Source - RNS
RNS Number : 3851L
Gable Holdings Inc
30 September 2016
 

                                                                                                                                                                                                        

30 September 2016

Gable Holdings Inc.

("Gable"  "the Company" or "the Group")

 

Unaudited Half Year Results for the six month period ended 30 June 2016

Gable (AIM: GAH), the European non-life insurance company, announces results for the six month period ended 30 June 2016.

Summary of Results


6 Months ended 30 June

Year ended

31 December


2016

£m

2015

£m

2015

£m

Gross Written Premiums

61.7

51.7

91.1

Net Earned Premiums

31.4

38.5

59.7

Profit / (loss) on constant currency basis

1.1

2.6

(15.9)

EPS on constant currency basis†

0.76

1.92p

(11.75)p

† Profit / (loss) on constant currency basis for 2016 is stated after adding back the effect of foreign exchange losses of £3.4m (H1 2015: £1.2m, Full year 2015 £0.9m).

 

Business in the Half Year

§ Written premiums £61.7 million (2015: £51.7 million)

§ Profitable underwriting on constant currency basis

§ Cash and short term investments £73.9 million (2015: £40.0 million)

 

Outlook - Strategic Restructuring Plan

§ Excellent progress with the provision of alternative capacity for the group's book of business

§ Considerable progress has ensured that running costs are at minimum sustainable level with a view to creating a lean business available for recapitalisation

 

William Dewsall, Chief Executive, Gable Holdings Inc, commented:

"I am pleased that the first half of 2016 returned to profit on a constant currency basis.  The impact of the introduction of Solvency II on small insurance companies such as Gable has been devastating.  The legislation has met widespread criticism, and justifiably so.  I have made good progress on my undertaking to find alternative capacity for our policyholders and I expect to make an announcement very soon.  In the meantime we are preparing for an orderly management of the historical book and to restructure the company so that it is in a suitable form for recapitalisation."

 

Gable Holdings Inc.

William Dewsall, Chief Executive

Michael Hirschfield, Group Finance Director

John Bick

Tel: +44(0) 20 7337 7460

 

 

Haggie Partners LLP

Peter Rigby

 

 

Tel : +44(0) 20 7562 4444

About Gable Holdings Inc.

Gable is a European non-life insurance company underwriting a comprehensive range of specialist policies for the commercial sectors in the UK, Denmark, France, Germany, Italy, Norway, Spain and Sweden. Gable benefits from a low-cost online underwriting platform and the Company has continued to successfully grow its business geographically whilst simultaneously exploiting a range of niche insurance segments which exist across the EU, which is delivered through the EU passporting mechanism.  Gable Holdings Inc is quoted on the London Stock Exchange's AIM market.   For further information please visit www.gableholdings.com.  

 

Interim Statement 2016

 

Overview and results

 

Gable's results for the six-month period ended 30 June 2016 are as follows with gross written premium at £61.7 million (H1 2015: £51.7 million).  Net earned premiums (earned income attributable to the Company) amounted to £31.4 million (H1 2015: £38.5 million) resulting in the insurance business returning to profit on a constant currency basis of £1.4 million (H1 2015: £2.6 million and full year 2015 Loss: £15.4 million). Where possible we maintain foreign currency assets to match relevant liabilities to minimise the ultimate exposure when settling non-Sterling claims. The impact on Sterling following the Brexit vote has led to a non-cash foreign exchange charge of £3.4 million giving a reported loss for the period of £2.3 million at the Group level.

At the end of the period cash balances and equivalents were £73.9 million (H1 2015: £40.0 million, 31 December 2015: £61.6 million).

 

During the period the Group continued to focus on delivering growth through leveraging its strong working relationships with selected brokers and broker networks to provide well priced bespoke insurance products to the commercial SME markets in Europe.

 

This period has been one of significant change for the business, the introduction of Solvency II on 1 January 2016 effectively rendered Gable's historic business model obsolete.  Whilst a risk based approach such as that which forms the basis of Solvency II is supported by the Board, the method of implementing the rules under the Solvency II regime effectively requires small niche operations to hold excessive levels of capital.  Gable estimates that it would need to hold a capital to GWP ratio of nearly one to one whereas an identical book of business as part of a wider, more diversified portfolio, within a major carrier would require a ratio of less than 30%.  We announced that it would not be possible to raise the capital necessary to support the historical business model and ceased writing new business on 14 July 2016.

