year of trading as a listed company and the proposed dividend is in line with
the indications we gave when we went to market at IPO in November 2007.
The Board's approach is to maintain a sustainable and progressive dividend
policy.
Current Trading and Outlook
2009 will be a challenging trading environment for all businesses and we will
certainly not be immune.
All pointers show that the numbers of businesses will contract during 2009 and
this must have an influence on our underlying revenues - as will lower interest
rates, which will impact on our investment earnings.
Counter balancing this will be, arguably, an increased demand from existing and
new clients for our products and services, notably in the fields of employment,
HR, compliance and protection from the demands of the Revenue. In addition, the
benefits of extending our reinsurance contract with Brit Insurance will start to
flow through in a meaningful way for the first time in 2009.
In 2008 we conducted a strategic review of our business and we concluded that
our historically strong organic growth and prudent approach has given us an
ideal platform for development in these uncertain times. Our strong balance
sheet, with no borrowings, and our annuity model gives us considerable financial
security to enable us to move quickly if there are opportunities for further
acquisitions.
We believe that any acquisition should be complementary to one or all of our
existing divisions. Our strategic review has also revealed significant
opportunities for cross selling within the Group and we have taken action to
identify these. Indeed, it is pleasing to note that we have already driven cross
selling opportunities out of the Accountax acquisition. We have found that,
where clients are pleased with the existing services provided by the Group, they
are very open to additional products being offered.
In addition to these goals we shall, of course, continue with the development of
new services and products; for example, tax planning and commercial After The
Event insurance, together with a capital allowances service have all proved
successful in the last couple of years. In particular, over the next few years
we will devote resources to focus on the significant opportunities offered by
the Legal Services Act 2007.
I make no apologies for repeating our key strengths from last year's report - it
is upon these sound principles which we have built our business and are the
reasons why we can look forward to a challenging year with confidence.
Directors
My thanks are due to all my fellow Board directors for their input and guidance
throughout the year, with a special acknowledgment to my colleagues on our
trading Company Board.
Staff and shareholders
Finally, a special thank you to all our staff, whose hard work and loyalty have
enabled us to achieve our goals over the past years; I am sure that these
talented people will also help us achieve our strategic goals over the coming
months in spite of what appears to be a time of general economic downturn. Thank
you, also, to our investors for their support during the year.
Colin Davison
Chief Executive
Enquiries
+--------------------------------------------+--------------------------+
| Abbey Protection plc | +44 (0)845 217 8293 |
| Minories House | |
| 2-5 Minories | |
| London | |
| EC3N 1BJ | |
| Colin Davison | |
| Chris Ward | |
| | |
+--------------------------------------------+--------------------------+
| PricewaterhouseCoopers LLP | +44 (0)20 7583 5000 |
| Simon Boadle | |
| Jon Raggett | |
| | |
+--------------------------------------------+--------------------------+
| Financial Dynamics | +44 (0)20 7269 7132 |
| Ed Gascoigne-Pees | +44 (0)20 7269 7114 |
| Nick Henderson | |
+--------------------------------------------+--------------------------+
About Abbey Protection PLC
Abbey Protection plc is an integrated specialist insurance and consultancy
group, and the UK's leading supplier of legal and professional fees insurance
products and services to small-to-medium sized enterprises. The Group's
principal products provide protection against costs incurred as a result of
legal actions and HM Revenue & Customs investigations.
Founded in 1992, the Group operates from offices in London, Rugby, Croydon and
Milton Keynes and had 220 employees as at 31st December 2008. Abbey Protection
distributes its products and services through the following divisions: Abbey
Legal Protection, Abbey Legal Services, Abbey Tax Protection, Abbey HR,
Accountax and After The Event Services.
Visit the Abbey Protection website at www.abbeyprotectionplc.com for more
information.
Analyst Presentation
There will be an analyst presentation to discuss the results at 9.30am today at
Financial Dynamics, Holborn Gate, 26 Southampton Buildings, London WC2A 1PB.
