AIM Admission doc

7/29/2019 AIM Admission doc

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Aim Admission and PlacingCOBRA Holdings Plc

Nominated Advisor: Dawnay, Day Corporate Finance Ltd

Broker: Fairfax I.S. Plc


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THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTIOabout the contents of this document, or as to what action you should take, you should seekimmediately from a person who is authorised under the Financial Services and Markets Act 2advising on the acquisition of shares and other securities in the United Kingdom. The whole t

be read.

This document comprises an admission document prepared in accordance with the AIM Rulconstitute an offer to the public in accordance with the provisions of sections 85 and/or 102B oMarkets Act 2000 (FSMA), or otherwise, and is not a prospectus for the purposesAccordingly, this document has not been approved by the Financial Services Authority pursuacopy of this document has been delivered to the London Stock Exchange plc as an admissionOrdinary Shares of Cobra Holdings PLC (the Company) but a copy has not been filed with of England and Wales. The Company, whose registered office appears on page 3 and the Dwhose names appear on page 3, accept responsibility for the information contained inresponsibility for compliance with the AIM Rules. To the best of the knowledge of the Compof whom has taken all reasonable care to ensure that such is the case) the information conta

accordance with the facts and contains no omission likely to affect the import of such inforApplication has been made to the London Stock Exchange plc for the Ordinary Shares to be aa market operated by the London Stock Exchange plc. The Ordinary Shares are not dealt in oand no application is being or has been made for the Ordinary Shares to be admitted to any suthat Admission will become effective and that dealing will commence in the Ordinary Shar

AIM is a market designed primarily for emerging or smaller companies to which a higher attached than to larger or more established companies. AIM securities are not admitted to Listing Authority. A prospective investor should be aware of the risks of investing in such comdecision to invest only after careful consideration and, if appropriate, consultation with an indThe AIM Rules are less demanding than those of the Official List of the UK Listing Author

required pursuant to the AIM Rules to have a nominated adviser. The nominated advideclaration to the London Stock Exchange plc on Admission in the form set out in ScheduleNominated Advisers. Neither the UK Listing Authority nor the London Stock Exchange plc hthe contents of this document.

YOUR ATTENTION IS DRAWN TO PART I OF THIS DOCUMENT WHICH LISTS CSHOULD BE TAKEN INTO ACCOUNT IN CONSIDERING WHETHER OR NOT TOSHARES.

COBRA HOLDINGS PLC(Incorporated and registered in England and Wales under the Companies Act 1985 withPlacing of 1,023,767 Ordinary Shares of 0.25 each

per Ordinary Share and admission to trading on

Nominated Adviser Financial ABroker and Pla

Dawnay, Day CorporateFinance Limited Fairfax I.S

Share capital immediately following Admission

Authorised IsAmount Number Amo


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CONTENTS

Directors, Officers and Advisers

Definitions

Glossary

Placing Statistics

Expected Timetable of Principal Events

PART I Risk Factors

PART II Key Information

PART III Information on the Group

PART IV Details of the Placing

PART V Historical Financial Information

Section A Accountants report on the consolidated historinformation of the Company

Section B Consolidated historical financial information o

Section C Accountants report on the aggregated historicinformation of the Company

Section D Aggregated historical financial information of

Section E Accountants report on the consolidated historinformation of Cobra GAL (Holdings) Limited

Section F Consolidated historical financial information o(Holdings) Limited

PART VI Additional Information


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DIRECTORS, OFFICERS AND ADVISERS

Directors

Peter James Robinson (Non-executive Chairman)Stephen Mark Burrows (Chief Executive)

Hannah Poulton (Finance Director)Stephen Michael Bullock (Non-executive Director)

David Harris (Non-executive Director)

Registered Office and website of the Company

110 Fenchurch StreetLondon EC3M 5JT

Tel.: d44 (0) 20 7204 0014www.cobraholdings.co.uk

Company Secretary

Hannah Poulton

Nominated Adviser

Dawnay, Day Corporate Finance Limited15-17 Grosvenor Gardens

London SW1W 0BD

Financial Adviser and Broker

Fairfax I.S. PLC46 Berkeley Square

MayfairLondon W1J 5AT

Solicitors to the Company

asb law

Horizon House1 Eclipse Park

Sittingbourne RoadMaidstone ME14 3EN

Solicitors to the Financial Adviser, Nominated Adviser and Br

Stephenson HarwoodOne St Pauls Churchyard

London EC4M 8SH

Reporting Accountants

Baker Tilly Corporate Finance LLP2 Bloomsbury StreetLondon WC1B 3ST

Auditors


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DEFINITIONS

The following definitions apply throughout this document, unless the conte

2006 Act the Companies Act 2006;Act the Companies Act 1985, as amended;

Admission the admission of the Ordinary Shares, inpursuant to the Placing, to trading on AIpursuant to the AIM Rules;

AIM AIM, a market operated by the London S

AIM Rules the rules of the London Stock Exchange goto and the operation of AIM;

Articles or Articles ofAssociation

the articles of association of the Company,to time;

Audit Committee the audit committee of the Company;

BKG Corporate Risks BKG Corporate Risks Limited, registeredwith the number 3257825;

BKG Insurance Brokers BKG Insurance Brokers Limited, registWales with the number 3242176;

BKG Mortgages BKG Mortgages Limited, registered in Enthe number 3426633;

Board or Directors the board of directors of the Company document, whose names are set out on pa

business day a day (excluding Saturdays, Sundays anEngland and Wales) on which banks genetransaction of business in London;

City Code the UK City Code on Takeovers and Mer

Company or CobraHoldings

Cobra Holdings PLC, registered in Englannumber 5548507;

CREST the relevant system (as defined in the Crespect of which CRESTCo is the operaCREST Regulations);

CRESTCo CRESTCo Limited, a company registeredand the operator of CREST;

CREST Manual the rules governing the operation of CRE


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CREST Regulations the Uncertificated Securities Regulations3755);

CREST Sponsor a CREST Participant admitted to CREST

Cobra Corporate Solutions Cobra Corporate Solutions Limited, regiWales with the number 5926710;

Cobra Financial Services Cobra Financial Services Limited, registWales with the number 2316414;

Cobra GAL (Holdings) Cobra GAL (Holdings) Limited, registeredwith the number 5074528;

Cobra Insurance Brokers Cobra Insurance Brokers Limited, regisWales with the number 3233679;

Cobra InsuranceManagement

Cobra Insurance Management Limited, and Wales with the number 5553037;

Cobra London Markets Cobra London Markets Limited, registWales with the number 2181039;

Cobra Network Cobra Network Limited, registered in En

the number 4628555;Cobra Tubbs Batten Cobra Tubbs Batten Limited, registered i

with the number 3144496;

Cobra Underwriting Agencies Cobra Underwriting Agencies Limited, regWales with the number 4731994;

Dawnay Day or NominatedAdviser

Dawnay, Day Corporate Finance Limitedand Wales with the number 1154048;

EEA European Economic Area;

Fairfax, Placing Agent orNominated Broker

Fairfax I.S. PLC, registered in Englandnumber 5496355;

FSA the Financial Services Authority;

FSMA the Financial Services and Markets Act 20

General Meeting an extraordinary general meeting or an annthe Company or any other meeting at whicany class of them) are entitled to vote;

Group the Company and its subsidiary undertak

Hammond Frey Marrington Hammond Frey Marrington Limited, regiW l i h h b 2367589


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Network Members the companies and businesses which form

Nomination Committee the nomination committee of the Compan

Non-executive Directors Peter Robinson, Stephen Bullock and Dav

Official List the Official List of the UK Listing Author

Optionholder holders of options granted pursuant to tOption Scheme;

Ordinary Shares the 146,140,000 ordinary shares of 0.25the Company;

Placing the conditional placing of the Placing Shapursuant to the Placing Agreement, document;

Placing Agreement the conditional agreement dated 29 Jbetween (1) the Company, (2) the DirectorFairfax and (5) certain Shareholders as

paragraph 12.1 of Part VI Additional In

Placing Price means 97 pence per Placing Share;

Placing Shares 1,023,767 new Ordinary Shares to be issuthe Placing;

Premium insurance premiums;

Prospectus Rules the prospectus rules made pursuant to Pa

and p pounds and pence, the lawful currency of

Registrar the registrars of the Company, SLCregistered in England and Wales with twhose registered office is 42-46 High Stree9QY;

Remuneration Committee the remuneration committee of the Comp

Senior Managers John Lincoln, Michael Bowler, Mark ZanTruman, Peter Bright and Paul Bryant;

Shareholders holders of Ordinary Shares;


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GLOSSARY

bonus target over-rider additional payments from insurers based

Commercial Gross WrittenPremiums gross insurance premiums requested bbrokers commission;

commission over-rider additional payments from insurers baaccounts;

hard market conditions insurance market conditions where demahigh in relation to the available capacity, upremiums;

Lloyds the Society of Lloyds, the London speciamarket;

soft market conditions insurance market conditions where premiavailable underwriting capacity exceeding

underwriting agency an agency which has underwriting capainsurance underwriters giving the agency dissue approved policies and manage claims

of underwriting profits.


