(RIIG) Resources In Insurance

17 May 2012

RESOURCES IN INSURANCE GROUP PLC

("RiIG", the "Group" or the "Company")

FINAL RESULTS

The Board of RiIG, a leading provider of claims management and consultancy solutions to the UK insurance profession, is pleased to announce today its Final Results for the financial year to 31^st December 2011.

HIGHLIGHTS

·     Revenue increased by 43.7% to £3.06m (2010: £2.13m);

·     Losses in the period narrowed by 77.6% from loss £402,343 (2010) to a loss £90,060 (2011);

·     Operating divisions returned an operating contribution of £0.703m before group costs (2010: £0.300m), up by 134%;

·     RiIG's profit generated on operations amounted to £80,385 before non recurring costs expended in the continued drive to change the shape of the business;  

·     Client base continues to expand and RiIG now counts amongst its clients eight of the top insurance companies; and

·     Strong trends in the business reaffirm the management team's focus on driving the business units forward.

Commenting on the Results, Executive Chairman John French said:

"The period under review has been encouraging in terms of continued progress in the overall recovery of the Group and one where our desktop claims management and implant solution iteam in particular has continued to produce strong results and greater awareness within the insurance profession.

"RiIG has seen a marked change since the restructuring of the business and Board. The Group's offerings are well received and highly valued by the market place.  The Group counts amongst its clients eight of the top insurance companies.  RiIG's business units are well positioned to capitalise on its ability to react quickly to client needs and the Group continues to expand its client base.

"With the broader range of services now available to the insurance profession and the plan to move into other related activities such as training during the coming year should provide the opportunity for continued growth."

For further information:

CHAIRMAN'S STATEMENT

I am pleased to report on the Group's results and performance for the financial year ended 31^st December 2011.

The period under review has been encouraging in terms of continued progress in the overall recovery of the Group and one where our desktop claims management and implant solution iteam has continued to produce strong results and greater awareness within the insurance profession.

Financials and Review of the Year

In January 2011, holders of £200,000 in Convertible Loan Notes showed their commitment to RiIG and converted their Loan Notes to Equity Shares. In November 2011, a new £30,000 unsecured Loan Note 2015 was issued in favour of Spread Trustees Company Ltd. on behalf of The French Settlement. In December 2011, the Group privately placed £130,000 with existing shareholder Bob Morton through Hawk Investment Holdings Limited (along with Chairman John French), showing confidence in the Boards' on-going strategic direction and support.  These key events helped the Group strengthen its balance sheet.

Turnover for the period rose 43.7% to £3.06m (2010: £2.13m) as a direct result of the Group's repositioning in the insurance market place. Losses in the period narrowed by 77.6% from loss £402,343 (2010) to a loss £90,060 (2011). These strong trends in the business reaffirm the management team's focus on driving our business units forward. The operating divisions returned an operating contribution of £0.703m before Group costs (2010: £0.300m), up by 134%.  RiIG's profit generated on operations amounted to £80,385 before non recurring costs expended in the continued drive to change the shape of the business.

During October 2011, the Group successfully vacated surplus premises, giving annualised savings on property outgoings of £41,901.

During September 2011 Dominic Boyce, the Group's long serving Finance Director and Company Secretary, stepped down from the Group to return to Trinidad to pursue family interests.  The Board welcomed Stephen Coke as in-coming Finance Director and Company Secretary, an experienced finance professional, joining a strong and well balanced senior management team at a time of successful turnaround at RiIG.

Business Review

The Group's professional consultancy business comprises four complementary product lines - iteam, Verify, Surety Claims and Consult.

iteam provides outsourcing capabilities within an insurer's claims operation with highly qualified personnel being implanted into client operational teams.  The brand continues to grow as the insurance market suffers from a lack of talent and the need to understand financial drivers in an increasingly competitive claims market.

Verify provides cost effective field investigation services across motor, property, creditor and liability markets. Client interest has occurred particularly with regard to the counter fraud capability of Verify. It offers an affordable deterrent to spurious claims - and this has been accepted by the market.

Surety Claimsis a specialist credit hire audit and handling operation. Surety is the newest division of the business and capitalises on the expert knowledge of the team to reduce insurers' exposure to high and inflated costs. Credit hire is a significant issue within the U.K. motor claims arena and with the knowledge gained from our work with existing clients the Group is excited by the opportunities the new division offers RiIG.

