and will continue to bear interest if not so repaid.

As announced on 24 September 2009 the Company is in advanced discussions with a potential offeror regarding a possible offer for the Company at a price of 33p per share in cash which includes arrangements for potential funding of the redemption of the Loan Notes. If these discussions do not conclude successfully Directors will ask Loan Note Holders to extend or convert their holdings; the results of such a request are uncertain and if the Company is forced to use internal cash resources to redeem the Loan Notes that will significantly reduce its trading capacity.

Current Trading and Prospects

The Directors are pleased with the performance of the Company across all sectors of the business and are able to look forward with confidence.  However there is a degree of uncertainty in the ATE market pending a governmental review by Sir Rupert Jackson into Civil Justice Costs process and changes to the conduct of low value Road Traffic accident cases, which are not yet finalised and due to come into force in April 2010. The potential impact of these changes is not presently known.

Elite has been notified of a number of significant ATE claims after the year end, all of these are fully provided in the audited accounts to 31 March 2009.

    

ANALYSIS SCHEDULE OF EARNINGS, PROFITS, CHANGES AND EPS

			2009				2008
		Insurance	MLR  & plc	Total		Insurance	MLR  & plc	Total
		£'000	£'000	£'000		£'000	£'000	£'000
Segmental Income		27,596 _________	1,818 _________	29,414 _________		9,683 _________	1,764 _________	11,447 ________
Operating Profit before AIM related costs and share base payment *('Adjusted' Net Profit/(loss) Pre Tax)		2,378	(22)	2,356		2,161	(466)	1,695
AIM related costs		-	(94)	(94)		-	(77)	(77)
Loan Note Interest		- _________	(295) _________	(295) _________		- _________	(331) _________	(331) ________
Net Profit pre tax and share based payment		2,378	(411)	1,967		2,161	(874)	1,287
Share based payment		- _________	(31) _________	(31) _________		- _________	(177) _________	(177) ________
Net Profit pre tax		2,378	(442)	1,936		2,161	(1,051)	1,110
Taxation		- _________	(530) _________	(530) _________		- _________	(326) _________	(326) ________
Retained Profit/(loss)		2,378 _________	(972) _________	1,406 __________		2,161 _________	(1,377) _________	784 ________
EPS				22.62p				12.80p
EPS pre share based payment				23.11p				15.69p
Fully diluted EPS				9.92p				5.83p
Fully diluted EPS pre share based payment				10.10p				6.75p

Calculation of Operating Profit, before UK central costs, Aim and share based payment

			2009				2008
		Insurance	MLR  & plc	Total		Insurance	MLR  & plc	Total
		£'000	£'000	£'000		£'000	£'000	£'000
Profit/(loss) on ordinary activities before tax		2,378	(442)	1,936		2,161	(1,051)	1,110
AIM related costs		-	94	94		-	77	77

  CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2009

CONTINUING OPERATIONS

None of the group's activities were acquired or discontinued during the current year or previous year. 

 

TOTAL RECOGNISED GAINS AND LOSSES
The group has no recognised gains or losses other than the profit for the current year. 

  CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2009

 

	Share Capital     £’000		Share Premium     £’000		Share Based Payment   £’000		Profit & Loss   £’000		Total       £’000
Balance at 1 April 2007	511		838		241		292		1,882
Reversal of goodwill amortisation under IFRS	-		-		-		27		27
Restatement of deferred tax under IFRS	-		-		-		3		3
	________		________		________		________		________
As restated	511		838		241		322		1,912
Issue of new ordinary shares	101		202		-		-		303
Share based payments	-		-		177		-		177
Profit for the year	-		-		-		784		784
	_________		_________		_________		_________		_________
Equity as at 31 March 2008	612		1,040		418		1,106		3,176
Issue of new ordinary shares	10		20		-		-		30
Share based payments	-		-		30		-		30
Expired share options	-		-		(14)		14		-
Share options exercised	-		-		(2)		2		-
Profit for the year	-		-		-		1,406		1,406
	_________		_________		_________		_________		_________
Equity as at 31 March 2009	622		1,060		432		2,528		4,642
	_________		_________		_________		_________		_________

 

CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 2009

 

 

