Charles Taylor Regulatory News (CTR)

18 Sep 2007 07:01

Charles Taylor Consulting PLC18 September 2007 Tuesday, 18 September 2007 Charles Taylor Consulting plc Interim Results for the six months ended 30 June 2007 Charles Taylor Consulting plc ("the company"), a leading provider of supportservices for the insurance industry, announces its interim results for the sixmonths ended 30 June 2007. Financial Highlights • Revenue of £40.7m (2006: £38.6m), an increase of 5% • Profit before tax - adjusted of £6.7m (2006: £6.3m), an increase of 7% • Profit after tax - adjusted of £7.1m (2006: £5.9m), an increase of 20%, benefiting from a tax credit generated by the run-off division • Earnings per share - adjusted of 16.83p (2006: 15.02p), an increase of 12% • Earnings per share - basic of 12.43p (2006: 14.85p), a decrease of 16% • Net debt continues to reduce at £32.9m (31 Dec 2006: £35.5m), a decrease of 8% • Interim dividend per share of 4.80p (2006: 4.36p), an increase of 10% Profit before and after tax shown in these financial highlights have beenadjusted by £1.74m in total compared with the equivalent statutory figures (2006- £0.07m). This relates to a goodwill charge of £1.67m arising under IFRS fromthe recognition of a deferred tax asset in respect of tax losses acquired withan insurance company subsidiary and a £0.07m charge for amortisation of acquiredcustomer relationship intangibles (2006 - £0.07m). Statutory profit andstatutory earnings per share are calculated after these adjustments and areshown on the Consolidated Income Statement. Operational Highlights • Created two new mutuals in the UK public sector (London Authorities Mutual and Fire and Rescue Authorities Mutual) • Acquired Allegro, a Bermuda based management company • Launched Charles Taylor Adjusting • Growth of Isle of Man Operation John Rowe, Chairman & Chief Executive, commented "Overall the group's financial performance continues to develop in line withmanagement's expectations, with some areas outperforming and therebycompensating to some extent for the lack of completed acquisitions by ourrun-off division. Whilst the run-off division continues to review acquisitionopportunities, these will only be completed on terms which the board views asvalue-enhancing for CTC shareholders." "Both new and existing mutuals show encouraging growth and the adjustingbusiness has received a number of notable new instructions in recent times. Thegroup has a strong market position in its key areas of operation. The adverseeffect of a weakening US dollar continues to be a concern but overall there ismuch to be optimistic about." Charles Taylor Consulting plc www.charlestaylorconsulting.comJohn Rowe, Chairman & 020 7759 4903Chief Executive Smithfield Consultants Limited 020 7360 4900Reg Hoare/Katie Hunt Chairman's Statement First of all may I thank, on your behalf, all the employees of the company whosecollective efforts have produced another set of good results. Revenue increased by 5% to £40.7m and, after adjustment for goodwill andintangible charges, profit before tax rose by 7% to £6.7m. Profit after tax roseby 20% to £7.1m, as a result of a tax credit generated by the run-off division.Earnings per share rose 12% to 16.83p per share, which is lower than theincrease in profit after tax owing to increased minority interests and moreshares being in issue. Over the period our rate of reported growth has been reduced by US Dollarweakness which has had a translation effect on both revenue and adjusted profitbefore tax; these would have been £42.0m and £7.0m respectively at constantexchange rates. We believe that a weaker US Dollar is likely to be an ongoing factor andtherefore will continue to take steps to minimise its impact. The group hassubstantial operations in the United States and thus significant dollar costs aswell as dollar borrowings; both of these together with dollar hedging providesome mitigating effect. The group's strong cash flow continues to reduce net debt levels, which at£32.9m are now £9.3m lower than June 2006 and £2.7m lower than last year end.Pension liabilities of £12.0m are also well below previous levels (£19.6m lastyear end) as a result of investment performance and higher bond yields. An interim dividend of 4.8p per share (2006: 4.36p) an increase of 10%, has beendeclared and will be paid on 26 November 2007 to shareholders on the register atthe close of business on 12 October 2007. Management Division In light of the potential of this business where many opportunities exist andwhere we are uniquely placed, we have carried out a review of all our mutualsover the last few months, with a particular concentration on those operatingoutside