Consult provides consultancy-led services to RiIG clients. Audits have been undertaken across the spectrum of claims areas including most elements of the supply chain and within insurer operations. The identification of claims leakage (unjustified over payments) and the improvement of cost controls and operational efficiencies continue to challenge some operations in the market. Consult has delivered much needed clarity during 2011. Inflationary drivers on indemnity spend and reserves will not lessen and we have seen considerable interest in these areas.

Consult has also delivered training and mentoring to a number of clients ensuring that their staff continues to be developed and trained. With the continued talent issues within the industry in the U.K. and abroad RiIG has had significant interest for these services from outside parties and are encouraged by the performance seen in 2011.

RiIG now finds itself with a complementary blend of services on which to build and produce scale: Claims Management - Insource and Outsourced - including Credit Hire, Field Investigation Services, Audit and Consultancy. The Group is able to provide proven solutions in a number of different areas within the insurers value chain - be that volume claims management; specialist credit hire claims; identification of fraud; understanding of cost drivers and where leakage is occurring and the ability to review process and train staff to a higher level.

RiIG's commitment to excellence is underlined by being one of the first signatories of the Aldermanbury Declaration, an industry wide initiative to improving professionalism and standards within the U.K. insurance industry. 

Outlook and Prospects

The Group has continued to secure new business from both existing and new clients during the latter part of the year and in recent weeks. This is encouraging although the mild winter has had an impact on the level of claims within the industry. RiIG's pipeline of new business prospects remains strong, including new areas such as PPI claims for the banking market place. As announced recently, the Group is also looking at broadening its activities in the insurance sector having identified an existing opportunity for the provision of technical training and mentoring services as well as placement activities.

RiIG has seen a marked change since the restructuring of the business and Board. The Group's offerings are well received and highly valued by the market place.  The Group counts amongst its clients eight of the top insurance companies.  RiIG's business units are well positioned to capitalise on its ability to react quickly to client needs and the Group continues to expand its client base.

As Chairman, and on behalf of my Board and shareholders, I would like to formally thank our staff. Each year we set ourselves challenging targets across the Group, and each year our staff reacts positively and enthusiastically to the challenges set by transacting more business. The Board looks to the future with confidence.

JOHN FRENCH
Chairman

17 May 2012

STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2011

                                                                     Notes                                                                   2011                  2010

                                                                                                                                                         £                         £

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the year ended 31 December 2011

CONSOLIDATED BALANCE SHEET
31 December 2011

These financial statements were approved by the Board of Directors on 16^th May 2012.

Stephen J Coke
Director

Company Registration Number 03922895

CONSOLIDATED AND COMPANY CASH FLOW STATEMENT

For the year ended 31 December 2011

1.       Significant accounting policies

Basis of accounting

The financial statements have been prepared on an historical cost basis. The directors, based on current management information and financial projections, have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. 

The company has prepared detailed profit and cash flow projections; projected gross profit margins are realistic and consistent with past performance, the existing and anticipated pricing structure and order book. Projected debtor collections are also realistic and consistent with past performance. Overhead levels have been closely considered and consistent with cost saving measures implemented.

The Board considers the cost base to be stable, and the risk of losing significant customers to be low, due to the nature of the services.

On 14^th December 2011 the Group privately placed £130,000 in new shares. The remaining £200,000 of convertible loan notes were converted in two tranches of £100,000 each on 13 January 2011 and on 20 January 2011. The Group has a new £30,000 unsecured loan note 2015 in place, issued on 21^st November 2011.

Cash flow projections have analysed all known liabilities, commitments and repayment dates in the future, including the period beyond twelve months from the date of this report. These projections include current enacted taxation rates.

The Group's main products are considered to be robust and are anticipated to benefit from external factors such as further Ministry of Justice reforms and industry attitudes to the claims environment. Significant new business has not been factored into the financial projections, although there are a number of new business contracts in negotiation. Current market response and the conversion of potential customers have both been good.

Projections have been tested by performing sensitivity analyses on critical assumptions, specifically levels of activity, to ensure sufficient levels of working capital. In these projections turnover has been flexed to incorporate both current confirmed work and new work expected to be won in the year.

There are additional plans in place to alter the amounts and timing of cash flows so unexpected needs or opportunities can be addressed. The Board has raised share capital and loan notes to fund the growth of the business and to capitalise on the growth opportunities that may present themselves. Improved trading, confidence from existing shareholders and current investment market conditions give the directors' confidence that this will be achieved.