Outlook

 

On 15 July 2015 Gable announced that it had developed a strategic restructuring plan which included the provision of alternative capacity for the group's book of business as it falls due for renewal.   I have made good progress on this and I am confident that an announcement will be made on this matter very shortly.  In the meantime, we are preparing details plans to ensure the orderly management of the historical book and have entered into discussions with third party experts to provide independent oversight and technical administration assistance to the process.

Our plan includes a comprehensive review of the overhead cost base to ensure that running costs are cut back to a minimum sustainable level with a view to creating a lean business available for recapitalisation.  Our Chairman and all non-executive directors have stood down from the Board and I should like to thank Jost Pilgrim, Blaise Craven, Andrew Trott, Julian Connerty and Kevin Alcock for their contributions during their tenure on the Board.  On 12 September 2016 our Nomad, Zeus, resigned which has triggered a delisting process and, whilst we continue to explore the possibility of securing a replacement, if a nomad is not appointed by 13 October 2016, the Company's listing on AIM will be cancelled.  The economic rights of shareholders are unchanged by this process which will result in a considerable cost saving as the maintenance of a listing was estimated to cost some £640,000 per year.

I shall continue to keep shareholders informed of developments over the coming period.

 

 

William Dewsall

Chief Executive

30 September 2016

GABLE HOLDINGS INC

Group Income Statement

For the six months ended 30 June 2016



Six months

Six months

Year



ended

ended

ended



30 June

30 June

31 December



2016

2015

2015


Notes

£000s

£000s

£000s



unaudited

unaudited

audited






Gross written premiums


61,717

51,668

91,128

Change in provision for gross unearned premiums

5

(21,276)

(8,793)

(18,534)

Gross earned premiums


40,441

42,875

72,594






Outward reinsurance premiums


(5,252)

(4,052)

(25,088)

Change in provision for unearned





  premiums - reinsurers' share

5

(3,760)

(328)

12,175

Net earned premiums


31,429

38,495

59,681






Net investment return


(378)

118

673

Total revenue from operations


31,051

38,613

60,354






Gross claims paid

5

(24,523)

(11,388)

(34,175)

Movement in gross technical provisions


(5,874)

(10,855)

(30,467)

Gross claims incurred


(30,397)

(22,243)

(64,642)






Reinsurers' share of gross claims paid


295

308

171

Movement in reinsurers' share of technical provisions


8,426

-

14,293

Reinsurers share of claims incurred


8,721

308

14,464






Net claims incurred


(21,676)

(21,935)

(50,178)






Expenses incurred in insurance activities


(11,157)

(10,504)

(24,072)

Other operating expenses - overheads


(540)

(8,567)

(6,110)

Total operating charges (excluding impairment charges)

Impairment charges


(11,697)

 

-

(19,071)

 

-

(30,182)

 

(4,250)






Loss from operations and before taxation


(2,322)

(2,393)

(24,256)






Taxation


(30)

(21)

47

Loss for the period attributable





  to owners of the parent

6

(2,352)

(2,414)

(24,209)

 

Earnings per share - basic

Earnings per share - diluted

 

4

4

 

(1.74)p

(1.74)p

 

(1.78)p

(1.78)p

 

(17.89)p

(17.89)p

 

All operations are continuing.



GABLE HOLDINGS INC

Group Statement of Financial Position

At 30 June 2016



30 June

30 June

31 December



2016

2015

2015


Notes

£000s

£000s

£000s



unaudited

unaudited

audited

Assets





Intangible assets


-

4,250

-

Property, plant and equipment


418

396

444

Deferred acquisition and reinsurance costs

5

21,303

14,883

16,231

Provision for unearned reinsurance premium

5

11,437

2,694

15,197

Reinsurers' share of technical provisions

5

22,100

3,200

17,452

Prepayments and accrued income


1,163

573

659

Trade and other receivables


72,172

89,684

61,944

Cash and cash equivalents

8

73,925

39,999

61,609

Total assets


202,518

155,679

173,536






Equity





Share capital


338

338

338

Share premium account


16,190

16,190

16,190

Share based premium reserve


876

1,049

876

Other reserves


3,875

3,875

3,875

Retained earnings


(20,605)