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PLACING STATISTICS

Placing Price

Number of Ordinary Shares in issue prior to the Placing and Admission

Number of Placing Shares

Number of Ordinary Shares in issue immediately following the Placing

Estimated proceeds of the Placing after expenses

Market capitalisation of the Company on admission at the Placing Price

ISIN number

EXPECTED TIMETABLE OF PRINCIPAL EVEN

Publication of this document

Admission and commencement of dealings

CREST accounts credited (where applicable)

Definitive share certificates dispatched in respect of the Ordinary Shares

(where applicable)


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PART I

Risk factors

Potential investors should carefully consider all of the information withinparticular the risks described below, in the light of the information in thipersonal circumstances, before making any decision to invest in the Compsummarised below are not intended to be exhaustive and are not intended order of priority. If any of the risks described should actually occur, a sadverse effect on the Groups business, results, operations and/or financial and the Company could be materially affected. In such circumstances, theShares may fall and potential investors could lose all or part of their investm

and uncertainties not presently known to the Directors, or which the Dirimmaterial, may also have a material adverse effect on the Group.

1. Risks related to the industry of the Group

1.1 Competition within the industry may make profitable pricing difficul

The insurance industry is highly competitive. The Group may find itself in cbrokers that may have an established position in the market and/or greater fin

management resources available to them. Increased competition could resultlower premium rates or less favourable policy terms and conditions, which the Groups growth and profitability. Premium levels may be adversely afinsurance industry capacity, increases in reinsurance capacity, reduction ofavourable loss experience, the pricing of underlying direct coverages andwhich could develop in a relatively short period of time.

1.2 The Group may fail to obtain new insurance or reinsurance business

The Group may fail to obtain new insurance or reinsurance business at the dbe no assurance that business will be available to the Group on terms or at a pto be attractive, nor can there be any assurance that if such terms or pricing econtinue.

1.3 Cyclicality of insurance business may produce significant fluctuations

The insurance business has historically been cyclical, with significant fluc

results due to competition, general economic and social conditions and otbroking conditions generally reflect the performance of the underlying sinsurer active primarily in the construction industry will be exposed to thethat industry, leading to a downturn in insurance premiums. This cyclicalitycharacterised by intense price competition due to excess underwriting capawhen shortages of capacity permitted favourable premium levels. In add


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applicable laws and regulations will occur in the future. The Group cannotany proposed or future law or regulation may have on the financial cooperations of the Group. It is possible that the Group may be adversely aapplicable laws or regulations or in their interpretation or enforcement.

2. Risks relating to the Group

2.1 Cyclicality of the Groups insurance business

As a broker, the Group is not exposed directly to underwriting losses. Hincome is affected by the state of the insurance market generally, and thiscyclical. In a soft market it is common for brokers to reduce commission percclients, adversely affecting their profitability. In addition, Cobra Underwritiprofit share of 40 per cent. of any underwriting profits derived from its poliexposed to underwriting losses, variations in underwriting profits will cauGroups profit share.

2.2 Prolonged disruption to IT Systems

The Group relies upon the proper operation of its IT and other critical infperform and manage the services it provides to its customers. If the Groupinfrastructure systems were to experience significant errors or prolonged

disrupt the Groups activities and cause it to fail to meet its customers expadversely affect the Groups reputation, operating results and business pro

2.3 Loss of key management or personnel

The Groups business is highly reliant on the continued services of its senior mits executive Directors, the Senior Managers and other key personnel. Therevenue, marketing, financial and administrative skills that are critical to thoperation of the Groups businesses. Failure to retain such individuals, whwish to enter into the employment of the Groups competitors or otherwise, and retain strong management staff in the future, could have an adverse efbusinesses, financial condition and the results of its operations. Furthinterruption in the services of one or more members of senior managemconsequences.

2.4 Physical damage to infrastructure

The ability of the Group to perform the services it provides to its customongoing ability to occupy its premises, and the continued normal operatDamage to its premises and equipment resulting from, for example, fire, floodthe Groups activities and prevent it from properly performing its contracshort to medium term, whilst repair works are carried out. This could adverbusiness, financial condition and the result of its operations.


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contractual relations with a supplier for external reasons unrelated to thGroup, for harm to the reputation of the Group. The loss by the Group of ahave wider profit and cash flow implications.

2.7 Interest rate riskThe Companys interest costs in respect of its floating rate borrowings will irising interest rates. Rising interest rates may also have a more general econolower demand for the services which the Group provides, with a potential financial performance.

2.8 Recent and future acquisitions may be difficult to integrate

The Group has made, and is likely to make further, strategic acquisitio

businesses, assets and companies, to accelerate growth and increase revenextent that the Group is unable to integrate successfully the operations, retaor customers, where applicable, and avoid unforeseen costs and delays, financial condition and the results of its operations may be adversely affecacquisition requires considerable management attention and this divermanagement of the Group could adversely affect the Groups operating resuresult of the prior membership of the Network of many of the businesses andGroup may acquire, the Directors and other managers of the Company and

conduct only limited due diligence prior to such acquisitions, with theproblems relating to the assets, personnel and financial performance, inter aand companies may arise after completion of any such acquisition.

3. Risks relating to the Ordinary Shares

3.1 AIM

The Ordinary Shares will be admitted to AIM and it is emphasised that no app

for the admission of the Ordinary Shares to the Official List or to any othinvestment in shares quoted on AIM may be less liquid and carry a higher riskshares quoted on the Official List. The rules of AIM are less demanding thaList. Further, the London Stock Exchange has not itself examined or approvdocument. A prospective investor should be aware of the risks of investing ishould make the decision to invest only after careful consideration and, if appwith an independent financial adviser.

3.2 Market risk the value of Ordinary Shares may go down as well as uFollowing Admission, it is likely that the Companys share price will fluctuaaccurately reflect the underlying value of the business. The value of Ordinaras well as up and investors may lose some or all of the original sum invested. Tmay realise for their holdings of Ordinary Shares, when they are able to do soa large number of factors, some of which are specific to the Company an


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Stock markets have from time to time experienced severe price and vrecurrence of which could adversely affect the market price for the Ordina

3.3 No assurance that an active trading market will develop

As there has been no public trading market for the Ordinary Shares, there caan active trading market will develop or, if one does develop, that it will bemarket primarily for emerging or smaller companies and may not provide associated with the Official List or other stock exchanges.

3.4 Future sales or issues of Ordinary Shares may affect their market pri

The Company cannot predict what effect, if any, future sales or further issuor the availability of Ordinary Shares for future sale, will have on the marShares. Sales or further issues of substantial amounts of Ordinary Sharesfollowing Admission, or the market perception that such sales or further issmaterially adversely affect the market price of Ordinary Shares and may maShareholders to sell Ordinary Shares at a desirable time and price.

3.5 Holding company structure and restrictions on dividends

The Company is a holding company and it is not currently envisaged that it

brokerage or similar operations of its own. Dividends from subsidiaries aCompanys main source of funds to pay expenses and dividends, if any. It is udividends will be declared by the Company to Shareholders (which will be aBoard after taking into account many factors (including those summariseFactors of this document)) and, in particular, the dividend policy described inon the Group of this document should not be construed as a forecast of pr

All dividends will, in any event, be subject to the future financial perforincluding results of operations and cash flows, the Groups financial

requirements, general business conditions, and any other factors the Directheir discretion, which will be taken into account at the time.

The other members of the Group may from time to time also be subject tability to make distributions to the Company, as a result of a number of fadistributable reserves, restrictive covenants contained in loan or other finaregulatory, fiscal or other requirements. There can be no assurance that suchave a material adverse effect on the Groups results of operations o

Furthermore, any change in the tax treatment of dividends or interest receivedreduce dividend payments to Shareholders.