the shipowners' protection and indemnity and workers' compensationareas. This has involved reviewing where best to deploy our resources and whatadditional investments are required to capitalise on the opportunitiesavailable. Our conclusions involve, inter alia, focusing on expanding the significantpresence we have established in the UK public sector where two new insurancemutuals have been created in the last five months and a decision to expand ouroperations further in the Americas through acquisition or otherwise. This is aregion where we see great opportunities for the company and is of course one wealready know well through our involvement with our two workers' compensationmutuals which operate in the US and Canada. A first step has been the acquisition of Allegro, a management company, which isbased in Bermuda and has a large number of US based clients for its segregatedcell and captive insurance companies. Adjusting Division During the period under review we completed the process, started some time ago,of unifying all of our adjusting operations under the Charles Taylor Adjustingbrand and putting in place a significantly more streamlined managementstructure. We have acquired eight firms of adjusters over the last ten years andit is pleasing to see their integration successfully completed. The benefits ofthis are already becoming apparent. Run-off Division Although no acquisitions were made by the run-off division during the period,new business, particularly involving the third-party life administrationoperations in the Isle of Man, had a favourable impact. With market prices beingpaid to acquire businesses remaining above the board's view of attractivelevels, no acquisitions were completed. There is cause for optimism, however, as recent events in the financial marketsshould lead to more realistic pricing. Furthermore, the implementation of thenew capitalisation rules for reinsurers contained in the EU Solvency IIdirective are likely to result in a significant number of reinsurers beingadversely affected and this will provide opportunities for the division. Outlook and current trading Overall the group's financial performance continues to develop in line withmanagement's expectations, with some areas outperforming and therebycompensating to some extent for the lack of completed acquisitions by our run-off division. Whilst the run-off division continues to review acquisitionopportunities, these will only be completed on terms which the board views asvalue-enhancing for CTC shareholders. Both new and existing mutuals showencouraging growth and the adjusting business has received a number of notablenew instructions in recent times. The group has a strong market position in itskey areas of operation. The adverse effect of a weakening US dollar continues tobe a concern but overall there is much to be optimistic about. John RoweChairman17 September 2007 Business Review Management DivisionThe largest business within the division involves the management of mutuals; it also includes investment management and our risk consulting business. During the period, a review of all the mutuals managed by the group was undertaken but with a particular concentration on those operating outside the shipowners' protection and indemnity and workers' compensation areas. Marine Mutuals • The marine mutuals continued to perform well in the first half. The Standard Club increased its tonnage to 64m tons at the February renewal and since then some notable members have increased their fleets in the Club.• Standard Asia and Standard London have also increased their tonnage. Workers compensation Mutuals • Signal, which covers US maritime related employees, reported payrolls which exceeded $2.5bn on an annualised basis for the first time. Growth came particularly from the shipyard membership group but was also boosted by new members.• At the Signal renewal on October 1 the success of Signal's safety initiative "Arrive Home Alive" and other loss preventions programs are likely to be reflected in members' renewal terms, however, this should be offset by payroll growth. Capitalised Mutuals Public Sector (UK) • This year has seen the group start up two FSA authorised and fully capitalised insurance mutuals. These are the first insurance companies to be launched in the UK by the company since 1990.• The London Authorities Mutual Limited (LAML) was launched in April of this year.