CTI.L Regulatory News (CTI)

13 Feb 2007 16:00

Cathay International Holdings Ld13 February 2007 13 February, 2007 CATHAY INTERNATIONAL HOLDINGS LIMITED PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006 CHAIRMAN'S STATEMENT PHARMACEUTICAL BUSINESS During the year we have continued to build a vertically integratedpharmaceutical business, with capabilities in research and development ('R&D'),manufacturing, marketing and distribution. The major contributor to this aspect of our business is the production,marketing and distribution division, focused on prescription andover-the-counter ("OTC") drugs for the treatment of rheumatic and orthopaedicdiseases. The pharmaceutical division comprises Lansen Medicine (Shenzhen)Company Limited ("Lansen"), an increasingly prominent distribution company andNingbo Liwah Pharmaceutical Company Limited ("Liwah"), which is positioningitself to become an important player in the herbal extract business in China.This division recorded first full year sales and profits of USD15.8 million andUSD1.4 million respectively in 2006 (2005: USD6.3 million and USD0.7 millionrespectively, representing post acquisition results in 2005). In 2006, Cathay commenced the construction of facilities to expand its herbalextract business and invested in the development of new drugs. The constructionof the herbal extract facilities is targeted to complete in the third quarter of2007 and it is expected to start contributing revenue to the Group followingcompletion. The application to the State Food and Drug Administration ("SFDA")for approval of the New Drug Licences and Production Licences for two oral fastrelease drugs is also progressing. Preparation for the launch of these new oralfast release drugs is underway to ensure a rapid launch post approval. Building on our strength in the herbal extracts, rheumatic and orthopaedicmarket sectors, we are carefully planning an expansion into paediatrics andgynaecology. A key factor for success in the pharmaceutical business is the building of a newproduct pipeline to sustain growth. We are investing in R&D to support thelong-term development of our pharmaceutical business. The drug development cycleis relatively long and therefore the R&D division is not expected to be anearnings contributor in the near future. In addition to building our new product pipeline internally, we are exploringacquisition opportunities in China to expand our product range in herbalextracts, rheumatic, orthopaedic, paediatrics and gynaecology, as well as ourdistribution network. Although an announcement is not yet appropriate, we haveidentified a number of suitable targets and are at various stages of evaluation,discussion and negotiations with these potential targets. The Chinese healthcare market has great potential and is growing. We believe ourexperienced management team will be able to build on our current business in thesector to generate long-term growth and improved shareholder returns. LANDMARK HOTEL (SHENZHEN) With the official opening of the spa & fitness centre on 5 September 2006, theall suite Landmark Hotel completed its extensive renovation. The Hotel is nowone of the leading luxury class hotels in Shenzhen and Southern China, equippedwith 235 enlarged suites, banquet facilities, an executive lounge, an Italianrestaurant and coffee shop, a Chinese restaurant, a wine and cigar lounge and aunique butler service for all hotel guests. The Shenzhen hotel industry continues to be highly competitive. Three newfive-star hotels have opened in the last few months. We believe our decision toconduct the major renovation of the Hotel was timely and responsive toanticipated market conditions, and we believe this has given the Landmark Hotelthe ability to maintain a strong competitive edge. The feedback from hotel guests has been positive, both with regard to the hotelfacilities and the services provided. We have priced our rooms at the top end ofthe market which has resulted in average room rates being approximately doublethose achieved prior to the renovation. Occupancy levels have been increasinggradually over the past few months. In China, it can take up to 18 months afterre-opening for the pricing and occupancy to reach normal levels. We havecontinued active marketing programmes to increase market awareness of the Hotel. PERFORMANCE Hotel Corporate Operations Pharmaceutical Office Total Production Research & marketing &(Stated in USD'000) development distribution___________________For the year ended31 December 2006Revenue 1,884 - 