Although the Directors will seek to minimise the impact of the risk factoCompany should only be made by investors able to sustain a total loss of theare strongly recommended to consult an investment adviser authorisedspecialises in investments of this nature) before making a decision to invest


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By their nature, forward-looking statements involve risks and uncertaintiesevents and depend on circumstances that may or may not occur in the futstatements are not an assurance of future performance. The Groups actufinancial condition, liquidity, prospects, growth, strategies and the industr

operates, may differ materially from those suggested by the forward-lookingin this document. In addition, even if the Groups results, operations, financiprospects, growth, strategies and the industry in which the Group operates, forward-looking statements contained in this document, those results or devindicative of results or developments in subsequent periods.

Prospective investors must read, in particular, the parts of this documentFactors, Part III Information on the Group, Part IV Details of the Historical Financial Information, for a more complete discussion of the facto

Groups future performance and the industry in which the Group operates.uncertainties and assumptions, the events described in the forward-lookdocument may not occur.

Any forward-looking statements in this document reflect the Groups currenfuture events and are subject to risks relating to future events and other riassumptions relating to the Groups results, operations, financial conditiongrowth, strategies and the industry in which the Group operates. Investo

consider the factors identified in this document which could cause actual rmaking an investment decision. Other than in accordance with the Compathe AIM Rules, the Company undertakes no obligation to update orforward-looking statements, whether as a result of new information, futur

Neither the forward-looking statements nor the underlying assumptions audited by any third party.


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PART II

Key information

The following information does not purport to be complete and is derived frentirety by, and should be read in conjunction with, the more detailed ielsewhere in this document.

Any decision to invest in Ordinary Shares should be based on the consideratia whole.

See Part I Risk Factors for a discussion of certain factors that must be takconsidering whether to acquire Ordinary Shares.

1. Introduction

The Group was formed in 2006 through the amalgamation of six separate coparent company, Cobra Holdings, creating a business capable of providing ain five distinct areas of the insurance market.

2. Principal business areas

Cobra Network

Cobra Network operates a network of small independent brokers (providing them with access to a panel of selected major underwriters.

There is a trend in the industry for major underwriters to work with brsubstantial levels of business. This creates difficulties for smaller brokersaccess to the larger underwriters and has contributed to the growth of Cobramembers with a combined annual premium income in excess of 350 milli

The Network was established in June 2003 and is one of the fastest commercial insurance brokers in the UK. Through the Network, independenare offered the benefits of working together to compete more effectivecompetitive marketplace.

Cobra Network undertakes much administrative work which would otherwsaving them costs. Cobra Network generates revenues in five ways: (i) combonus target over-rider; (iii) profit share; (iv) marketing allowance; and (v) these amounted to c2.7 million.

Cobra Insurance Brokers

Cobra Insurance Brokers (formerly Truman Lincoln Limited) comprises theof BKG Insurance Brokers, BKG Corporate Risks and Truman Lincoln Limitrading history stretching back over a decade. The former companies were foN t k


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markets and also places re-insurance for underwriters. There are three distinwithin Cobra London Markets: being liability (specialising in employers liand products for high-risk areas); property; and international (with busineclients on both a direct and reinsurance basis).

Cobra London Markets has an established and dedicated business unit exMembers. The team comprises eight experienced Lloyds brokers and actscontact for all Network Members, providing professional expertise and assiMembers need to use the Lloyds market.

Cobra Underwriting Agencies

Cobra Underwriting Agencies was incorporated in 2003. The principal act

during 2006 was that of the provision of underwriting agency services tCobra Underwriting Agencies is expected to underwrite premiums in exces2007. The Directors believe that this figure will rise to 18 million du31 December 2008. Cobra Underwriting Agencies employs qualified, expand administrators to provide a range of bespoke and enhanced covers and dGroup Companies and all Network Members.

Cobra Financial Services

Cobra Financial Services, formerly BKG Financial Services Limited, is an adviser. Cobra Financial Services is focused on providing insurance-based, assistance to a broad range of companies, directors and staff as well as privatpast 24 months it has entered into joint ventures/partnerships with professioof solicitors and accountants, to provide advice to high net worth individualcompanies client bases.

Cobra Insurance Management

Cobra Insurance Management provides management solutions for the entiremergers and acquisitions, human resources for training and competence, cgroup marketing, procurement and facilities management.

Acquisition consolidation is seen by the Directors to be of key importandivision has successfully assisted in creating and managing merger solutionof acquired businesses: the Network utilises the services of Cobra Insurance and police effective human resources and training.

3. Commission arrangements, financial information and prospects

Commission income is generated in a variety of ways. Normally commerccommission is in the range of 16 18 per cent. of the premiums. The arrangements with the panel insurers enhance the commission by a minimumC b U d iti A i li i ld t N t k M b th


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The constituent parts of the Group have come together over recent yearshistorical accounts for the group as a whole covering the last three years. Cowhich incurred losses before it was managed by the Group has been restor

The profitability and prospects of the Group have improved as a result

Network (which led to improved commission rates as described above anvolumes), the widening of the range of insurance products and services offeother operating efficiencies. The state of the insurance market, which has hisoffers scope for further improvements as do new products such as the receprovided by Cobra Underwriting Agencies.

4. Directors and senior management

Management track record of delivering performance

The Board believes that the executive Directors, led by Stephen Burrows, have demonstrated the ability to deliver organic growth and to integrate acquof the operational management of the Group has been involved in the mancompanies for a considerable period of time. The Directors believe that the grlow turnover of broking and support staff reflect the culture developed wit

Experienced broking teams

COBRA has built broking teams with considerable experience in both thsectors, which in turn have established long-term relationships with clients Senior Managers and directors, inter alia, are subject to Lock-in Agreemen

5. Corporate strategy

The Directors intention after Admission is to acquire insurance brokers acentres throughout the UK. This will allow the Group to expand its operatiolocations.

The Group intends to fund acquisitions from a variety of sources. In particutilise soft loans that a number of insurance companies are prepared to Company; (ii) use its own resources; (iii) use bank facilities; (iv) use the proceOrdinary Shares; or (v) a combination of all four.

The Group has an established and continuing process for identifying anacquisition opportunities. This process is focussed on retaining key relationships and includes working with the management of the business to a business plan for its operation as part of the Group.

The acquired companies are expected to benefit from additional brokerage Groups enhanced commission arrangements described in paragraph 3 abo

The Company has signed an option to acquire Tubbs Insurance Services, a Swhich generated commission income of approximately 800,000 du31 December 2006 and other potential acquisitions are currently being ne


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PART III

Information on the Group

1. Background to the GroupThe Group was formed in 2006 through the amalgamation of six separate coparent company, Cobra Holdings, creating a business capable of providing ain five distinct areas of the insurance market.

2. Principal Business Areas

2.1 The Company

Since incorporation, the Company has brought together Cobra Insurance B

the businesses of BKG Insurance Brokers, BKG Corporate Risks and TrumCobra Financial Services (formerly BKG Financial Services Limited), Co(formerly G.A.L, the Lloyds wholesale broker), Cobra Network (formerlyAlliance Limited), Cobra Underwriting Agencies, Cobra Insurance MaCorporate Solutions under a single parent company. Further details relatpursuant to which the Company acquired these companies can be found Part VI Additional Information.

The Company provides head office functions and other administrative businesses.

2.2 Cobra Network

Cobra Network operates a network of small independent brokers (providing them with access to a panel of selected major underwriters.

There is a trend in the industry for major underwriters to work with brsubstantial levels of business. This creates difficulties for smaller brokers

access to the larger underwriters and has contributed to the growth of Cobramembers with a combined annual premium income in excess of 350 milli

The Network was established in June 2003 and is one of the fastest commercial insurance brokers in the UK. Through the Network, independenare offered the benefits of working together to compete more effectivecompetitive marketplace.

Membership of Cobra Network is free (subject to meeting certain qualificati

at attracting commercially orientated insurance brokers currently controlliWritten Premiums in excess of 1 million. Network Members retain theindependence and their respective insurer agency agreements remain unaffemade available to Network Members, although it is normally restricted toPremier status confers certain benefits on relevant Network Members, inclustandards, additional commissions and increased payment period terms


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trading history stretching back over a decade. The former companies were foNetwork.

Cobra Insurance Brokers, which is authorised and regulated by the FSA, has profits and is an independent commercial insurance broker providing a winsurance solutions aimed at both the commercial and private sectors. As an broker, with wide access to the market, it is able to source insurance prrequirements at competitive rates.

2.4 Cobra Corporate Solutions

Cobra Corporate Solutions was recently formed to service and develop clients, previously managed within Cobra Insurance Brokers. Cobra Corpor

the placement of risks with substantial capacity requirements, complex insuexposures.