• On 1 September the Fire and Rescue Authorities Mutual (FRAML), a mutual for the English and Welsh Fire Authorities, commenced operations. Discretionary Mutuals (UK) The attraction of joining other like-minded and well-managed organisations sawthe Livery Mutual grow during the period whereas within the newsagents and carehomes sectors the more diverse membership and competition from commercialinsurers saw membership drop or grow more slowly. Discretionary Mutuals (Australia) Both of our managed mutuals, Capricorn Mutual and Unimutual, prospered duringthe period with record premium levels in the former and a substantial new memberjoining the latter. Adjusting Division Charles Taylor Adjusting is one of the world's leading adjusters for the energy,aviation and marine markets, and also has a specialised and growing non-marinebusiness. The launch of the new Charles Taylor Adjusting brand has been well received byclients and benefits are already being seen in better coordination between thefour product lines. Over time, this is expected to result in stronger growth andsome cost efficiencies. Energy - 43% of Adjusting Revenue (2006 - 41%) The energy business was generally busy during the first half, with major claimshandled by the UK office including offshore pipeline damage in the North Sea andTurkey, and platform fire damage in the Congo. The US business based in Houstonreceived various new Gulf of Mexico physical damage claims and the Canadianbusiness was appointed on a significant offshore business interruption claim. InMexico, a refinery explosion claim in June will provide considerable additionalwork for the second half of the year. The Perth office remained busy with miningequipment losses as a result of the continued high level of activity in naturalresource exploration in Western Australia. Aviation - 25% of Adjusting Revenue (2006 - 26%) The aviation business handled some notable Indonesian hull losses in the firstsix months. China remains a significant source of business, but new instructionswere also received in Vietnam, Thailand and Korea. Considerable progress wasmade in developing the business in Mexico with the appointment on severalairline accounts. In the US, the general aircraft aviation business continued toface difficulties but the recent appointment as the adjuster for a significantinternational airline catering account will provide additional work for the USbusiness in particular. The aviation liability business also continues to growwith additional work coming from UK ground handling contracts together withFrench and Mexican Airports. Marine - 21% of Adjusting Revenue (2006 - 23%) The number of marine claims received in the first half year of 2007 exceededthose at the same point of 2006, but did not include any further large averageadjusting losses that helped boost last year. The yacht adjusting business wasconsiderably strengthened in the first half and this has already led to newinstructions in the Mediterranean and Florida. In the Far East, Shanghai hascontinued its success and a restructuring of the Singapore office was completed.Singapore has been successful in obtaining several new instructions since then.After the half year, a major average adjusting claim was received from aTaiwanese shipowner, which is being handled by the Hong Kong office. The Taiwanoffice is also dealing with a large builder's risk claim. Non-Marine - 11% of Adjusting Revenue (2006 - 10%) Non-marine remained busy in the first half, particularly with the handling ofvarious losses arising from the Buncefield explosion. Financial institution workalso continues to develop and involved claims for European and Russian Banks.Progress has also been made in developing IT professional indemnity work,particularly in Scandinavia. Elsewhere overseas, the Miami office has continuedto develop its business and further steps have been taken to strengthen theMiddle East adjusting team. More recently a significant business interruptionclaim has been received as a result of the flooding in the UK during the summer. Run-off Division CTC's run-off businesses advise, manage and own insurance companies closed to new business in both Life and Non-life sectors. Run-off Services The run-off services businesses have continued to trade at a consistent leveland have produced a similar profit to that achieved in the first half of 2006.The third party administration operation on the Isle of Man has continued toperform well, principally as a result of winning the contract to establish andmanage a new reinsurance captive for a major Japanese life insurer. The numberof policy administration systems in use is being rationalised to simplifyoperations, reduce cost and support future business development. Following a review of LCL Collections Limited, the debt recovery businessacquired with the other LCL companies in December 2005, this company was sold tomanagement in May 2007. Its disposal