Those analysts wishing to attend are asked to contact Nick Henderson or Ed Berry
at Financial Dynamics on +44 20 7269 7114 or at nick.henderson@fd.com / +44 020
7269 7297 or at edward.berry@fd.com.
Financial Review
As presented in note 5 to the financial statements, the Group has two principal
segments, an insurance intermediation and consultancy arm together with an
underwriting arm. Within the insurance intermediation and consultancy arm, the
business is divisionalised. This review considers the financial development of
the Group as a whole.
Revenue
Revenue before investment income for the year increased relative to the prior
year by GBP2.6m (2007: GBP2.2m) to GBP28.3m (2007: GBP25.7m) representing growth
of 10.1% (2007: 9.3%).
Investment income at GBP1.9m (2007: GBP1.6m) was up 19% driven by increased cash
and investment balances together with higher yields. The majority of the year
was a depositor's market caused by the general financial turmoil now referred to
as the "credit crunch" which manifested itself during the latter part of 2007
and which has continued through 2008.
However, this environment was partly offset by the rapid reduction in Bank of
England base rates from 5% at the end of quarter three to 2% at the end of the
year.
Expenses & Claims
Operating and administration expenses increased by 12.5% (2007: 12%) to GBP13.2m
(2007: GBP11.7m). However, as noted in the Chief Executive's report, the Company
was admitted to trading on AIM on 27 November 2007. Accordingly, 2008 reflects a
full year of expenditure associated with this status (estimated at circa
GBP390,000) whereas 2007 only included one month of comparable expenditure.
Similarly, share scheme incentives charged in the year were GBP155,000 (2007:
GBP8,000). Allowing for these items, the underlying increase in expenditure
equated to circa 8.3% reflecting the increase in average headcount to 206 (2007:
196). Staff costs including associated expenses represent circa 74% (2007: 73%)
of operating and administration expenses. An analysis of average headcount by
division is included in note 12 to the financial statements.
Claims incurred (including provision for claims Incurred But Not Reported
"IBNR") across all underwriting years represented 63.9% (2007: 69.74%) of net
earned premiums. The underwriting business has seen rapid growth since the
formation of Ibex Reinsurance Limited, the Group's Guernsey based reinsurance
subsidiary, in 2003. A summary of the development of each underwriting year is
shown in the tables within note 4(i) to the financial statements.
Profit
Whilst reported profits before taxation from insurance intermediation and
consultancy were only marginally ahead of 2007 at GBP3.7m, allowing for the
additional costs explained above, this was a satisfactory result. Reported
profits from underwriting activities were again strongly ahead at GBP4.6m (2007:
GBP3.7m). Across the Group, profit after taxation increased by 13% to GBP6.0m
(2007: GBP5.3m).
Taxation
The effective rate of corporation tax was broadly consistent with prior year at
26.9% (2007: 27.4%). The profits arising in Ibex Reinsurance Limited are taxable
on remittance to the UK. Under HMRC rules, 90% of these profits must be remitted
to the UK within 18 months of the end of the relevant financial year. Deferred
tax is provided on profits held in Guernsey pending their remittance to the UK.
Cash flow
Net cash from operating activities was again strong at GBP7.1m (2007: GBP7.8m).
After the payment of dividends and the acquisition of Accountax (see note 20 to
the financial statements), cash and financial investment balances remained
broadly level at GBP33.6m (2007: GBP33.9m).
Balance sheet
During the year, the Company has remained debt free (redeeming a loan held by
Accountax on acquisition). Whilst debt funding remains an option, the Company
has sufficient cash resources for its immediate needs.
Risk management
A comprehensive summary of the risks facing the business and how those risks are
managed is disclosed within note 4 to the financial statements.
Regulatory solvency requirements
Details of the regulatory solvency requirements associated with the Group's
activities are disclosed in note 39 to the financial statements. As at 31 |