2.5 Cobra London Markets

Cobra London Markets, which became wholly owned by the Group in Aprinsurance broker authorised and regulated by the FSA. Cobra London Maboth the Lloyds and non-Lloyds markets and also places re-insurance for

There are three distinct operating divisions within Cobra London Ma(specialising in employers liability, public liability and products for hiscaffolders and contractors), property (with niche areas in commercial business) and international (with business placed for clients from the United East and Australia amongst other territories on both a direct and reinsuran

Cobra London Markets has an established and dedicated business unit exMembers. The team comprises eight experienced Lloyds brokers and acts

contact for all Network Members, providing professional expertise and assiMembers need to use the Lloyds market.

2.6 Cobra Underwriting Agencies

Cobra Underwriting Agencies was incorporated in 2003. The principal actduring 2006 was that of the provision of underwriting agency services tCobra Underwriting Agencies was initially incorporated to provide insuraFollowing the change of business, Cobra Underwriting Agencies is ex

premiums in excess of 8 million during 2007. The Directors believe that18 million during the year ending 31 December 2008. Cobra Underwritqualified, experienced underwriters and administrators and uses bespoke into maximise efficiency. The Directors believe that this company will furtherthrough providing a range of bespoke and enhanced covers and discounteCompanies and all Network Members It is authorised and regulated by th


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2.8 Cobra Insurance Management

Cobra Insurance Management provides management solutions for the entiremergers and acquisitions, human resources for training and competence, cgroup marketing, procurement and facilities management.

The Directors view Cobra Insurance Management as a vital element in aoverall growth strategy. A specific team has been created to control this sectioresponsibilities include, target identification, interviewing, negotiating, anrecommendations to the Board for approval. A templated approach has beeensure consistency.

Acquisition consolidation is seen by the Directors to be of key importandivision has successfully assisted in creating and managing merger solution

of acquired businesses: the Network utilises the services of Cobra Insurance and police effective human resources and training.

3. Financial Information

The financial information in Part V Historical Financial Informatioconsolidated financial information of the Company for the two years ended 3aggregated financial information of the Company for the two years ended 3

the various businesses that comprised the Group as at 31 December 2006financial information of Cobra GAL (Holdings) for the 21 month period f31 December 2005 and the year ended 31 December 2006, which as of 2wholly owned subsidiary undertaking of the Company.

The changes to the Group structure have affected the financial information. Tfinancial information of the Company show turnover of 8.8 million (20profits before tax of 612,000 (2005: 1,350,000). The financial informa

relates only to Cobra Network whereas the 2006 information is for the whoprofits in 2006 were depressed by exceptional costs relating to the infrastructure for the growth of the Network and the integration of acquir

The 2006 consolidated financial information of Cobra GAL (Holding3.5 million (2005: 5.2 million) and a loss before tax of 872,000 (2005: turnover related to the loss of business following the departure of certain pe2007, when the Group took over the management of this company, it has redue to increased volumes of business and reduced overheads.

Commission income is generated in a variety of ways. Normally commerccommission is in the range of 16 18 per cent. of the premiums. The arrangements with the panel insurers enhance the commission by a minimumCobra Underwriting Agencies policies are sold to Network Members, thcommission is increased to approximately 20 per cent In addition Cobra U


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4. Corporate strategy

The Directors intention after Admission is to acquire insurance brokers acentres throughout the UK. This will allow the Group to expand its operatiolocations.

The Group intends to fund acquisitions from a variety of sources. In particutilise soft loans that a number of insurance companies are prepared to Company; (ii) use its own resources; (iii) use bank facilities; (iv) use the proceOrdinary Shares; or (v) a combination of all four.

The Group has an established and continuing process for identifying anacquisition opportunities. This process is focussed on retaining key relationships and includes working with the management of the business to a business plan for its operation as part of the Group.

The acquired companies are expected to benefit from additional brokerage Groups enhanced commission arrangements described in paragraph 3 abo

The Company has signed an option to acquire Tubbs Insurance Services, a Swhich generated unaudited commission income of approximately 800,00031 December 2006. Further details relating to the option agreement an

purchase agreement are set out in paragraph 12.5.10 of Part VI Additiondocument.

The Company is also currently at an advanced stage in the potential purbrokerage headquartered in the North West of England and has a pipelineWherever possible, the Company makes acquisitions on terms that considera period following completion of the acquisition and is adjusted in accordaperformance of the business being acquired. In addition, the Company enco

Ordinary Shares, rather than cash, as consideration. The deferral of considCompany ensures that the managers of the target businesses are tied into ttwo and three years.

5. Current trading and prospects

Current trading is in line with the Directors expectations and the recently acMarkets has returned to profitability. The Group is well positioned to t

changes in the insurance market.

6. Directors and senior management

6.1 Directors

Peter James Robinson (aged 65), Non-executive Chairman


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Stephen Mark Burrows (aged 46), Chief Executive

Stephen Burrows entered the insurance industry at the age of 17, working inibefore moving on to Berry Birch and Noble Plc at the age of 23. Stephen wasthe age of 25. In December 1988, Stephen formed Burrows, Keith & Ass

certain of his colleagues. Burrows, Keith & Associates Limited then becacompanies and ultimately part of the Group in 2006.

Stephen has focused over his insurance career on marketing and new busincommercial insurance industry. For the past 10 years Stephen has carriedexecutive officer and until recently was the chairman of the Company. He board of all trading companies in the Group, together with the acquiscompliance committees of Cobra Insurance Management and the Nominat

Hannah Poulton (aged 32), Finance Director

Hannah Poulton qualified as a chartered accountant in 1999 before wspecialising in regulated companies. In 2001, Hannah moved to Cobra Londaudit client, advancing to Finance Director in 2004. Hannah was appointedthe Company upon its incorporation in August 2005 and now sits on thcompanies in the Group, together with the acquisition and compliance Insurance Management and the Nomination Committee.

Stephen Michael Bullock (aged 46), Non-executive Director

Stephen Bullock is a chartered accountant specialising in corporate financeadvising and reporting on public company transactions. Following the mergpractices of MRI Moores Rowland LLP and Mazars LLP chartered accountadvisers, Stephen became a partner in Mazars LLP and a director of MazaLimited, an FSA registered corporate finance advisory practice. Stephen has eadvising on AIM transactions and acquisitions. Stephen is the chairman of

and a member of the Remuneration Committee.

David Harris (aged 56), Non-executive Director

David Harris is chief executive of InvaTrust Limited, which specialises in mato the investment and financial services industry. He writes articles regulartrade press on investment matters. His current directorships and partnershLimited, Premier Absolute Growth & Income Trust plc, Character Group Limited, Osprey Smaller Companies Income Fund Limited and Small Com

plc. David is the chairman of the Remuneration Committee and a member of

6.2 Senior Management

John Lincoln (aged 51), Executive Director Cobra London Markets, ManNetwork

John Lincoln began his insurance career in Lloyds in 1972 and worked in t


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in December 1988. This company grew through organic growth and acquinsurance group known as the BKG group of companies. Over 18 years responsibilities as a director have been varied, including the operationafinancial aspects of the business. Since 1995, he has been responsible for B

and the financial affairs of all BKG group companies.Following the sale of BKG Corporate Risks and BKG Insurance Brokers to tbecame commercial and financial director of Cobra Insurance Brokers. In aappointed managing director of Cobra Underwriting Agencies, tasked to invof an underwriting agency for the group. Michael is an Associate of theInstitute and a Chartered Insurance Broker.

Mark Zandler (aged 44) Managing Director Cobra Insurance Brokers, DirBatten

Mark Zandler started his insurance career in 1978 with the Prudential Assmotor underwriter and then fleet underwriter in 1980. He passed the HNDCroydon Technical College in 1981. In 1982 he became the manager odepartment before moving on to be appointed as a fire & accident insubsequently a general branch consultant in 1987, a role in which he was respand development of the Prudential corporate commercial account across 3

In 1991 he left to form Lincoln Insurance Services, an independent commeLincoln Insurance Services transacted a merger/management buyout with Tito form Lincoln Tilbury Steward Limited and Mark took on the role of operaLincoln Tilbury Steward Limited merged with Truman Insurance Services LiLincoln Limited where again Mark took on the role of operations director, sfor developing the established corporate account and running the day-to-daybusiness. In 2006, following a merger with the BKG Group of compani

Managing Director of Cobra Insurance Brokers. Mark was appointed a dirBatten in April 2007.

