Charles Taylor Regulatory News (CTR)

23 Mar 2007 07:30

Charles Taylor Consulting PLC23 March 2007 PRESS RELEASE Contacts: John Rowe, Chairman 020 7759 4900 Damian Ely, Group Chief Operating Officer 020 7759 4960 George Fitzsimons, Group Finance Director 020 7759 6355 Charles Taylor Consulting plcAnnouncement of results for year ended 31 December 2006 Consolidated Financial HighlightsFor the year ended 31 December 2006 Year to Year to 31 December 31 December 2006 2005 IncreaseRevenue £79.1m £67.7m 17%Profit before tax - adjusted £13.4m £10.4m 28%Profit after tax - adjusted £12.4m £10.0m 23%Earnings per share - adjusted 31.3p 27.5p 14%Earnings per share - basic 28.1p 27.5p 3% Dividend per share - interim 4.36p 3.96p 10%Dividend per share - final 7.64p 6.04p 26% _________ _________ _________ 12.00p 10.00p 20% Profit before and after tax shown in these financial highlights have beenadjusted by £1.2m in total compared with the equivalent statutory figures (2005- nil). A goodwill charge of £1.1m arises under IFRS from the recognition of adeferred tax asset in relation to tax losses acquired with an insurance companysubsidiary. Profit and earnings per share shown above have been adjusted toexclude the goodwill charge and amortisation of acquired customer relationshipintangibles of £0.1m. Statutory profit and statutory earnings per share arecalculated after goodwill and amortisation of acquired customer relationshipintangibles and are shown on the Consolidated Income Statement. The final dividend is payable on 25 May 2007 to Shareholders on the register on20 April 2007. CHAIRMANOS STATEMENT The results for the year ended 31 December 2006 demonstrate that this has beenanother successful year for your company with growth across all divisions. Revenue was up 17% at £79.1m (2005 - £67.7m). After adjusting for the exclusionof goodwill amortisation, profit before tax rose by 28% to £13.4m (2005 -£10.4m), and profit after tax by 23% to £12.4m (2005 - £10m). Adjusted earningsper share rose by 14% to 31.3p (2005 - 27.5p) a lower percentage growth ratethan in respect of the profit figures, as a result of the increased number ofshares in issue. The combined result from the CTC Services and the CTC Management divisions grewby a very respectable 18.8%. I am also pleased to be able to report that net debt reduced to £35.5m (2005 -£44.8m) with free cash flow of £17.8m (2005 - £6.5m). The operating profit tocash conversion rate rose to 123% (2005 - 60%), largely as a result ofadditional cash flows generated by the Run-off division. The activities of the 819 people who work within the group are wide ranging.Almost everything that we do however, relates one way or another to the businessof insurance and, with the creation of the new Run-off division in 2005, it isfair now to say that we are involved in most parts of the insurance managementprocess: - we create and manage both mutual insurance companies and captive insurance companies; - we provide investment management services on behalf of clients; - we manage claims through our adjusting activities; and - we manage the orderly run-off of both property and casualty and life assurance companies, some of which are owned by the group. Against the backdrop of an increasingly complex and sophisticated insurancemarket it is gratifying that, in a number of cases, our client relationships goback a very long time; we do not take our clients for granted and all concernedseek to improve the quality of the service provided both to existing clients andto the new clients the group continues to attract. The breadth of the groupOsexpanding client base is illustrated, on the one hand, by our recent appointmentas managers of a new Yen10bn life reinsurance operation for Japanese interests,and on the other by our appointment as managers of a significant new mutualinsurer for UK local authorities, which starts operations in April 2007. As far as our Services division is concerned, we have been instructed to act onsome recent high-profile losses. We have also made significant progress inrelation to the integration of the loss adjusting operations, and I hope to beable to announce further news about this shortly. The Run-off division considered various potential acquisitions, in both the lifeand the property & casualty sectors and successfully completed three of these.It provided strategic advice to a variety of clients and worked extensively on anumber of business development projects. Corporate Governance As anticipated in last yearOs statement, your board has concluded that we shouldsplit the role of Chairman and Chief Executive; whilst remaining as Group ChiefExecutive I shall, therefore, be stepping down as Chairman as soon as a suitablecandidate can be found to fulfil the role of Chairman in a Non-Executivecapacity. Mike Dean, who has served as a Director since June 2000, will not be standingfor re-election at the companyOs Annual General Meeting. He has served yourinterests well and we will miss his effective input in our deliberations. Dividend In line with the boardOs desire to maintain its progressive dividend policy andin recognition of the increased cash generated by the business and the boardOsconfidence in the prospects for the group, it is proposed to raise the finaldividend for the year by 26% to 7.64p (2005 - 6.04p). Subject to approval byshareholders at the AGM this will be paid to those on the register at close ofbusiness on 20 April 2007. This dividend, together with the interim dividend of4.36p (2005 - 3.96p) gives an increase year on year of 20%. The board wishes tomaintain a progressive dividend policy whilst ensuring a satisfactory level ofdividend cover. Outlook and Current Trading Trading since the year-end has been in line with managementOs expectations andwe are confident that through a combination of organic growth, new acquisitionsand new projects your company can continue to prosper and grow. My thanks are due, on your behalf, to all those whose hard work has contributedtowards this excellent set of results. John RoweChairman22 March 2007 BUSINESS REVIEWDescription of the BusinessSummary Charles Taylor Consulting (CTC) provides management and insurance-relatedservices to