		2009				2008
	£’000		£’000		£’000		£’000
NON-CURRENT ASSETS
Goodwill			482				482
Other intangible assets			-				1
Property, plant and equipment			54				46
Deferred tax asset			126				126
			_______				_______
			662				655
CURRENT ASSETS
Trade and other receivables	20,678				10,324
Cash and cash equivalents	3,295				3,384
	_________				_________
	23,973				13,708
	_________				_________
CURRENT LIABILITIES
Trade and other payables	(14,376)				(6,641)
Current tax liabilities	(2,851)				(1,459)
Obligations under finance leases	(12)				(2)
Financial liabilities - borrowings	(2,745)				(3,077)
	_________				_________
	(19,984)				(11,179)
	_________				_________
NET CURRENT ASSETS			3,989				2,529
			________				________
TOTAL ASSETS LESS CURRENT LIABILITIES			4,651				3,184
NON-CURRENT LIABILITIES   Obligations under finance leases			(9)				(8)
			__________				__________
NET ASSETS			4,642				3,176
			__________				__________
EQUITY
Share capital			622				612
Share premium			1,060				1,040
Other reserves			432				418
Retained earnings			2,528				1,106
			_________				_________
TOTAL EQUITY			4,642				3,176
			_________				_________

 

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2009

			2009 £’000	2008 £’000
		Notes
Net cash generated from operating activities		1	598	917
			________	________
Investing activities
Interest received			135	156
Purchases of property, plant and equipment			(24)	(30)
Proceeds from disposal of property, plant and equipment			-	-
			_________	_________
Net cash generated from investing activities			111	126
			_________	_________
Financing activities
Capital element of finance lease payments			(6)	(3)
Issue of new ordinary shares			2	-
Share premium on issue of ordinary shares			5	-
Repayment of 10% secured convertible loan notes			(578)	-
Interest paid			(374)	(416)
			_________	_________
Net cash generated (used in) financing activities			(951)	(419)
			_________	_________
Net (decrease)/increase in cash and cash equivalents			(242)	624
Cash and cash equivalents at beginning of year			3,343	2,719
			_________	_________
Cash and cash equivalents at end of year			3,101	3,343
			_________	_________
Consisting of
Cash at bank and in hand			1,334	3,384
Units in unit trusts			1,961	-
Bank overdrafts			(194)	(41)
			_________	_________
			3,101	3,343
			________	________
			2009	2008
			£’000	£’000
1.	Profit for the year before taxation		1,936	1,110
	Adjustments for Finance costs		375	420
	Investment revenues		(135)	(155)
	Depreciation of property, plant and equipment		31	26
	Amortisation of intangibles		1	1
	Share based payments		31	177
	Restructuring of group debt		115	115
			_________	_________
	Operating cash flows before movements in working capital		2,354	1,694
	Decrease in inventories		-	15
	(Increase) in receivables		(10,354)	(5,006)
	Increase in payables		8,836	4,214
			_________	__________
	Cash generated by operations		836	917
	Tax paid		(238)	-
			_________	__________
	Net cash generated from operating activities		598	917
			_________	__________

    

LITCOMP PLC AND SUBSIDIARY UNDERTAKINGS

NOTES TO THE ANNOUCEMENT

1.    Publication of Non Statutory Accounts

The financial information set out in this announcement for the years ended 31 March 2009 and 2008 does not constitute the Group's statutory accounts as defined in section 240 of the Companies Act 1985.

The primary statements, comprising consolidated income statement, consolidated statement of changes in equity and consolidated cash flow statement for the year ended 31 March 2009 and, consolidated balance sheet as at 31 March 2009, have been extracted from the Group's audited statutory report and financial statements.

The auditor's report on the statutory report and financial statements for the year ended 31 March 2009 is modified on the basis of an emphasis of matter opinion in relation to going concern. No statement was required under section 237 (2) or (3) of the Companies Act 1985.

The comparatives figures (for the year ended 31 March 2008) have been extracted from the audited statutory report and financial statements for that year, which has been delivered to the Registrar of Companies and upon which the auditor's report was modified on the basis of an emphasis of matter opinion in relation to going concern.

2.    Basis of Preparation

The Group's statutory report and financial statements have been prepared in accordance with International Accounting Standard Board ('IASB') and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB (together with 'IFRS') as endorsed by the European Union in 2005.

The information contain within this announcement has been extracted from the statutory report and financial statements for the year ended 31 March 2009 and as such, does not contain all the information required to be disclosed in the statutory report and financial statements in accordance with IFRS.

3.    Accounting Policies

The principal accounting policies applied in the preparation of the statutory report and financial statements for the year ended 31 March 2009 have not changed since the end of the last financial year end and have all been consistently applied throughout the period.

