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  • BY: Andrew Hore |
  • POSTED: 11/07/2008 |

Litcomp’s insurance business helped it grow profits by one-third in the year to March 2008.

Medico-legal reports supplier Litcomp started Elite Insurance around three years ago. Last year it generated gross premiums of £11.3m and net premiums of £9.68m after reinsurance costs. Elite generated a profit of £2.16m, up from £1.52m the year before.

Elite supplies after the event insurance for legal expenses and indemnifies litigants in the event that their case fails. New business is strong and the company is considering moving into new insurance markets, such as professional indemnity insurance.

Elite made up for the medico-legal business increasing its operating loss before central costs from £44,000 to £187,000. The uncertainties in this market have been sorted out and demand is increasing.

Litcomp reported an overall increase in profits from £855,000 to £1.11m, on revenues 80% higher at £11.3m. Stripping out share based payment charges and one-off costs the profit was £1.49m.

The dilutive effect of the £3.15m of loan notes convertible at the end of October means that fully diluted earnings per share were 28% higher at 6.75p.

Net cash was £3m at the end of March 2008. At 46p, Litcomp’s market value is £2.82m.

Daniel Stewart forecasts a rise in profits to £2.6m in 2008-09. That should come from further growth by Elite and a return to profit for the medico-legal business. The shares are trading on a 2008-09 prospective multiple of less than five, and it is expected to fall to four – based on profits of £3.2m - the following year.

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