Lee Wallis, APFS, (aged 50) Managing Director Cobra Financial Services

Lee Wallis has over 30 years experience in the financial services sector workcompanies and IFA firms. Lees experience includes managing sales teams, trstaff as well as being a client adviser. Lee was formerly branch manager of tScotland in Croydon and director of Donald Duncan (Life & Pension

established in 1982. Lee joined the insurance industry in 1974, becomconsultant for Scottish Amicable.

Lee obtained the Advanced Financial Planning Certificate in 1994 aqualification in 1999, followed by the G70 Investment Portfolio Manage2003 Lee is an associate of the Personal Finance Society and is a past chairm


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For the past 17 years, apart from his role as managing director and moreTruman Lincoln Limited, Philips day-to-day roles have revolved aroumarketing. Following the formation of the Group, Philip was tasked wmarketing for the group and more recently was appointed managing directo

Solutions. This company was established to focus on and develop broking selargest retail clients.

Peter Bright (aged 50) Director of Cobra Insurance Brokers

Peter Bright joined Norwich Union in 1974 and left in 1977 to join local CrTownsend and Co. Limited. After running the general insurance division fPeter started his own broking business, P J Bright Insurance Brokers inexpanded to incorporate life and pensions work and Peter went on to prac

P J Bright Insurance Brokers merged with Cobra Insurance Brokers in June 2a shareholder and director of the Cobra Insurance Brokers group of compshareholding Director of the Company. Following the creation of the Grodirector of Cobra Insurance Brokers responsible for small business develop

Paul Andrew Bryant (aged 41), Group Human Resources Director

Paul Bryant began his insurance career in 1987 with APIA Limited, a compaLondon specialising in professional indemnity insurance for architects, beWrightson Limited in Kingston and completing his ACII in 1991. In 1990joined Philip Truman as a director of Truman Insurance Services (UK) Limthe following 11 years they built up a successful commercial brokerage Surrey. This culminated in a merger with Lincoln Tilbury Steward Limformation of Truman Lincoln Limited.

7. Lock-in AgreementsCertain Directors and Senior Managers whose names are set out in paragrap(with effect from Admission and subject to certain limited exceptions) underany interests in 28,818,252 of their Ordinary Shares for a period of Admission and to act in accordance with the reasonable requests of Fairfax interests in any of their Ordinary Shares between 12 and 24 months asignatories of Lock-In Agreements are not restricted from selling the balcomprising 5,085,572 Ordinary Shares. Further details of the Lock-in Agr

paragraph 12.2 of Part VI Additional Information.

8. Corporate governance

The Directors recognise the value of the Principles of Good Governance Practice set out in the 2003 Combined Code (the Combined Code).


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The Directors have adopted a share dealing code which imposes restrictionmembers of their families, Senior Managers and any employees of the Compare likely to be in possession of unpublished price sensitive information. Trequires that any such person obtain clearance before dealing in the Ordin

will not be given during any period in which the Company is in possessionsensitive information, and in particular during the periods running up announcement by the Company of its financial results.

9. Dividends

In the short to medium term it is the Directors intention to re-invest funds drather than fund the payment of dividends to Shareholders. Thereafter, thewill be subject to the availability of distributable reserves, the need to mainta

of dividend cover and the need to retain sufficient funds to finance the develoactivities.

10. Use of Placing proceeds

The proceeds of the Placing will be used to pay the costs of the Admission to provide general working capital for the Group.


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PART IV

Details of the placing and settlement

1. PlacingFairfax has undertaken to use its reasonable endeavours to place up to 1,023as agent for the Company, with investors at 97p per Ordinary Share. Theunderwritten, is conditional upon, inter alia, Admission by 5 July 2007, ornot later than 5 August 2007) as Fairfax and the Company may agree.

Under the Placing Agreement, which may be terminated by Fairfax in (including force majeure) prior to Admission, the Company has given cindemnities to Fairfax concerning, inter alia, the accuracy of the informadocument.

The Placing is intended to raise up to 993,054 for the Company before exPlacing is fully subscribed, the expenses of the Placing payable by the Comapproximately 775,000.

The terms of the Placing Agreement are summarised in paragraph 12.1 oInformation of this document.

Dealings in the Placing Shares on AIM are expected to commence on 5 Juplacees requesting their Placing Shares in uncertificated form, it is expectedCREST accounts will be credited with the Placing Shares comprising theirwith effect from 5 July 2007. In the case of placees requesting their Placingform it is expected that certificates in respect of such Placing Shares will be dlater than 16 July 2007. Pending despatch of definitive share certificates oaccounts, the Registrars will certify any instrument of transfer against the r

2. CRESTCREST is a paperless settlement procedure enabling securities to be evidencertificate and transferred otherwise than by written instrument in accordRegulations. The Articles permit the holding of Ordinary Shares under the COrdinary Shares will be in registered form and no temporary documents o

The Company has applied for the Ordinary Shares to be admitted to CRESTthe Ordinary Shares will be so admitted and accordingly enabled for settlemdate of Admission. It is expected that Admission will become effective and

Shares will commence on 5 July 2007. Accordingly, settlement of transactiofollowing Admission may take place within the CREST system if any Share

CREST is a voluntary system and holders of Ordinary Shares who wish to recertificates will be able to do so.


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PART V

Historical Financial Information

The Company was incorporated on 30 August 2005 and, as set out in paragraph 2.1on the Group of this document, brought together Cobra Insurance Brokers (incorpBKG Insurance Brokers, BKG Corporate Risks and Truman Lincoln Limited), C(formerly BKG Financial Services Limited), Cobra London Markets (formerly G(formerly Commercial Broking Alliance Limited), Cobra Underwriting AgenManagement and Cobra Corporate Solutions under a single parent compainformation in the form of consolidated financial information for the two years enand aggregated financial information for the two years ended 31 December 2005 (bincorporation of the Company and the acquisitions referred to above) has been prep

this document and does not constitute a statutory financial statement in accordancAct. Historical financial information is set out in this Part V as follows:

Section B historical consolidated financial information of the Company in respec31 December 2006. The acquisition by the Company of Cobra Network has bacquisition. As a result, the comparatives shown for the year ended 31 December Network.

Section D historical aggregated financial information of the Company in respec31 December 2005 of the various businesses that comprised the Group as at 31 Dece

of combination of the financial information is considered necessary to give a trunderlying results of those entities that were owned as at 31 December 2006. Asincorporated on 30 August 2005, this aggregated financial information provides anhistory of the Group. In accordance with Standards for Investment Reporting 2000,of the relevant entities have been aggregated with eliminations for intercompany tronly.

The aggregated financial information for the two years ended 31 December 2005presented in accordance with IFRS (except for the method of aggregation which is

Business Combinations) and in accordance with the accounting policies of the C

Section F historical consolidated financial information of Cobra GAL (Holdingsfrom incorporation on 16 March 2004 to 31 December 2005 and the year ended 3as of 2 April 2007 became a wholly owned subsidiary undertaking of the Compan

Sections A, C and E of this Part V set out reports from Baker Tilly Corporate FinaReporting Accountants, in respect of the above historical financial information.

The Directors are required to prepare the financial information in a form consisten

adopted in the Companys next published annual financial statements having restandards, policies and legislation applicable to such annual financial statements.International Financial Reporting Standards (IFRS), the financial information is rfair view of the state of affairs of the Company for that period. In preparing the finDirectors are required to:

(i) select suitable accounting policies and apply them consistently;


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Section A Accountants report on the consolidated historical financial informa

The following is the full text of a report on Cobra Holdings Limited from Baker Tillythe Reporting Accountants, to the Directors of Cobra Holdings PLC.

2 BLoww

The DirectorsCobra Holdings PLC110 Fenchurch StreetLondonEC3M 5JT

Dear Sirs

Cobra Holdings PLC (the Company)

We report on the consolidated financial information set out Section B of Part V of ththe Company dated 29 June 2007 (Admission Document). This consolidated fibeen prepared for inclusion in the Admission Document on the basis of the accountin1 of Section B.

This report is required by paragraph 20.1 of Annex I of the Prospectus Rules as appliTwo to the AIM Rules and is given for the purpose of complying with that para

purpose.

Save for any responsibility arising under paragraph 20.1 of Annex I of the Prospectu(a) of Schedule Two to the AIM Rules to any person as and to the extent there provpermitted by law we do not assume any responsibility and will not accept any liabilitany loss suffered by any such other person as a result of, arising out of, or in connectistatement, required by and given solely for the purposes of complying with paragrapProspectus Rules as applied by part (a) of Schedule Two to the AIM Rules, consentAdmission Document.