15,778 - 17,662Segmentprofit/(loss)before income tax (1,815) (991) 1,451 (4,060) (5,415)___________________ _______ _______ _______ _______ _______ For the year ended31 December 2005 Contracted income - 4,950 6,282 - 11,232 Less consolidationadjustment - (4,950) - - (4,950) _______ _______ _______ _______ _______ Revenue - - 6,282 - 6,282 _______ _______ _______ _______ _______ Segmentprofit/(loss)before income tax (2,298) 4,554 708 (3,609) ( 645) Less consolidationadjustment - (4,950) - - (4,950) _______ _______ _______ _______ _______ (2,298) (396) 708 (3,609) (5,595) ======= ======= ======= ======== ======== BACKGROUND ON LAST YEAR'S CONSOLIDATION ADJUSTMENT FOR PHARMACEUTICAL'S RESEARCH& DEVELOPMENT OPERATION The consolidation adjustment was made in relation to the product technology andrelated rights and interests transfer agreement (the "Technology TransferAgreement") dated 26 May 2005 between Tianjin Longbai Biological Engineering andTechnology Company Limited ("Longbai") and Liwah relating to the sale by Longbaito Liwah of six oral fast release drugs. Since the Technology Transfer Agreementwas entered into in 2005 when Liwah was an independent third party and was notyet a subsidiary of the Group, the Company considered that the revenue andassociated profits from the Technology Transfer Agreement should also bereflected in the consolidated profit and loss account of the Group. However, although Longbai, representing one of the Company's pharmaceuticalresearch and development businesses, has successfully generated and recorded itsfirst sale of its technology to Liwah, an independent third party in the marketat that time, on subsequent review of the pertinent accounting requirements andstandards, the treatment of this revenue is open to debate. The Directorsadopted the most prudent approach in 2005 for the accounts as they and theauditors felt it was appropriate to show this alternative treatment which moreaccurately reflected the underlying activity of the subsidiaries. Hence the saleand the associated profits arising from the Technology Transfer Agreement wereprudently eliminated by the consolidation adjustment in 2005 in arriving at theconsolidated profit and loss account of the Group. OPERATING RESULTS Group turnover of USD17,662,000 was recorded for the year (2005: USD6,282,000(after consolidation adjustment)), of which: - USD15,778,000 (2005: USD6,282,000 (after consolidation adjustment)) was generated from the production, marketing and distribution and sale of pharmaceutical products; and - USD1,884,000 (2005: nil) was generated by the hotel operation during the last quarter of 2006. The gross profit for the year was USD10,846,000 (2005: USD4,176,000), of whichUSD10,510,000 (2005: USD4,176,000) was from the pharmaceutical division; andUSD336,000, from the hotel operation (2005: Nil). The Company recorded a reduced overall loss for the year 2006 as a result of theimproved performance of our pharmaceutical business and the re-commencement ofcontributions from the Hotel. - The operating loss for the year was USD2,369,000 (2005: loss of USD4,111,000). - The loss before tax for the year was USD5,415,000 (2005: loss of USD5,595,000). The profit for the pharmaceutical business was USD460,000 (2005: USD312,000). The Hotel was in its pre-opening phase until October 2006 and the operating profit of the Hotel during this period was recorded as a reduction of pre-operating expenses capitalised during the renovation period. The loss for the hotel operation was USD1,815,000, which was mainly due to interest on bank borrowing and a shareholder's loan and pre-opening expenses. - We continued to exercise tight control over our general and administration expenses and the net increase in our corporate office expenses is owing to an increase in interest on borrowings related to the Hotel renovation. - The loss after tax and minority interest for the year was USD5,315,000 (2005: USD6,345,000). On 20 April 2006, the Company announced that it had raised £1,500,000(approximately USD2,672,550, using exchange rate as of 20 April 2006) by way ofa private placement of 15,000,000 new common shares, representing 5.44% of theissued share capital, at an issue price of 10 pence per share (the "Placing").The principal purposes of the Placing were to ensure that at least 25% of theCompany's listed securities were in public hands, as required by the listingrules of the UK Listing Authority and to introduce new investors to the Company.The Placing proceeds were used for general working