is not expected to have a material effecton the group's future financial results. Property & Casualty Business As anticipated, Bestpark International Limited's run-off is continuing steadilyon a stable but narrow margin of solvency but produced a significantly betterresult than in the first half of 2006. Life Business Increasing interest rates, good investment performance and lower expense ratiosmeant a better than anticipated performance, although policy persistency wasworse than expected in the period. Results Revenue for the six months to 30 June 2007 was £40.7m, 5% higher than in theequivalent period of 2006, and profit before tax was £6.7m, 7% higher than in2006. As explained below, exchange rate movements reduced the reported revenueand profit when translated into Sterling. Adjusted earnings per share were16.83p (2006 15.02p), an increase of 12%. Acquisitions In July, the group acquired a Bermuda-based management company known as Allegro.As well as enhancing CTC's existing captive management operations, theacquisition is expected to strengthen the potential for further business growthin Bermuda and Americas generally. Dividends and earnings per share The proposed interim dividend for 2007 is 4.80p (2006 4.36p), an increase of10%. This will be paid on 26 November 2007 to shareholders on the share registerat close of business on 12 October 2007. Treasury The group's main foreign currencies are US Dollar, Canadian Dollar andAustralian Dollar. There has been a trend of increasing Sterling strength and USDollar weakness since early 2006 and, although the exchange rate is at anunusual level by historic standards, this shows no sign of abating. There hasbeen a similar trend in the Canadian Dollar, while the Australian Dollar hasbeen more stable against Sterling. If the exchange rates applied in the accountsfor the period to 30 June 2006 had prevailed during the current reportingperiod, revenue for the 6 months to 30 June 2007 would have been 3% higher andadjusted profit before tax would have been 6% higher. The businesses principallyaffected by these exchange rate movements are Signal mutual management and theadjusting businesses in North America and Mexico. The group manages its exposure to foreign currency fluctuations and has a numberof forward contracts and options in place. At best, these only average outexchange rate movements but they do provide more certainty over future cashflows than an unhedged approach. Increasing UK interest rates have resulted in a higher interest charge than in2006 in comparison to the level of borrowings, but the group's 5.5% interestrate cap, which covered over half of net borrowings at 30 June 2007, hasmitigated the impact to some extent. Free cash flow for the period of £4.5m represents 67% of adjusted profit fromoperations, compared to £3.5m and 46% in the first half of 2006. Free cash flowis defined as net cash from operating activities excluding movement in clientmonies, plus interest received less expenditure on acquisition of tangible andintangible assets plus disposal proceeds. Taxation The effective tax rate on current year profits is 14.9%, with an additional 4.4%relating to prior-year adjustments. Full UK tax relief is continuing during 2007as a result of Bestpark International Limited's losses. The foreign tax burdenhas increased because of lower US tax deductions and growth in foreign profitsgenerally. As in the 2006 full year, there is a significant deferred tax credit(£1.7m in the six months to 30 June 2007) arising from the value realised fromtax losses. John RoweChief Executive Damian ElyChief Operating Officer George FitzsimonsFinance Director17 September 2007 Consolidated Income StatementFor the six months ended 30 June 2007 Six months to Six months to Year to 30 June 30 June 31 December 2007 2006 2006 Note £000 £000 £000Continuing operationsRevenue 37,263 35,867 73,581 Revenue from insurance contracts acquired 3,979 4,140 8,059Outward reinsurance premiums (523) (1,402) (2,527) ________ ________ ________ Net revenue from insurance contracts acquired 3,456 2,738 5,532 Total revenue 2 40,719 38,605 79,113 Claims from insurance contracts acquired (11,614) (21,776) (31,999)Reinsurance recoveries 1,036 11,515 9,128Expenses of managing insurance companies (3,377) (3,608) (10,614)Investment and other income from insurance activities 11,032 10,936 28,952 _______ ________ ________ Net expenses and other income from insurance (2,923) (2,933) (4,533)contracts acquired Amounts written off goodwill (1,676) - (1,100)Administrative expenses (30,785) (28,708) (59,567)Share of results of associates 96 111 127Share of results of joint ventures 148 132 139 ________ ________ ________ Profit from operations 5,579 7,207 14,179 Investment and other income from non-insurance 800 551 1,091activitiesFinance costs (1,422) (1,562) (3,114) ________ ________ ________ Profit before tax 4,957 6,196 12,156Income tax credit/(expense) 3 382 (374) (1,041) ________ ________ ________ Profit for the period from continuing 5,339 5,822 11,115operations ________ ________ ________ Attributable to:Equity holders of the parent 4,939 5,755 11,027Minority interest 400 67 88 ________ ________ ________ 5,339 5,822 11,115 ________ ________ ________ Earnings per share from continuing operations Basic (p) 5 12.43 14.85 28.14 ________ ________ ________ Diluted (p) 5 12.37 14.75 27.96 ________ ________ ________ Basic adjusted (p) 5 16.83 15.02 31.30 ________ ________ ________ Diluted adjusted (p) 5 16.74 14.93 31.10 ________ ________ ________ Consolidated Balance SheetAt 30 June 2007 At 30 June At 30 June At 31 December 2007 2006 2006 Note £000 £000 £000Non-current assetsGoodwill 37,058 41,120 38,742Intangible assets 10,546 11,723 10,617Property, plant and equipment 3,868 4,166 4,160Interests in associates 1,001 951 926Interests in joint ventures 599 599 543Investments 30 31 31Deferred tax assets 3,768 5,396 6,299 ________ ________ ________ 56,870 63,986 61,318 ________ ________ ________Current assetsTotal assets in insurance businesses 306,537 349,056 324,976Trade and other receivables 46,988 49,714 44,834Cash and cash equivalents 32,810 24,417 30,922 ________ ________ ________ 386,335 423,187 400,732 ________ ________ ________Total assets 443,205 487,173 462,050 ________ ________ ________Current liabilitiesTotal liabilities in insurance businesses 292,564 337,707 312,048Trade and other payables 19,001 21,210 17,221Tax liabilities 3,279 186 2,153Obligations under finance leases 131 115 149Bank overdrafts and loans 6 19,671 19,201 18,888Client funds 23,068 17,473 20,790 ________ ________ ________ 357,714 395,892 371,249 ________ ________ ________Net current assets 28,621 27,295 29,483 ________ ________ ________Non-current liabilitiesBank loans 6 22,538 29,550 26,282Retirement benefit obligation 10 11,963 16,592 19,609Provisions 1,825 4,812 2,597Obligations under finance leases 203 176 280Deferred consideration - LCL acquisition 5,958 5,234 6,174Deferred consideration - other 464 - 430 ________ ________ ________ 42,951 56,364 55,372 ________ ________ ________Total liabilities 400,665 452,256 426,621 ________ ________ ________ Net assets 42,540 34,917 35,429 ________ ________ ________EquityShare capital 7 400 397 397Share premium account 7 29,649 28,701 28,824Merger reserve 6,872 6,872 6,872Capital reserve 662 662 662Own shares (233) (238) (211)Retained earnings 4,101 (1,692) (1,804) ________ ________ ________Equity attributable to equity holders of the 41,451 34,702 34,740parentMinority interest 1,089 215 689 ________ ________ ________Total equity 42,540 34,917 35,429 ________ ________ ________ Consolidated Cash Flow StatementFor the six months ended 30 June 2007 Six months to Six months to Year to 30 June 30 June 31 December 2007 2006 2006 Note £000 £000 £000 Net cash from operating activities 8 6,947 (4,069) 14,623 Investing activitiesInterest received 277 325 681Proceeds on disposal of property, plant and 72 92 240equipmentPurchases of property, plant and equipment (289) (521) (1,273)Acquisition of intangible assets (206) - (782)Purchases of investments (21) (77) (77)Proceeds from sale of investments - 1,339 1,568Acquisition of subsidiaries - (345) (2,562)Disposal of subsidiary 545 - -Payment of deferred consideration (155) - (2,926)Net cash acquired with subsidiary - - 155 ________ ________ ________Net cash from/(used in) investing activities 223 813 (4,976) ________ ________ ________Financing activitiesProceeds from issue of shares 757 258 375Dividends paid (3,037) (2,356) (4,083)Repayments of borrowings (4,148) (6,945) (11,666)Repayments of obligations under finance leases (80) (66) (154)New bank loans raised - - 1,468Increase in bank overdrafts 1,220 4,948 4,466 ________ ________ ________Net cash used in financing activities (5,288) (4,161) (9,594) ________ ________ ________Net increase/(decrease) in cash and cash 1,882 (7,417) 53equivalentsCash and cash equivalents at beginning of year 30,922 31,828 31,828Effect of foreign exchange rate changes 6 6 (959) ________ ________ ________Cash and cash equivalents at end of period 32,810 24,417 30,922 ________ ________ ________ Consolidated Statement of Recognised Income and ExpenseFor the six months ended 30 June 2007 Six months to Six months to Year to 30 June 30 June 31 December 2007 2006 2006 £000 £000 £000 Unrealised losses on available-for-sale