Responsibilities

As described on the front page of this document, the Directors of the Company are rthe financial information on the basis of preparation set out in note 1 to the historicasuch Section B and in accordance with International Financial Reporting StandEuropean Union


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Opinion

In our opinion, the consolidated financial information gives, for the purposes of thetrue and fair view of the state of affairs of the Company as at the dates stated and of ichanges in equity for the periods then ended in accordance with the basis of preparsuch Section B and in accordance with International Financial Reporting StandEuropean Union as described in that note.

Declaration

For the purposes of part (a) of Schedule Two to the AIM Rules we are responsible forAdmission Document and declare that we have taken all reasonable care to ensucontained in this report is, to the best of our knowledge, in accordance with thomission likely to affect its import.

Yours faithfully

Baker Tilly Corporate Finance LLP

Regulated by the Institute of Chartered Accountants in England and Wales

Baker Tilly Corporate Finance LLP is a limited liability partnership registered in England and Wales, regthe names of members is open to inspection at the registered office 2 Bloomsbury Street London WC1


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Section B CONSOLIDATED FINANCIAL INFORMATION OF THE

Consolidated Income Statements

Yea31 De

Note

RevenuesCommissionsInterest and investment income 7Other operating income

3

Operating expensesOperating profitFinance costs 8

Profit before amortisation and depreciationAmortisation and depreciation

Profit before taxTaxation 9

Profit after tax of consolidated companiesShare of losses of associate 12

Profit/(loss) for the year

Earnings/(loss) per share:Basic and fully diluted 22

All amounts relate to continuing activities.

The loss for the year is attributable to the equity shareholders of the Company.


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CONSOLIDATED FINANCIAL INFORMATION OF THE COM

Consolidated Balance Sheets

31 De

Note

ASSETSNon-current assetsProperty plant and equipment 10Investments 12Goodwill and other intangibles 11

Current assetsTrade and other receivables 13Cash and cash equivalents 14

Total assets

EQUITY AND LIABILITIES

Non-current liabilitiesBorrowings 16Other non-current liabilities 17Finance lease obligations 18

Current liabilitiesBorrowings 16

Current tax liabilitiesDeferred tax 20Finance lease obligations 18Trade and other payables 15

Total liabilities

EquityShare capital 21Acquisition reserveRetained earnings

Total equity

Total equity and liabilities


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Consolidated Statement of Changes in Shareholders Equity

Sharecapital

AcquisitionReserve

Re

000 000At 1 January 2005 1 Profit for the year

At 31 December 2005 1 Shares issued 8,424 Reverse acquisition (1) (4,032)Loss for the year

At 31 December 2006 8,424 (4,032)

The acquisition reserve arose on the deemed reverse acquisition of the Company by C1 January 2006.

The acquisition reserve comprises loan notes totalling 2,723,000 issued to the formNetwork and 1,309,000 being the excess of the fair value of consideration paid by value of net assets of Cobra Network.


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Consolidated Cash Flow Statements

Yea31 De

Note

Cash flows from operating activitiesCash generated from operations 26Income taxes paid

Net cash generated from/(utilised by) operating activities

Cash flows from investing activities

Proceeds from sale of property, plant and equipmentPurchase of property, plant and equipmentFinance lease interest paidAcquisition of subsidiaries, net of cash acquired 27

Net cash (utilised by)/generated from investing activities

Cash flows from financing activitiesNew borrowingsRepayment of borrowingsBank interest paidRepayment of finance leases

Net cash (utilised by)/generated from financing activities

Total cash and cash equivalents movementCash and cash equivalents at the beginning of the year

Cash and cash equivalents at the end of the year


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Notes to the Consolidated Financial Information

1. Accounting Policies

The financial information has been prepared in accordance with International Finanas adopted by the European Union (IFRS) that are effective at 31 December 2006

Basis of preparation

The Company is the holding company of a group of companies whose principalnetwork, wholesale and retail insurance broker, underwriting agency and financiaGroup was formed in 2006, through the amalgamation of six separate companientity, creating a business capable of providing a wide range of services in the insu

The financial information has been prepared in accordance with IFRS as adopted Group has taken the transitional provision in IFRS 1 to treat the net book value oftransition to IFRS as the deemed cost.

The Company has assessed pronouncements issued by the International Accountinwere in issue but not in force at 31 December 2006.

IFRS 7 (Effective for accounting periods beginning on or after 1 January 2007)additional disclosure concerning the financial instruments used by, and financialHowever, given the companys limited use of financial instruments and straightforthe impact will be very restricted.

IAS 1 (Revised version effective for accounting periods beginning on or after 1 Januto this standard will require some additional disclosures concerning the Company

IFRS 8 (Effective for accounting periods beginning on or after 1 January 200disclosure of segmental information based on the format used for reporting to themaker within the Group. It will not affect the total amounts presented in the finan

In addition, the following interpretations were in issue but not yet effective:

IFRIC 7 (Effective for accounting periods beginning on or after 1 March 2006). T

restatement approach under IAS29, Financial Reporting in Hyperinflationary EcoIFRIC 8 (Effective for accounting periods beginning on or after 1 May 2consideration of transactions involving the issuance of equity instruments, consideration received is less than the fair value of the equity instruments issued, to they fall within the scope of IFRS 2.

IFRIC 9 (Effective for accounting periods beginning on or after 1 Novemberreassessment of the embedded derivatives.

IFRIC 10 (Effective for accounting periods beginning on or after 1 November 2

impairment losses recognised in an interim period in goodwill, investments in investments in financial assets carried at cost, to be reversed at a subsequent balan

IFRIC 11 IFRS 2 Group and Treasury Share Transactions (effective for accountingafter 1 March 2007). This provides guidance on accounting for share based paymsubsidiary undertakings.

IFRIC 12 Service Concession Agreements (effective for accounting periods beginn

T T T


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The purchase method of accounting is used to account for the acquisition of subsidcost of an acquisition is measured as the fair value of the assets given, equity instrumincurred or assumed as at the date of exchange, plus costs directly attributable to

Functional currency and foreign exchange

Items included in the financial information of the Company are presented and measucurrency of the primary economic environment in which the Company operates.

The Company had no transactions in a currency other than the functional currenc

Significant judgements and estimates

In preparing the financial information, management is required to make estimate

affect the amounts represented in the financial information and related discloinformation and the application of judgement are inherent in the formation of estimfuture could differ from these estimates, which may be material to the financial infareas in which judgement is applied are as follows:-

Valuation of the assets of the subsidiaries at the point of acquisition

Recoverability of trade receivables

Identification of separable intangible assets arising on acquisition

Useful lives of intangible assets

Business combinations

In accordance with IFRS 3, the acquisition by the Company of Cobra Network hasacquisition, since control of the Company passed to the previous shareholders of Cobno goodwill or intangible assets have been recorded as a result of this transactioshown for the consolidated statements and notes are those of Cobra Netwo31 December 2005. The actual comparative period for Cobra Holdings wa31 December 2005.

All other business combinations have been accounted for using the purchase methobasis of consolidation accounting policy.

Goodwill and intangible assets

IFRS 3 requires that on an acquisition the difference between the cost of acquisitionnet assets acquired be analysed between goodwill and specific intangible assets acq

In the opinion of the directors, specific intangible assets met the criteria for separate racquisitions in the year and these are disclosed in note 11.

Goodwill arising on the acquisition of a subsidiary represents the excess of the cosGroups interest in the net fair value of the identifiable assets, liabilities and consubsidiary recognised at the date of acquisition. Goodwill is initially recognised asubsequently measured at cost less any accumulated impairment losses.

For the purpose of impairment testing goodwill is allocated to each of the Group



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Costs include costs incurred to acquire or construct an item of property, plant aincurred subsequently to add to, replace part of, or service it. If a replacement ccarrying amount of an item of property, plant and equipment, the carrying amount o

derecognised.Property, plant and equipment are carried at cost less accumulated depreciation an

Depreciation of property, plant and equipment

Depreciation is provided to write off the cost or valuation, less estimated residual valand equipment evenly over their expected lives. It is calculated at the following rat

Leasehold property improvements Term of the leaseFixtures and fittings and computer equipment 25-33% on cost

Motor vehicles 20% on cost

Assets under finance leases

Where assets are financed by leasing agreements (including hire purchase agreapproximate to ownership (finance leases), the assets are treated as if they were pamount capitalised is the present value of the minimum lease payments payable over corresponding leasing commitments are shown as amounts payable to the lessrelevant assets is charged to the income statement. Lease payments are analysed bet

components. The interest element of the payment is charged to the income stateinterest method.

