Broker says £21.4m loss in nine months was "satisfactory"

HLF spent £5.5m preparing for a flotation that was pulled at the 11th hour.

HLF's accounts for the nine months to 31 December 2002 reveal HLF's listing plans cost £4.9m. It had already spent £600,000 on preparations made in the year to the end of March 2002.

The group, which trades as Heath Lambert Group and is the world's seventh largest insurance broker, reported on a nine-month period because it changed its financial year-end to 31 December after pressure from analysts and potential investors during the run-up to its planned flotation.

The float was pulled in July last year with the group blaming the extreme volatility that rocked the world's stock markets.

Plans by Marsh to buy the group fell through recently, with sources close to Heath Lambert suggesting talks were scuppered by disagreement on price.

But other industry sources said the deal was damaged by difficulties over Heath Lambert's pension liabilities and lawsuits pending against it over film finance products.

The brokers accounts show that HLF spent £800,000 in the nine-month period to December and £900,000 in the year ended 31 March 2002, employing people specifically to defend it against film finance litigation. Several banks are trying to recover unpaid insurance claims for policies broked by HLF companies.

The group estimated that the claims involved will total £236.2m, excluding court costs, interest and damages, if judgements go against it.

The accounts also reveal the rapidly growing extent of Heath Lambert's pension headache. It has two main defined benefit schemes, the Lambert Fenchurch Staff Pension Scheme and the Heath Lambert Group Pension Plan.

These had a combined deficit of £167.4m as at 31 December, up from a deficit of £56.7m in March 2002. The deficit comes to £150.5m after tax, up from £39.8m reported in the prior period.

The group's turnover in the nine-month period was £233.3m, against £287.5m in the 12-month prior period.

It made a loss before tax of £21.4m against a loss of £1.6m in the 12-month prior period. Excluding non-recurring items, interest payable, other finance income and goodwill amortisation, the group made a trading profit of £20.8m in the nine-month period. The comparable figure for March 2002 was £48.7m.

Chairman Ian Martin described this result as "satisfactory."

The nine-month period reported on excludes the group's peak profit-making period of January to March.

Results in brief

  • Turnover £233.3m (in nine months) from £287.5m (in 12)
  • Loss before tax £21.4m (in nine months) from a loss of £1.6m (in 12)
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