investments (404) (1,036) (1,069)Exchange differences on translation of foreign operations 16 (300) 1,308Actuarial gains on defined benefit pension schemes 6,932 7,337 4,107Tax on items taken directly to equity (2,532) (2,201) (1,371) ________ ________ ________Net income recognised directly in equity 4,012 3,800 2,975Profit for the period 5,339 5,822 11,115 ________ ________ ________Total recognised income and expense for the period 9,351 9,622 14,090 ________ ________ ________Attributable to:Equity holders of the parent 8,951 9,555 14,002Minority interests 400 67 88 ________ ________ ________ 9,351 9,622 14,090 ________ ________ ________ Notes to the Interim Financial InformationFor the six months ended 30 June 2007 1. Basis of preparation The interim financial information was approved by the board on 17 September2007. The group results for the six month periods to 30 June 2007 and 30 June2006 are unaudited, but have been reviewed by Deloitte & Touche LLP. The interimreport has been prepared in accordance with the recognition and measurementcriteria of applicable International Financial Reporting Standards and thedisclosure requirements of the Listing Rules. The accounting policies appliedare consistent with those used in the statutory accounts for the year ended 31December 2006. The group has not adopted IAS 34 'Interim Financial Reporting'. The financial information for the year ended 31 December 2006 does notconstitute statutory accounts as defined in section 240 of the Companies Act1985. A copy of the statutory accounts for that year has been delivered to theRegistrar of Companies. The auditors' report on these accounts was not qualifiedand did not contain statements under s237(2) or (3) of the companies Act 1985. The company has acquired a number of insurance companies. The assets of theinsurance companies are held for the benefit of the policyholders in the firstinstance and the group's interest is restricted to income from managing thesebusinesses and a share in any surplus after deferred consideration payments tothe former owners. Consequently, although fully consolidated, the assets andliabilities relating to insurance companies are separately identified in theseaccounts. Similarly, the income and expense items relating to insurance contracts aregrouped together in the consolidated income statement because most are related,for example claims and related insurance recoveries and to distinguish them fromthe group's main activities. 2. Segmental information For management purposes, the group is currently organised into three operatingdivisions - CTC Management, Charles Taylor Adjusting (formerly CTC Services) andCTC Run-off Services. Principal activities are as follows: CTC Management - Mutual management, captive management, investment managementand risk management. Charles Taylor Adjusting - Energy, Aviation, Non-marine andMarine (including Average) adjusting. CTC Run-off Services - insurance companyacquisition and run-off services. The results of the insurance companies havebeen shown separately in the segmental information. Segmental information aboutthese businesses is presented below: Six months to Six months to Year to 30 June 30 June 31 December 2007 2006 2006 £000 £000 £000RevenueManagement 17,048 16,703 35,420Adjusting 18,820 17,851 35,449Run-off Services 3,306 3,368 8,359Insurance companies - life and non-life 3,456 2,738 5,532Intercompany eliminations (1,911) (2,055) (5,647) _______ _______ _______Consolidated 40,719 38,605 79,113 _______ _______ _______ResultManagement 2,556 3,337 7,959Adjusting 3,240 3,206 5,024Run-off services 501 514 1,042Insurance companies - life and non-life 533 (195) 999 _______ _______ _______Consolidated 6,830 6,862 15,024 _______ _______ _______Amounts written off goodwill (1,676) - (1,100)Unallocated foreign exchange 181 102 (11)Share of results of associates and joint ventures 244 243 266 _______ _______ _______Profit from operations 5,579 7,207 14,179Investment income 800 551 1,091Finance costs (1,422) (1,562) (3,114) _______ _______ _______Profit before tax 4,957 6,196 12,156Tax 382 (374) (1,041) _______ _______ _______Profit after tax 5,339 5,822 11,115 _______ _______ _______ Associates and joint ventures would be included in the Adjusting segment but for the requirement to show their result separately where the equity method of accounting has been adopted which is the case in these accounts. Segmental information on a geographical basis is shown below: Six months to Six months to Year to 30 June 30 June 31 December 2007 2006 2006 £000 £000 £000RevenueUnited Kingdom 13,966 12,401 24,951Other Europe 3,496 3,163 6,893North America 6,140 5,592 11,551Asia