4.    Functional Currency

The results are prepared in pound sterling as this is the currency of the primary economic environment in which the Group operates.

5.    Segmental Information

'Ins' represents the results of the ATE Insurance business whilst 'Reports' comprises the provision of Medico-Legal Reports and litigation services.

All income is generated within the United Kingdom albeit the insurance policies are underwritten in Gibraltar.

Trading Statement:

	Ins £'000	Reports £'000	2009 Total £'000	Ins £'000	Reports £'000	2008 Total £'000
Segmental income	27,596 ______	1,818 ______	29,414 ______	9,683 ______	1,764 ______	11,447 ______
Trading Profit/(loss)	2,378	(22)	2,356	2,161	(466)	1,695
AIM related costs	-	(94)	(94)	-	(77)	(77)
Loan note interest	- ______	(295) ______	(295) ______	- ______	(331) ______	(331) ______
Profit/(loss) before tax and share based payments	2,378	(411)	1,967	2,161	(874)	1,287
Share based payments	- ______	(31) ______	(31) ______	- ______	(177) ______	(177) ______
Net profit/(loss) before tax	2,378	(442)	1,936	2,161	(1,051)	1,110
Tax	- ______	(530) ______	(530) ______	- ______	(326) ______	(326) ______
Net profit after tax	2,378 ______	(972) ______	1,406 ______	2,161 ______	(1,377) ______	784 ______

Balance Sheet:

	Ins £'000	Reports £'000	2009 Total £'000	Ins £'000	Reports £'000	2008 Total £'000
Goodwill	-	482	482	-	482	482
Other Intangibles	-	-	-	-	1	1
Property, plant and equipment	28	26	54	17	29	46
Deferred tax asset	-	126	126	-	126	126
Trade and other receivables	19,486	1,192	20,678	8,073	2,251	10,324
Cash and cash equivalents	2,590 ______	705 ______	3,295 ______	2,509 ______	875 ______	3,384 ______
Total Assets	22,104 ______	2,531 ______	24,635 ______	10,599 ______	3,764 ______	14,363 ______
Trade and other payables	(12,645)	(1,731)	(14,376)	(4,525)	(2,116)	(6,641)
Current tax liabilities	(1,640)	(1,211)	(2,851)	(634)	(825)	(1,459)
Obligations under finance lease	-	(21)	(21)	-	(10)	(10)
Financial liabilities; borrowings	- ______	(2,745) ______	(2,745) ______	- ______	(3,077) ______	(3,077) ______
Total liabilities	(14,285) ______	(5,708) ______	(19,993) ______	(5,159) ______	(6,028) ______	(11,187) ______
Net Assets/(liabilities)	7,819 ______	(3,177) ______	4,642 ______	5,440 ______	(2,264) ______	3,176 ______

6.    Earnings per ordinary share

Basic earnings per ordinary share is based on earnings of £1,406,199 (2008: £783,454) for the year and on 6,217,676 (2008: 6,120,012) being the weighted average number of shares on issue during the year.

Fully diluted earnings per ordinary share is calculated on earnings of £1,406,199 for the year adjusted for convertible loan note interest and on 17,148,283 (2008: 19,119,952) being the potential weighted average number of shares.

7.    10% Secured convertible loan notes

On 21 November 2005 the company issued £3.605m convertible loan notes of which £2.551m were outstanding at the year end. Interest is payable in quarterly instalments at a coupon rate of 10% per annum. 

The loan notes are convertible into equity shares by the loan note holders and if not converted these loan notes are redeemable at par at the end of their term. For each £1 of loan note converted 3.3 ordinary shares of £0.10 each would be issued.

During the year the loan note term was extended by one year and they are now repayable on 31 October 2009 to the extent which they have not been converted. The loan notes are secured over the assets of the Group.

8.    Provision of Annual Report and Accounts

The annual report and accounts for the twelve months ended 31 March 2009 has today been sent to shareholders and is available to download from the Company's website at www.litcomp-plc.com

9.    Date of approval of this announcement

This announcement was approved by the Directors on 29 September 2009

END

Enquiries:

Litcomp Plc

Tel: +44 (0) 147 656 0113

Jason Smart, Chief Executive Officer

Paul Lavender, Finance Director

Seymour Pierce Limited

Tel: +44 (0) 207 107 8000

Richard Feigen / Chris Howard / Christopher Wren

Bishopsgate Communications Ltd 

Tel: +44 (0) 207 562 3350

Maxine Barnes

Gemma O'Hara

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