Revenues

The Group generates revenue from commission and fees associated with the placeinsurance contracts and policies and related activities, together with the placemproducts.

In the broking related companies, credit is taken for commission and other netwocontractual entitlement. Alterations in commission arising from premium adjustmenas and when such adjustments are notified. To the extent that the Company is provide services after this date, a suitable proportion of income is deferred and recorelevant contracts to ensure that revenue appropriately reflects the costs of fulfilm

In the financial services related companies, commissions are recognised on the date is completed and renewals are recognised on their renewal date. Fees for investmentthe period in which the advice is given.

Interest income

Interest income is recognised as earned and includes interest earned in cash flows arof insurance broking receivables and payables. As interest income forms an inteoperating activities it is included in operating income.

Operating leases

h h fi l d l h l l



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Taxation

The current tax expense is based on the taxable profits for the year, after any adjustyears. Tax, including tax relief for losses if applicable, is allocated over profits befo

charged or credited to reserves as appropriate.Provision is made for deferred tax liabilities, or credit taken for deferred tax assets, uon all material temporary differences between the tax bases of assets and liabilamounts in the consolidated financial statements.

The principal temporary differences arise from depreciation of property and equipmsubstantively enacted at the balance sheet date are used to determine the deferred

Deferred tax assets are recognised to the extent that it is probable that future taxabagainst which the temporary differences can be utilised.

Retirement benefit costs

Pension scheme contributions to the Groups money purchase schemes are chargedin the period to which they relate.

Financial Instruments

Cash and cash equivalents

Cash and cash equivalents are measured at fair value and comprise cash balances, ccall.

Trade and other receivables

Trade and other receivables do not carry any interest and are stated at their nomiappropriate allowances for estimated irrevocable amounts.

Trade and other payables

Liabilities are recognised for amounts to be paid in the future for goods or services billed to the Company. The amounts are unsecured, non-interest bearing, are normaand are stated at cost.

Insurance receivables and payablesCertain subsidiaries of the Company act as agents in broking insurable risks of clieliable as a principal for premiums due to underwriters or for claims payable to clienlegal relationship with clients and underwriters, the Group has followed industrbrokers by showing receivables, payables and cash balances relating to insurancliabilities of the company itself. This recognises that the company is entitled to retaion any cash flows arising from these transactions.

Insurance receivables and payables and client monies held are recognised as gross a

balance sheet.Borrowings

Borrowings are recognised initially at fair value, net of transaction costs insubsequently stated at amortised cost. Any difference between the proceeds and recognised in the income statement over the period of the borrowing using the effect



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If there is any indication that an asset may be impaired, the recoverable amount is estasset. If it is not possible to estimate the recoverable amount of the individual asset, ththe cash-generating unit to which the asset belongs is determined.

The recoverable amount of an asset or a cash-generating unit is the higher of its fair vits value in use.

If the recoverable amount of an asset is less than its carrying amount, the carryinreduced to its recoverable amount. That reduction is an impairment loss.

A reversal of an impairment loss of assets carried at cost less accumulated depreciatithan goodwill is recognised immediately in profit or loss. Any reversal of an impaiasset is treated as a revaluation increase.

2. Segmental reporting

Business segments

Based on risks and returns, the Directors consider that the Group had only two busiyear ended 31 December 2006:-

Provision of independent financial advice (being Cobra Financial Services)

Provision of reinsurance and insurance intermediary, risk advisory and re(including all other companies in the Group)

2006

Revenue

Depreciationand

AmortisationProfit

After Tax

Share ofLoss of

Associate000 000 000 000

Insurance Intermediary 7,856 397 1,792 (314)

Financial Advice 1,088 49 97 Shared costs/net assets (1,587) Other operating income 12

8,956 446 302 (314)

2005

Revenue

Depreciationand

Amortisation

Profit

After Tax

Share ofLoss of

Associate000 000 000 000

Insurance Intermediary 2,537 25 926 (65)Financial Advice Share costs/net assets Other operating income 12



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4. Profit before tax

Yea31 De

Profit before tax is stated after charging/(crediting):Depreciation of owned and leased property, plant and equipmentAmortisation of customer relationshipsStaff costsOperating lease rentals landAuditors remuneration audit of the Company and

consolidated information audit of the Companys subsidiaries taxation services other services

5. Particulars of employees

The average number of employees, including executive directors, employed by the Gyear amounted to:

Yea31 De

Number of administrative staff

The payroll costs of the above were:

Wages and salaries

Social security costsBenefits in kindOther pension costs

6. Auditors remuneration

Yea

31 De

Audit services Fees payable to the Companys auditor for the audit of the parent

company and consolidated accounts



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7. Interest and investment income

Yea31 De

Interest receivableOther investment income

8. Finance costs

Yea31 De

Bad debtsFinance lease interestInterest payable

9. Taxation

Yea31 De

Note

Major components of the tax expense/credit:Income tax expense current period

Over provision in prior year

Income tax expenseDeferred tax 20

Taxation differs from the standard rate of corporation tax inthe UK (30%) as applied to the profits as explained below:

Profit before tax

Profit multiplied by the standard rate of tax in the UK of 30%Effects of:Expenses not deducted for tax purposesShort term timing differences between capital allowances anddepreciationAdj i f i



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10. Property, plant and equipment

Leasehold

propertyimprovements

Fixtures,fittings and

computerequipment

000 000CostAt 1 January 2006 76Additions on business combination 25 246Additions 10 44Disposals

At 31 December 2006 35 366DepreciationAt 1 January 2006 27Charge for the year 4 89Disposals

At 31 December 2006 4 116

Net book value at 31 December 2006 31 250

CostAt 1 January 2005 40Additions 37

At 31 December 2005 77

DepreciationAt 1 January 2005 14Charge for the year 13

At 31 December 2005 27Net book value at 31 December 2005 50

Included within the net book values of property, plant and equipment is 337,000 (2to assets held under finance lease agreements. The depreciation charged in the yearamounted to 80,000 (2005: 35,000).

11. Goodwill and other intangibles

Goodwill rel000

CostAt 1 January 2005 and 1 January 2006 Additions on business combinations (note 25) 5,469

At 31 D b 2006 5 469



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Goodwill was allocated for impairment testing purposes to the following five cash

Cobra Insurance BrokersCobra Financial Services

Cobra NetworkCobra Underwriting AgenciesCobra Tubbs Batten

The recoverable amount of the cash-generating units is determined based on a valuecash flow forecasts.

The cashflow forecasts were prepared for each cash generating unit, based on tincluded in the Groups business plan for 2007 and 2008 and extended for 200projections based on broadly consistent growth assumptions. The projections were payments to arrive at operating cash flows. The five year cash flows have been disccent. The composite cost of capital is derived from the Groups borrowing rate andraising equity.

The carrying amount of goodwill allocated to the cash generating units is as follow

31 De

Cobra Insurance BrokersCobra Financial ServicesCobra Underwriting AgenciesCobra Tubbs Batten

Customer relationships

In accordance with the Groups accounting policy, a review of the businesses acquirvalue of 2,549,000 was attributed to customer relationships acquired with certai

The valuations have been based on an income approach which is considered by tsuitable for the appraisal of assets such as contracts and contractual relationships. the extent to which future income streams that are likely to be receivable as a concontractual relationships.

A discounted cash flow method has been used to calculate a business enterprise generating unit. These calculations have been prepared only in order to establish an ato apply to each cash generating unit.

The discount rate applied to the subsequent valuations has been arrived at by appleach reporting unit.

Key assumptions underlining the valuations are as follows:



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12. Investments

Investment inassociate

000Cost of investment 229Impairment (65)

At 31 December 2005 164Addition on business combination Further impairment (164)

At 31 December 2006

The investment comprises a holding of 40 per cent. of the issued share capital of comprising 1 ordinary shares. The company is incorporated in England & Wcompany of Cobra London Markets.

The consolidated financial information of Cobra GAL (Holdings), as set out in Sedocument, shows that as at 31 December 2006, the company had consolidated asse28,615,000) and consolidated liabilities of 27,085,000 (2005: 28,205,000). Tloss for the year ended 31 December 2006 was 785,000, of which 40 per cent. (31in the income statement (2005: 65,000).