Pacific 3,911 4,012 7,796Bermuda 13,206 13,437 27,922 _______ _______ _______Consolidated 40,719 38,605 79,113 _______ _______ _______ 3. Income tax credit/(expense) Six months to Six months to Year to 30 June 30 June 31 December 2007 2006 2006 £000 £000 £000Current tax: UK corporation tax (160) - (1,538) Foreign tax (1,134) (312) (623) _______ _______ _______ (1,294) (312) (2,161) _______ _______ _______Deferred tax: Current period 1,676 (62) 1,120 _______ _______ _______ 382 (374) (1,041) _______ _______ _______ Current corporation tax for the interim period is charged at 19.3% (2006 -5.0%), representing the best estimate of the weighted average annual corporationtax rate expected for the full financial year. This includes 4.4% which relatesto underprovision of foreign tax in 2006. Deferred tax movement in the interimperiod represents additional value recognised in respect of insurance companytax losses. 4. Dividends paid Six months to Six months to Year to 30 June 30 June 31 December 2007 2006 2006 £000 £000 £000Amounts recognised as distributions to equity holders in theperiod:Final dividend paid (2006 - 7.64p; 2005 - 6.04p per share) 3,037 2,356 2,356Interim dividend paid (2006 - 4.36p per share) - - 1,727 _______ _______ _______ 3,037 2,356 4,083 _______ _______ _______ The proposed interim dividend for the six months ended 30 June 2007 of 4.80p(2006 - 4.36p) per share was approved by the board on 17 September 2007 and inaccordance with IFRS, has not been included as a liability at 30 June 2007. 5. Earnings per share Earnings per ordinary share have been calculated by dividing the profit onordinary activities after taxation and minority interests for each period by theweighted average number of shares in issue. The shares held by the ESOP havebeen excluded from the calculation because the trustees have waived the right todividends on these shares. The calculation of the basic and diluted earnings per share is based on the following data: Six months to Six months to Year to 30 June 30 June 31 December 2007 2006 2006 £000 £000 £000EarningsEarnings for the purposes of adjusted earnings per share 6,685 5,825 12,266Amounts written off goodwill (1,676) - (1,100)Amortisation of acquired customer relationship intangible (70) (70) (139)assets _______ _______Earnings for the purposes of basic and diluted earnings per 4,939 5,755 11,027share being net profit attributable to equity holders of theparent _______ _______ Number Number NumberNumber of sharesWeighted average number of ordinary shares for the purposesof basic earnings per share 39,720,813 38,768,261 39,196,810Effect of dilutive potential ordinary shares:Share options 204,602 256,750 248,255 ____________ ____________ ____________Weighted average number of ordinary shares for the purposesof diluted earnings per share 39,925,415 39,025,011 39,445,065 ____________ ____________ ____________ 6. Bank overdrafts and loans Loans raised during the period amounted to £nil (to 30 June 2006 - £nil, full year 2006 - £1,468,000) and repayments on loans amounted to £4,148,000 (to 30 June 2006 - £6,945,000, full year 2006 - £11,666,000). 7. Share capital 258,120 ordinary 1p shares were issued during the period (to 30 June 2006 -1,222,591, full year 2006 - 1,261,369). The consideration above 1p per share isreflected in the share premium account and amounts to £825,000 (to 30 June 2006- £3,723,000, full year 2006 - £3,845,000). 8. Notes to the cash flow statement Six months to Six months to Year to 30 June 30 June 31 December 2007 2006 2006 £000 £000 £000 Profit from operations 5,046 7,402 13,180Adjustments for:Depreciation of property, plant and equipment 551 686 1,275Amortisation of intangibles 1,928 - 1,428Other non-cash items 61 - 103(Decrease)/increase in provisions (652) 344 (608)Share of results of associates and joint ventures (244) (243) (266) ________ ________ ________Operating cash flows before movements in working capital 6,690 8,189 15,112(Increase)/decrease in receivables (2,349) (2,751) 2,429Increase/(decrease) in payables 2,193 (4,118) 499 ________ ________ ________Cash generated by operations 6,534 1,320 18,040Income taxes paid (438) (1,020) (839)Interest paid (1,427) (1,552) (3,078)Dividends from insurance companies - 4,810 4,810 ________ ________ ________Net cash before movement in client monies 4,669 3,558 18,933Movement in client monies 2,278 (7,627) (4,310) ________ ________ ________Net cash from/(used in) operating activities 6,947 (4,069) 14,623 ________ ________ ________ Additions to motor vehicles during the period amounting to £nil (to 30 June 2006- £40,000, full year - £315,000) were financed by new finance leases. Cash and cash equivalents (which are presented as a single class of assets onthe face of the balance sheet) comprise cash at bank and other short-termhighly-liquid investments with a maturity of three months or less. The cash flowstatements exclude the cash flows within the group's insurance companies. Cash includes client monies of £23,068,000 (30 June 2006 - £17,473,000, 31December 2006 - £20,790,000). 