3,542

(18,253)

Total equity attributable to owners of the parent

6

674

24,994

3,026






Liabilities





Technical provisions

Reinsurers' share of deferred acquisition costs

5

163,593

1,257

107,833

-

136,511

2,776

Accruals and deferred income


244

384

244

Current taxation


110

342

292

Deferred taxation

Loan notes and derivatives


221

4,011

41

-

41

3,966

Trade and other payables


32,408

22,085

26,680

Total liabilities


201,844

130,685

170,510






Total liabilities and shareholders' funds


202,518

155,679

173,536

 

 

Net asset value per ordinary share

 

 

4

 

 

0.50p

 

 

18.47p

 

 

2.24p

 



GABLE HOLDINGS INC

Group Statement of Cash Flows

For the six months ended 30 June 2016



Six months

Six months

Year



ended

ended

ended



30 June

30 June

31 December



2016

2015

2015


Notes

£000s

£000s

£000s



unaudited

unaudited

audited






Cash flows from operating activities





Cash flows from operations

7

12,762

5,938

14,904

Interest received


(378)

24

673

Tax paid


(31)

(310)

(162)

Net cash flows from operating activities


12,353

5,652

15,415






Cash flows from investing activities





Purchase of tangible fixed assets


(33)

(44)

(125)

Net cash flows from investing activities


(33)

(44)

(125)






Cash flows from financing activities





Shares issued


-

335

-

Share issue costs

Loan notes issued net of costs


-

-

-

-

-

3,966

Net cash flows from financing activities


-

335

3,966






Net (decrease)/increase in cash and cash equivalents

8

12,320

5,943

19,256






Cash and cash equivalents at period beginning


61,609

27,021

42,358

Exchange movements on cash and cash equivalents


(4)

9

(5)






Cash and cash equivalents at period end

8

73,925

32,973

61,609

 

 

 

 

 



GABLE HOLDINGS INC

Notes to the Interim Consolidated Financial Statements

For the six months ended 30 June 2016

 

 

1. Basis of preparation

The Company was incorporated as a Corporation in the Cayman Islands which does not prescribe the adoption of any particular accounting framework.  These interim financial statements have been prepared under the historical cost convention and in accordance with the requirements of International Financial Reporting Standards ("IFRS") endorsed by the European Union, in so far as they apply to interim statements.

The Group financial statements consolidate the financial statements of Gable Holdings Inc and subsidiary undertakings made up to 30 June 2016.

 

2. Accounting policies

There have been no changes to the Group's accounting policies as set out in the Group's financial statements for the year ended 31 December 2015 and, as such, those accounting policies have been applied to these interim statements.

 

3.  Segmental information

The Group's business is the provision of insurance products and it has, in the six months to 30 June 2016, derived its business from the United Kingdom, France, Spain, Norway, Denmark, Germany and Italy.

 

4.  Earnings and net asset value per share

The calculation of basic and diluted earnings per share is based on the net loss after tax of £2,352,000 (six months ended 30 June 2015: loss of £2,414,000, full year ended 31 December 2015: loss of £24,209,000) divided by the weighted average number of shares in issue during the period of 135,319,833 (six months ended 30 June 2015: 135,319,833, full year ended 31 December 2015: 135,319,833

The net asset value per share is calculated by dividing the total equity of £674,000 (30 June 2015: £24,994,000, 31 December 2015: £3,026,000) by the number of shares in issue at the end of the period - 135,319,833 (30 June 2015: 135,319,833, 31 December 2015: 135,319,833).

 



5.  Insurance assets and liabilities


Six months

Six months

Year


ended

ended

ended


30 June

30 June

31 December


2016

2015

2015


£000s

£000s

£000s


unaudited

unaudited

audited

Insurance assets




Deferred acquisition and reinsurance costs

21,303

14,883

16,231

Provision for unearned reinsurance premium

11,437

2,694

15,197

Reinsurers' share of technical provisions

22.100

3,200

17,452


54,840

20,777

48,880





Insurance liabilities




Technical provisions

76,475

51,733

70,670

Provisions for unearned premium

Reinsurers' share of deferred acquisition costs

87,118

1,257

56,100

-

65,841

2,776


164,850

107,833

139,287





Claims reserved




At 1 January

53,218

37,485

37,485

Claims notified and reserved in the period, net of RI

34,078

19,143

37,924

Claims paid in the year net of reinsurance recoveries

(24,228)