capital purposes. Immediatelyfollowing the completion of the Placing, approximately 27.77% of the Company'slisted securities were in public hands. Net assets at the end of 2006 were USD89,681,000 (2005: USD86,023,000). Theincrease was primarily due to the Placing and the upward revaluation of theHotel. Net assets per share at the end of 2006 were USD0.33 (2005: USD0.33). Gearing increased to 62% (2005: 57%), primarily as a result of the consolidationin the Group's accounts of bank and other borrowings arising as a result of theacquisitions of our pharmaceutical subsidiaries since 2005 and borrowingsrelated to the Hotel renovation. CONCLUSION AND APPRECIATION Your Board will continue to focus on expanding the pharmaceutical business andimproving the results of the Hotel. Your Board continues to believe that thereare attractive opportunities for investment in China, and we are activelyseeking additional business opportunities in China to provide new sources ofsteady earnings and capital growth. New investments in China will only be madeafter conducting a careful and professional evaluation of the risks. On behalf of the Board, I would also like to thank our staff for their continueddedication and commitment. James BuchananChairman Enquiries: Stephen Hunt (Deputy Chairman) (via Brunswick) 020 7404 5959Patrick Sung (Director - Finance) Jon Coles, Brunswick 020 7404 5959 OPERATIONAL REVIEW PHARMACEUTICAL BUSINESS China has made considerable progress in recent decades towards improving theliving standard of its population, including better health and reduced levels ofpoverty. The pharmaceutical industry in China has in recent years experiencedgrowth above the all industry average in China. The current market for high quality, patient-oriented healthcare services isrelatively small because most Chinese lack health insurance and only a fractionof the population can afford top-end Western medical care; but it is growingsteadily. There has been an increasing participation in the State Basic MedicalInsurance System in China. Currently, the total expenditure per capita inhealthcare in China is still substantially below that of the United States andEurope, and offers significant growth potential. Building on our strength in the rheumatic and orthopaedic market sectors, we arecarefully planning an expansion into paediatrics and gynaecology. We believe that the key to our success is the building of a new product pipelineto sustain long-term growth. Our R&D division is devoting efforts to support thelong-term development of our pharmaceutical business. We are also exploring opportunities to acquire other pharmaceutical companies inChina. Our strategy is to expand our product range in herbal extracts,rheumatic, orthopaedic, paediatrics and gynaecology, as well as our distributionnetwork. We have identified a number of suitable targets and are at variousstages of evaluation, discussion and negotiations. Looking ahead, as the Chinese economy grows and the government improves thequality of healthcare, we believe the Chinese pharmaceutical market willcontinue to offer enormous growth potential. Capitalising on the experience ofits professional pharmaceutical team, Cathay is well placed to benefit. LANDMARK HOTEL (SHENZHEN) With the official opening of the spa & fitness centre on 5 September 2006, theall suite Landmark Hotel completed its extensive renovation. The spa is namedTamara Spa and is managed by Lifestyle Health & Fitness Sdn.Bhd, a Malaysianbased company specialising in creating exclusive spas with a holistic approachto beauty and well being. There are three VIP spa rooms and eight regular sparooms. Each VIP spa room is equipped with sophisticated spa and facial equipmentto provide extensive spa, body firming and facial treatments. Each regular sparoom is equipped with a steam room and connected to the spa centre by a privateelevator. The Hotel is now one of the leading luxury class hotels in Shenzhen and SouthernChina, equipped with 235 enlarged suites, enhanced banquet and meetingfacilities, an executive lounge, an Italian restaurant and coffee shop, aChinese restaurant, a wine and cigar lounge and a unique butler service to allhotel guests. The feedback from hotel guests has been positive, both on hardware (the hotelfacilities) and software (the hotel services). Based on in-house customersurveys, the Hotel's new all suites butler service has made an importantcontribution to the development of improved customer service in the LandmarkHotel. Customers also appreciate our