9. Net interest bearing liabilities Six months to Six months to Year to 30 June 30 June 31 December 2007 2006 2006 £000 £000 £000 Cash and cash equivalents 32,810 24,417 30,922Bank overdrafts and current loans (19,671) (19,201) (18,888)Non-current bank loans (22,538) (29,550) (26,282)Loan stock (73) (78) (79)Finance leases (334) (291) (429) _______ _______ _______ (9,806) (24,703) (14,756)Client monies (23,068) (17,473) (20,790) _______ _______ _______ (32,874) (42,176) (35,546) _______ _______ _______ 10. Pensions The group contributes to a number of defined benefit pension schemes on behalfof employees. The present value of the retirement benefit obligation at the 30June interim reporting date has been arrived at by recalculating the 31 December2006 liabilities using the financial assumptions at 30 June 2007 and rollingforward the liability to 30 June 2007 allowing for interest and benefit accrual.The value of plan assets represents the bid value of invested assets at 30 June2007 plus cash balances held. The reduction in the retirement benefit obligation during the period from£19,609,000 to £11,963,000 is principally the result of an increase in thediscount rate used to calculate scheme liabilities from 5.3% at 31 December 2006to 6.0% at 30 June 2007 and an increase in the value of plan assets by£3,432,000. The effect of changes in assumptions is reflected in the Consolidated Statementof Recognised Income and Expense. Other movements in the retirement benefitobligation arise from the difference between amounts recognised in theConsolidated Income Statement and contributions made to and benefits paid by theschemes. 11. Related party transactions Transactions between the company and its subsidiaries, which are relatedparties, have been eliminated on consolidation and are not disclosed in thisnote. Transactions between the group and its associates and its joint venturesare not material and so have not been disclosed. 12. Post balance sheet event On 5 July 2007 the group acquired the Allegro group of companies, a Bermuda-based manager of captive insurance companies. This Interim Report contains certain forward-looking statements. By theirnature, forward-looking statements involve risks and uncertainties because theyrelate to events and depend on circumstances that will or may occur in thefuture. Actual results may differ from those expressed in such statements,depending on a variety of factors, including demand and pricing; operationalproblems; general economic conditions; political stability and economic growthin relevant areas of the world; changes in laws and governmental regulations;exchange rate fluctuations and other changes in business conditions; the actionsof competitors and other factors. Independent Review Report to Charles Taylor Consulting plc Introduction We have been instructed by the company to review the financial information forthe six months ended 30 June 2007 which comprise the Consolidated IncomeStatement, Consolidated Statement of Recognised Income and Expense, ConsolidatedBalance Sheet, the Consolidated Cash Flow Statement and related notes 1 to 12.We have read the other information contained in the interim report andconsidered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report is made solely to the company in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe company, for our review work, for this report, or for the conclusions wehave formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures are consistent withthose applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit.Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2007. Deloitte & Touche LLPChartered AccountantsLondon17 September 2007 Notes A review does not provide assurance on the maintenance and integrity of thewebsite, including controls used to achieve this, and in particular on whetherany changes may have occurred to the financial information since firstpublished. These matters are the responsibility of the directors but no controlprocedures can provide absolute assurance in this area. Legislation in the United Kingdom governing the preparation and dissemination offinancial information differs from legislation in other jurisdictions. This information is provided by RNS The company news service from the London Stock Exchange