(11,080)

(34,004)

Incurred but not reported movement in the period, net of reinsurers' share

(12,030)

3,023

11,850

Exchange movement

3,337

(38)

(37)

At 30 June/31 December

54,375

48,533

53,218





Movement for provision in unearned premium




At 1 January

65,841

47,307

47,307

Movement in provision for the period

21,276

8,793

18,534

At 30 June/31 December

87,117

56,100

65,841





Movement in provision for unearned reinsurance premium




At 1 January

15.197

3,022

3,022

Movement in provision for the period

(3,760)

(328)

12,175

At 30 June/31 December

11,437

2,694

15,197

 

Movement in deferred acquisition costs




At 1 January

16,231

13,153

13,153

Movement in provision for the period

5,072

1,730

3,077

At 30 June/31 December

21,303

14,883

16,231

 

Movement in reinsurers' share of technical provisions




At 1 January

17,452

3,200

3,200

Movement in provision for the period

Exchange movement

5,149

(501)

-

-

14,293

(41)

At 30 June/31 December

22,100

3,200

17,452

 

Movement in reinsurers' share of deferred acquisition costs




At 1 January

2.776

-

-

Movement in provision for the period

(1,519)

-

2,776

At 30 June/31 December

1,257

-

2,776

 



6. Reconciliation of movements in shareholders' funds


Six months

Six months

Year


ended

ended

ended


30 June

30 June

31 December


2016

2015

2015


£000s

£000s

£000s


unaudited

unaudited

audited





(Loss)/profit for the period

(2,352)

(2,414)

(24,209)

Shares issued in the year

-

-

-

Share issue costs

-

-

-

Share based payment charge

-

99

(74)

Net increase in shareholders' funds

(2,352)

(2,315)

(24,283)

Equity shareholders' funds brought forward

3,026

27,309

27,309

Equity shareholders' funds carried forward

674

24,994

3,026

 

7. Reconciliation of profit for the period before taxation to net cash flows from operating activities


Six months

Six months

Year


ended

ended

Ended


30 June

30 June

31 December


2016

2015

2015


£000s

£000s

£000s


unaudited

unaudited

Audited





(Loss)/profit for the period before taxation

(2,322)

(2,393)

(24,256)

Interest received

378

(118)

(673)

Non-cash exchange movements

1

1

-

Depreciation of property, plant and equipment

Amortisation of derivatives

63

45

60

-

122

6

Share based payment charge

Impairment of goodwill

-

-

99

-

(74)

4,250

Increase in insurance liabilities

27,081

19,841

48,519

Increase in reinsurers' share of technical provisions

(4,648)

-

(14,252)

Increase/(decrease) in deferred acquisition

            and reinsurance costs

Increase in reinsurers' share of deferred acquisition costs

 

(5,072)

(1,519)

 

(1,730)

-

 

(3,078)

2,776

Decrease/(increase) in provision for unearned reinsurance premium

3,760

328

(12,175)

Increase in receivables

(10,732)

(23,757)

3,897

Increase in payables

5,727

5,387

9,842

Net cash flows from operating activities

12,762

(2,282)

14,904

 



 

8. Reconciliation of net cash flows to movement in net funds


Six months

Six months

Year


ended

ended

ended


30 June

30 June

31 December


2016

2015

2015


£000s

£000s

£000s


unaudited

unaudited

audited





Change in cash for the period

12,320

(2,359)

19,256

Change in net funds resulting from cash flows

12,320

(2,359)

19,256

Net funds brought forward

61,609

42,358

42,358

Exchange movements on cash and cash equivalents

(4)

-

(5)

Net funds carried forward

73,925

39,999

61,609

 

9. General information

The information for the period ended 30 June 2016 does not constitute statutory accounts as defined in the Companies Act 2006.  The figures for the period ended 31 December 2015 have been extracted from the 2015 Financial Statements prepared under IFRS.  The auditors' report on those accounts was unqualified and did not contain a statement under the provisions of the Companies Act 2006.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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