large, well-equipped suites (minimum size48 sq.m.). We have priced our rooms at the top end of the market and this hasresulted in average room rates twice as high as those achieved prior to therenovation. The Hotel continues to concentrate on corporate business. One of theearly successes in our new configuration is a substantial increase in ourmeeting and conference business. As a result of the enlarged ballroom capacity,the Hotel has also become a major player in the wedding, reception and dinnermarket in Shenzhen. We have continued with active marketing programmes toincrease market awareness of the Hotel. The website of the Hotel (http://www.szlandmark.com/eng/index.htm) was also re-launched. In accordance with its usual practice, the Group conducted an annual revaluationof the Hotel. The Hotel was revalued at USD130 million (2005 : USD118 million). The Hotel is preparing its application for a "platinum five-star" hotel ratingof the China National Tourism Administration, the highest hotel standard inChina. When the relevant standards are finalised, the Hotel will submit theapplication to the authority. GROUP INCOME STATEMENT Year ended Year ended 31 December 31 December 2006 2005 Notes USD'000 USD'000 CONTRACTED INCOME 17,662 11,232CONSOLIDATION ADJUSTMENT - (4,950) _________ _________REVENUE 2 17,662 6,282COST OF SALES (6,816) (2,106) _________ _________ GROSS PROFIT 10,846 4,176SELLING AND DISTRIBUTION EXPENSES (6,447) (2,405)ADMINISTRATIVE EXPENSES (6,253) (5,006)PRE-OPERATING EXPENSES (515) (876) __________ __________LOSS FROM OPERATIONS (2,369) (4,111)FINANCE COSTS - NET 4 (3,046) (1,484) __________ __________LOSS BEFORE INCOME TAX 2 (5,415) (5,595)INCOME TAX EXPENSE - - __________ __________LOSS FOR THE YEAR (5,415) (5,595) ========== ==========ATTRIBUTABLE TO: (5,315) (6,345)EQUITY SHAREHOLDERS OF THE PARENT (100) 750MINORITY INTEREST __________ __________ (5,415) (5,595) ========== ==========LOSS PER SHAREBASIC 5 (1.96 cents) (2.87 cents) ========== ========== GROUP BALANCE SHEET As at As at 31 December 31 December 2006 2005 USD'000 USD'000ASSETS NON-CURRENT ASSETSProperty, plant and equipment 144,699 129,452Investment property 1,365 1,319Intangible assets 521 575Goodwill 7,781 6,243Loans to minority shareholders 1,087 126 __________ __________ 155,453 137,715 __________ __________CURRENT ASSETSInventories 2,186 2,520Trade and other receivables 12,065 11,538Cash and cash equivalents 1,983 10,020 __________ __________ 16,234 24,078 __________ __________TOTAL ASSETS 171,687 161,793 ========== ========== EQUITY AND LIABILITIES CAPITAL AND RESERVESCalled up share capital 13,793 13,043Share premium 10,216 8,355Capital and special reserve 42,923 43,320Revaluation reserve 64,176 55,884Exchange equalisation reserve (14,529) (11,551)Statutory reserve 1,143 1,104Profit and loss account (35,830) (30,515) _________ _________EQUITY ATTRIBUTABLE TO EQUITY 81,892 79,640HOLDERS OF THE PARENT MINORITY INTEREST 7,789 6,383 _________ _________TOTAL EQUITY 89,681 86,023 _________ _________ NON-CURRENT LIABILITIESBorrowings 22,838 23,241Deferred tax liabilities 16,820 15,164 _________ _________ 39,658 38,405 _________ _________CURRENT LIABILITIESBorrowings 9,451 8,332Trade and other payables 32,897 29,033 _________ _________ 42,348 37,365 _________ _________TOTAL LIABILITIES 82,006 75,770 _________ _________TOTAL EQUITY AND LIABILITIES 171,687 161,793 ========= ========= GROUP STATEMENT OF CHANGES IN EQUITY Minority Total Interest Equity Attributable to equity holders of the parent ____________________________________________ Capital and Exchange Profit Share Share Special Revaluation Equalisation Statutory and loss Capital Premium Reserve Reserve Reserve Reserve Account Total USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000________________________________________________________________________________________________________________________ Balance at 1January 2005 9,042 - 43,320 53,529 (10,463) 1,083 (24,170) 72,341 - 72,341____________ _____ ______ ______ ______ ________ _____ ________ ______ _______ _______Exchange differencesarising ontranslationofforeigncurrencyoperations - - - 1,322 (1,088) 21 - 255 - 255Surplus onrevaluationofhotelproperties - - - 1,033 - - - 1,033 - 1,033____________ _____ ______ ______ ______ ________ _____ ________ ______ ________ ______Net incomerecogniseddirectly inequity - - - 2,355 (1,088) 21 - 1,288 - 1,288Loss for theyear - - - - - - (6,345) (6,345) 750 (5,595)____________ _____ ______ ______ ______ ________ _____ ________ ______ ________ ______Totalrecognisedincomeand expensesfor theYear - - - 2,355 (1,088) 21 (6,345) (5,057) 750 (4,307)____________ _____ ______ ______ ______ ________ _____ ________ ______ ________ ______Issue ofshare 4,001 9,032 - - - - - 13,033 - 13,033capitalCost of issue - (677) - - - - - (677) - (677)Arising fromacquisitionof - - - - - - - - 5,633 5,633subsidiaries ____________ _____ ______ ______ ______ ________ _____ ________ ______ ________ ______Balance at 1January 2006 13,043 8,355 43,320 55,884 (11,551) 1,104 (30,515) 79,640 6,383 86,023____________ _____ ______ ______ ______ ________ _____ ________ ______ ________ ______Exchangedifferencesarising ontranslationofforeigncurrencyoperations - - - 2,849 (2,978) 39 - (90) 10 (80)Surplus onrevaluationofhotelproperties - - - 5,443 - - - 5,443 - 5,443Reversewaiver ofpayable tominorityinterest onimpairmentof intangibleassets - - (397) - - - - (397) 397 -____________ _____ ______ ______ ______ ________ _____ ________ ______ ________ ______Net incomerecogniseddirectly inequity - - (397) 8,292 (2,978) 39 - 4,956 407 5,363Loss for theyear - - - - - - (5,315) (5,315) (100)(5,415)____________ _____ ______ ______ ______ ________ _____ ________ ______ ________ ______Totalrecognisedincomeand expensesfor theyear - - (397) 8,292 (2,978) 39 (5,315) (359) 307 (52)____________ _____ ______ ______ ______ ________ _____ ________ ______ ________ ______Issue ofshare 750 1,861 - - - - - 2,611 - 2,611capitalDeemeddisposal ofinterest insubsidiaries - - - - - - - - 690 690Capitalinjectionfromminorityinterest - - - - - - - - 1,102 1,102Dividends ofsubsidiaries - - - - - - - - (693) (693)____________ _____ ______ ______ ______ ________ _____ ________ ______ ________ ______Balance at31 December2006 13,793 10,216 42,923 64,176 (14,529) 1,143 (35,830) 81,892 7,789 89,681____________ _____ ______ ______ ______ ________ _____ ________ ______ ________ ______ The accompanying accounting policies and notes form an integral part of thesefinancial statements. GROUP CASH FLOW STATEMENT Year ended Year ended 31 December 31 December 2006 2005 USD'000 USD'000Cash flows from operating activities Loss before income tax (5,415) (5,595)Adjustments for:Finance costs recognised in the income statement 3,046 1,484Depreciation 858 642Amortisation of intangible assets 73 29Loss on investments - 56Loss on disposal of property plant and equipment - 37Gain on deemed acquisition of subsidiaries - (188) _________ _________Operating cash flows before movements in workingcapital (1,438) (3,535)Decrease/(increase) in inventories 334 (228)Increase in trade and other receivables (1,200) (181)Increase in trade and other payables 3,634 13,517 _________ _________Cash generated from operations 1,330 9,573Interest paid (3,151) (1,654) _________ _________Net cash (used in)/generated from operatingactivities (1,821) 7,919 _________ _________ Cash flows from investing activities Purchase of property, plant and equipment (8,146) (18,410)Purchase of intangible assets - (62)Proceeds from disposal of investments - 4,890Proceeds from disposal of associate - 152Acquisition of subsidiaries - (1,453)Interest received 105 170 _________ _________Net cash used in investing activities (8,041) (14,713) _________ _________ GROUP CASH FLOW STATEMENT Year ended Year ended 31 December 31 December 2006 2005 USD'000 USD'000 Cash flows from financing activities Capital element of finance lease payment (11) (10)Proceeds from borrowings - 183Repayments of borrowings (630) -Proceeds from issued of shares, net of expenses 2,611 12,356Loans to minority shareholders (961) (126)Dividends paid to minority interest (693) -Capital injection from minority interest 1,102 - _________ _________Net cash generated from financing activities 1,418 12,403 _________ _________ Net (decrease)/ increase in cash and cashequivalent (8,444) 5,609Cash and cash equivalents at beginning of year 10,020 3,835Effects of exchange rate changes 147 576 _________ _________Cash and cash equivalents at end of year 1,723 10,020 _________ _________ Analysis of cash and cash equivalentsCash and bank balances 1,983 10,020Bank overdrafts (260) - _________ _________ 1,723 10,020 _________ _________ NOTES 1. BASIS OF PREPARATION AND ACCOUNTING This preliminary results statement and the consolidated financial statements ofthe Group have been prepared in accordance with International FinancialReporting Standards (IFRS), including all new and revised standards effectivefor the period commencing 1 January 2006. The preparation of financial statements in accordance with IFRS requires the useof estimates and assumptions that affect the reported amounts of assets andliabilities, and disclosure of contingent assets and liabilities at the date ofthe financial statements and the reported amounts of revenues and expensesduring the reporting period. Although these estimates are based on management'sbest knowledge of current events and actions, actual results may ultimatelydiffer from those estimates. These consolidated financial statements have been prepared under the historicalcost convention as modified by the revaluation of certain property, plant andequipment and investment property. 