As such the directors continue to adopt the going concern basis in the preparation of the financial statements.

Statement of compliance

The financial statements of Resources in Insurance Group plc and all its subsidiaries have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

Basis of consolidation

The consolidated financial statements incorporate the results of the Company and all its subsidiary undertakings as if they were a single entity. Subsidiary undertakings are consolidated from the date of acquisition using the acquisition method of accounting.

Key risks and judgements

To be able to prepare financial statements according to generally accepted accounting principles, management and the Board must make estimates and assumptions that affect the recorded asset and liability items as well as

1.       Significant accounting policies (continued)

other information, such as that provided on provisions and pensions. These estimates are based on historical experience and various other assumptions that management and the Board believe are reasonable under the circumstances. The results of these form the basis for making judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Revenue recognition

Revenue is recognised by reference to the stage of completion of the transaction, in accordance with IAS 18, and represents the value of services provided in the period and is stated net of VAT.

Property, plant and equipment

Property, plant and equipment are stated at cost less provision for depreciation. Depreciation is provided at rates calculated to write off the cost of each asset less its estimated residual value evenly over its estimated useful life, as follows:

Investments

Fixed asset investments are stated at cost less provision for diminution in value.

Work in progress

Work in progress is valued at the lower of cost and net realisable value.

Trade and other receivables

Trade and other receivables are measured on initial recognition at fair value.  When objective evidence exists that the asset is impaired the estimated irrecoverable amount is written off to profit and loss.

Trade and other payables

Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Leasing and finance lease commitments

Assets obtained under hire purchase contracts and finance leases are capitalised in the balance sheet and depreciated over their useful economic lives. The interest element of the rental obligations is charged to profit and loss over the period of the contract and represents a constant proportion of the balance of capital payments outstanding. Rentals paid under operating leases are charged to profit and loss on a straight line basis over the term of the lease.

Current and deferred taxation

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the company's subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which

1.       Significant accounting policies (continued)

applicable tax regulations is subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.

However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable future.

Pension costs

The Group contributes to two defined contribution Group Personal Pension Schemes for Directors and senior employees. Pension contributions are charged to profit and loss as they are incurred.

Share-based payment transactions

The Group operates a number of equity-settled, share-based compensation plans. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. At each balance sheet date, the entity revises its estimates of the number of options that are expected to vest. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.

The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.

IFRS standards in issue but not yet effective

The following standards and amendments to existing standards have been published and are mandatory for the Group's accounting periods beginning on or after 1 January 2012  or later periods, but the Group has decided not to early adopt them. The directors do not anticipate that the adoption of these standards and interpretations would have a material impact on the financial statements in the period of initial application although there will be revised and additional disclosures.  The Group plans to apply these standards in the reporting period in which they become effective.  The new standards and interpretations include: 

Endorsed and available for early adoption:

·               Amendments to IFRS 7 - Transfers of Financial Assets (effective beginning on or after 1 July 2011)

·               IFRS 9 - Financial Instruments (effective beginning on or after 1 January 2013)

·               IFRS 13 - Fair Value Measurement (effective beginning on or after 1 January 2013)

·               Amendments to IAS 1 - Presentation of Items of Other Comprehensive Income (effective beginning on or after 1 July 2012)

·               Amendments to IAS 12 - Deferred Tax - Recovery of Underlying Assets (effective beginning on or after 1 January 2012)

·               IFRS 10 - Consolidated Financial Statements (effective beginning on or after 1 January 2013)

2.     Taxation

At 31 December 2011 the Group had corporation tax losses and unclaimed capital allowances of approximately £2,629,000 (2010: £2,559,000).

No deferred tax asset has been recognised in respect of these losses due to there being uncertainty as to whether sufficient future taxable profits will be generated by the company in the near future, to prudently justify this.

3.       Loss per share

The calculation of the basic and fully diluted loss per share is based on the loss for the year of £90,060 (2010: loss of £402,343) and on 317,465,150 ordinary shares, (2010: 162,465,262) being the weighted average number of ordinary shares in issue during the year. In calculating fully diluted loss per share, the weighted average number of shares was 317,465,150 (2010: 162,456,262) ordinary shares. 

4.     Cash and cash equivalents