In 2005, the carrying value of the investment in the associate was reduced to the neGAL (Holdings). In 2006, the Group has accounted for its full share of the losses ainvestment carrying value has been deducted from amounts due from the associate

Other investments relate to unquoted equities. The directors consider that the investments approximates their fair value.

13. Trade and other receivables

31 De

Trade receivablesAmounts due from associateOther receivables

Included within trade receivables is 1,784,000 (2005: nil) relating to insurance

The directors consider that the carrying value of trade and other receivables appro

14. Cash and cash equivalents



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15. Trade and other payables falling due within one year

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Deferred consideration (see note 17)Trade payablesOther taxation and social securityOther payablesAccruals and deferred income

Included within trade payables is 3,883,000 (2005: nil) relating to insurance br

The directors consider that the carrying value of trade and other payables approxi

16. Borrowings

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No later than 1 yearLater than 1 year and no later than 5 years repayable monthly until 2011

Total

As at 31 December 2006, the Group had 1,350,000 (2005:nil) outstanding onBarclays Bank plc, repayable in half yearly instalments to December 2011. The loandebenture and cross-guarantee from the following subsidiaries:



Cobra Network


In addition, the Group had 1,157,000 (2005: Cobra Network: 112,000) outstaloans from Premium Credit Limited. The loans from Premium Credit Limsecond-ranking company debenture and cross-guarantee from the following subsi



Cobra Network




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The deferred consideration relates to the acquisition of the entire issued share caMarrington by the Company on 12 April 2006 and is payable in two instalments in JThe balance is wholly payable in cash and depends on commissions generated in

30 April 2007 and 30 April 2008.The loan notes relate to consideration in respect of the acquisition of the entire isssubsidiaries of the Group by the Company. The loan notes issued to the former oundertakings are unsecured and bear interest at a fixed rate of 5 per cent. per annumthe Company at any time prior to 31 January 2011, except in certain circumstancCompany (see note 25 for further details).

18. Finance lease obligations

The Group had the following commitments under finance lease agreements:

31 De

Not later than 1 yearLater than 1 year and not later than 5 years

Future finance charges

Present value of finance lease liabilities

Disclosed as:Current liabilitiesNon-current liabilities

The Directors consider the total future minimum lease payments at the balance she

their present values.

19. Commitments under operating leases

The Group has the following total commitments under operating leases.

At 31 December 2005Land andbuildings Other

000 000

Operating leases which expire:

Not later than 1 year Later than 1 year and not later than 5 years Later than 5 years



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21. Share capital

31 De

Authorised:36,000,000 Ordinary shares of 1 each 535,000 7% Preference shares of 1 each 5,000 Ordinary A shares of 0.10 each (in Cobra Network)5,000 Ordinary B shares of 0.10 each (in Cobra Network)1,112 Ordinary C shares of 0.10 each (in Cobra Network)

On 3 February 2006, the Company increased its authorised Ordinary share capital bits 7 per cent. Preference shares by 535,000.

Allotted, called up and fully paidAt the beginning of the year2 Ordinary shares of 1 each (in the Company)5,000 Ordinary A shares of 0.10 each (in Cobra Network)5,000 Ordinary B shares of 0.10 each (in Cobra Network)1,112 Ordinary C shares of 0.10 each (in Cobra Network)

8,423,918 Ordinary shares of 1 each issued (in the Company)

At the end of the year

The share capital in 2005 relates to Cobra Network, the deemed acquirer of the reve1 January 2006. The share capital in 2006 relates to Cobra Holdings, the legal pa

On 3 February 2006, the Company increased its authorised ordinary share capital byits 7 per cent. preference shares by 535,000.

22. Earnings per share

Basic

Basic earnings per share in the year ended 31 December 2006 is calculated by dividin12,000 attributable to equity holders in the Company by the weighted average num1 each in issue during the period of 8,423,920 (equivalent to 33,695,680 ordinary

note 31 for further details).

Basic earnings per share in the year ended 31 December 2005 is calculated by diviNetwork of 861,000 attributable to equity holders in that company by the numberCompany issued to the former shareholders of Cobra Network (being 2,722,910 orequivalent to 10,891,640 ordinary shares of 0.25 each. See note 31 for further det



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23. Emoluments of key management

Key management are considered to be the directors of the Company or the dircompanies. The aggregate emoluments of key management in respect of qualifying

Yea31 De

Emoluments receivablePension contributionsBenefits-in-kind

The highest paid director received emoluments of 185,000 (excluding pension cyear ended 31 December 2006 (2005: 154,000). In addition, the Company made 10,000 to the highest paid director.

Two directors currently accrue benefits with regard to pension payments (2005: 1

24. Risk management

The Groups operating activities take place entirely in the United Kingdom and are The operating transactions are not considered complex. The Group does not enter inrate contracts.

The Group has a risk management function that manages and continuously monrelating to the Groups operations. The Groups senior management meets regappropriate approve the implementation of optimal strategies for effective manage

The process includes documentation of policies, including limits, controls and rep

Liquidity riskIn order to mitigate any liquidity risk which the Group may face, the Groups polisubstantial assets and liquid resources to ensure that sufficient funds are available

Interest rate risk

Deposit accounts attract interest at rate that vary with prime. The Group policy is to so that fluctuations in variable rates do not have a material impact on profit.

Credit risk

Credit risk consists mainly of cash deposits, cash equivalents and trade debtors. The Gwith major banks with high quality credit standing and limits exposure to any one

25. Acquisitions

Cobra Holdings purchased the entire share capital of the following companies. Un



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The following net book values were transferred and the Directors consider that thassets was approximate to their fair value:

CIB BKG IB BKG CR CFS CUA

000 000 000 000 000 Non-current assetsProperty, plant andequipment 295 53 22 72 Investments 1 Intangible assets 26 14 5

Current assetsReceivables 797 903 291 334

Inventory 6 Cash and cash equivalents 2,204 730 42 526 6

3,322 1,700 366 933 6

Current liabilities 2,549 1,474 570 666 4Non-current liabilities 81 114

Net assets/(liabilities) acquired 692 226 (204) 153 2

Goodwill has been allocated to the above subsidiaries as follows:CIB BKG IBBKG CR CFS CUA

000 000 000 000 000

ConsiderationCash 34 33 33 33 22Ordinary shares of 1 each issued inCobra Holdings 2,900 1,621 460 720 Loan notes issued by Cobra Holdings 1,399 578 164 257

Deferred consideration 4,333 2,232 657 1,010 22

Net assets/(liabilities) acquired 692 226 (204) 153 2

Goodwill 3,641 2,006 861 857 20

Allocated to customer relationships

At 31 December 2006

The Directors consider that the par value of the ordinary shares issued was approx

The loan notes issued to former owners of the subsidiary undertakings excluding unsecured and non-interest bearing. The loan notes are redeemable by the Comp31 January 2011, save in certain circumstances such as default by the Company at wthe loan notes can require the Company to redeem the loan notes. The loan notes issu


26 C h d f i


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26. Cash generated from operations

Yea31 De

Profit before taxationDepreciation of property, plant and equipmentAmortisation of customer relationshipsFinance costsChanges in working capital:Trade and other receivablesTrade and other payables

27. Acquisition of subsidiaries

Yea31 De

Total purchase considerationLess: non-cash consideration

Consideration paid in cashLess: cash and cash equivalents acquired, net of overdrafts

Net cash inflow on acquisition

Non-cash transactions comprise the inception of finance leases of 216,000, the i3,911,000 and the issuance of ordinary shares of 8,424,000.

28. Related party disclosures

The following companies were all wholly owned subsidiaries of the Company as atall are incorporated in and operate from the United Kingdom:

Principal activity

Cobra Insurance BrokersBKG Insurance BrokersBKG Corporate Risks Provision of insurance and reinsur

Hammond Frey MarringtonCobra Tubbs Batten

Cobra Corporate Solutions DormantCobra Financial Services Provision of services relating to theservice products

Cobra Underwriting Agencies Provision of underwriting agency s


Th k f h G id d i f ll h d


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The key management of the Group are considered to consist of all the company d

P J RobinsonS M Burrows

H PoultonS M BullockD HarrisM BowlerP J BrightP BryantW R Fairchild

J E LincolnM T Peasey

P N T SmithP TrumanL G WallisM J Zandler

Related party transactions for the year to 31 December 2006 are as follows:

Expenses recharged to associate

The comparative information for the year ended 31 December 2005 relates to Co

Cobra Network loaned Cobra London Markets (an associated company) 20received 1,500 in marketing income therefrom. 150,000 was the largest amount oThe

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