2. SEGMENTAL INFORMATION 2.1 Business Segments For management purposes the Group is currently organised into business segmentsas reported below: Hotel Pharmaceutical Corporate Total Operations Office Production Research & marketing & development distribution USD'000 USD'000 USD'000 USD'000 USD'000 For the year ended31 December 2006 Revenue 1,884 - 15,778 - 17,662 Segment result (1,815) (991) 1,451 (4,060) (5,415) Included: 515 - - - 515 Pre-operating expenses Segment assets 135,993 3,762 31,313 619 171,687 Segment 40,934 158 12,576 28,338 82,006 liabilities Capital 4,830 54 3,254 8 8,146 expenditures Depreciation 295 185 362 16 858 Amortisation - - 73 - 73 ________ ________ ________ ________ ________ For the year ended 31December 2005 Contracted income - 4,950 6,282 - 11,232 Less consolidation - (4,950) - - (4,950) adjustment ________ ________ ________- ________ ________ Revenue - - 6,282 - 6,282 ________ ________ ________ ________ ________ Segment result (2,298) 4,554 708 (3,609) (645) Included: Pre-operating 876 - - - 876 expenses Related corporate 175 - - - 175 expenses Less consolidation - (4,950) - - (4,950) adjustment ________ ________ ________ ________ ________ Segment result after (2,298) (396) 708 (3,609) (5,595) consolidation adjustment ________ ________ ________ ________ ________ Segment assets 124,381 8,734 28,184 494 161,793 Segment liabilities 40,819 158 12,457 22,336 75,770 Capital expenditures 15,318 2,092 1,061 1 18,472 Depreciation 357 138 134 13 642 Amortisation - - 29 - 29 ________ ________ ________ ________ ________ 2.2 Geographical Segments PRC United Kingdom Hong Kong Total USD'000 USD'000 USD'000 USD'000For the year ended 31 December2006 Revenue 17,662 - - 17,662 Segment assets 171,068 174 445 171,687 Capital expenditures 8,138 - 8 8,146 ________ ________ ________ ________ For the year ended 31 December2005 Contracted income 11,232 - - 11,232 Less consolidation (4,950) - - (4,950) adjustment ________ ________ ________ ________ Revenue 6,282 - - 6,282 ________ ________ ________ ________ Segment assets 161,299 97 397 161,793 Capital expenditures 18,471 - 1 18,472 ________ ________ ________ ________ 3. DIRECTORS' EMOLUMENTS The Directors at 31 December 2006 were as follows: J.R.H. Buchanan Wu Zhen Tao S. B. Hunt J.H. Cosson P. Sung Mao Yu Min (Resigned on 3 April 2006) Their aggregate emoluments for the year ended 31 December 2006 were USD631,000(2005: USD1,118,000). 4. FINANCE COSTS - NET Year ended Year ended 31 December 31 December 2006 2005 USD'000 USD'000 ___________ _________ Interest on bank loans and overdrafts 2,160 1,424Finance charges payable under finance lease 1 2Interest payable to an intermediate parentundertaking 990 228__________________________________________ ___________ _________ 3,151 1,654Less interest receivable (105) (170)__________________________________________ ___________ _________ 3,046 1,484 ___________ _________ 5. LOSS PER SHARE Basic loss per share is based upon the loss after tax attributable to equityholders of the parent of USD5,315,000 (2005: loss of USD6,345,000) and theweighted average number of A Shares and Common Shares in issue during the yearof 11,851,433 and 258,008,671 respectively (2005: A Shares, Common Shares:11,998,896 and 208,852,319). 6. FINANCIAL INFORMATION This preliminary results statement was approved by the Board of Directors on 13February 2007. The above results for the year ended 31 December 2006 have beenabridged from the full Group financial statements for that year, which receivedan unqualified auditors' report and which will be delivered to the Registrar ofCompanies in Bermuda shortly. The Annual Report and Financial Statements will be posted to shareholders assoon as practicable. Further copies will be available from the Company'sregistered office at Canon's Court, 22 Victoria Street, Hamilton HM12, Bermuda. 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