both buyers of insurance and insurance companies. Management Division Management and Creation of Mutuals: This is the largest activity of the Management division and involves theprovision of all the day-to-day services needed to run mutual insuranceassociations. Mutuals are generally created by companies or organisationsoperating in the same or similar fields as each other and who accordingly havesimilar liability exposures. Rather than insure with a commercial profit-makinginsurer, members of mutual insurance associations collectively self-insure. Amutual insurance association is owned by its members who also provide thecapital in contrast to the normal relations between a commercial insurer and apolicy holder. Investment Management: Investment management is provided both to client mutuals and group ownedinsurance companies. Captive Management, Insurance Review and Risk Management: These activities include the management of captive insurance companies,principally but not exclusively in Bermuda, and the provision of risk managementand other advice to corporate buyers of insurance on the structure andappropriateness of their insurance arrangements. Services Division This division provides loss adjusting capabilities to the worldOs insurancemarkets and Average Adjusting to shipowners. The adjusting activities on behalfof insurers, which also include surveying and risk assessment, are concentratedin four principal areas. - Aviation- Energy- Marine- Non-marine (property & casualty) For management and reporting purposes Average Adjusting is included within themarine business. Run-off Division The Run-off division, as its name implies, involves the orderly management ofinsurance and life assurance companies which have ceased underwriting on the onehand and the claims arising on discontinued books of insurance business on theother. This activity may involve acquisitions in either case. Insurance Cycle Given that the groupOs business is almost entirely related to insurance, thegroupOs activities are subject to the insurance cycle, albeit in different ways.In the case of mutual management, when insurance is more expensive (hardmarket), the balance shifts in favour of mutuals, where the aim is to provideinsurance at cost and where there is the ability to absorb high levels ofaggregate risk between the members. By contrast the availability of cheaperinsurance (soft market) may lead to increased competitive pressures and aclimate where the alternative risk transfer mechanisms, such as mutuals, becomeless attractive. In most circumstances, however, once companies have joined a mutual, throughwhich they collectively control their own insurance affairs, they tend to remainmembers irrespective of any shift in the insurance cycle. The conditions that favour the creation and expansion of mutual insuranceschemes (i.e. hard market) are in some ways balanced by being less beneficialfor the Services division businesses because there are usually fewer claims todeal with, and vice versa. In the case of the Services division, a soft marketresults in cheaper insurance and lower deductibles, something which exposesinsurers to the greater probability of claims and thus increases theopportunities for the Services division. While hard insurance markets also create favourable conditions for the Run-offdivision, as insurers decide to reallocate capital or dispose of non-core orunprofitable books of business, contracts for managing the run-off of claimstypically last for several years once secured, whatever the cyclical conditions. Business PerformanceManagement Division The promising developments referred to at the half year continued into thesecond half with the result that this division performed well. Marine Mutuals: The Standard Clubs performed well in all areas. During the year the new ITsystem went live, the culmination of several yearsO development. Non-marine Mutuals:AmericasOur two Bermuda-based mutuals both prospered. Signal, which covers certain US Maritime employersO liabilities to theiremployees in relation to workplace injuries, had another good year. Memberpayrolls were well ahead of expectations, particularly in the shipyard andoffshore sectors. The decision to open a new office on the West Coast of the UShas been vindicated, with further growth being seen in this important area. The SCALA mutual that covers the workersO compensation liabilities of themajority of Canadian ship-owners also performed well. Australia The group manages two mutuals in Australia: Unimutual, a mutual for Australianand New Zealand universities, and Capricorn Mutual, which provides coverage tomembers of the Capricorn Society, a trade association for Australian and NewZealand businesses in the motor trade. Progress was made in developing boththese mutuals but Capricorn in particular required additional investment in bothinfrastructure and management time, which depressed the result for the year. UK The performance of the UK-based mutuals was mixed. The Livery Companies Mutualincreased its membership during the year, continuing the expansion into areas ofoperation beyond those of the original founder members, and the Stop Loss Mutualalso performed well. The Newsagents Mutual membership fell during the yearprimarily as a result of the decision not to follow the commercial market ratinglevels ever lower. New Mutuals: In the second half of the year the group was appointed the manager of MarathonMutual, which provides coverage to UK care homes. This mutual progressed wellduring the remainder of the year. Further progress was made by the public sectorunit and the London Authorities Mutual will operate from April 2007 as planned.The development of mutuals in other areas of the public sector is expected tocontinue throughout 2007. Investment Management: The groupOs investment management business produced another good performance forits clients. Funds under management rose by 9% to over US$1.2bn. Risk Management: Risk Management business increased considerably as the US business continued towiden its client base. Services Division There is a significant level of overlap between our various operations, bestillustrated by the Mexico office which operates in all the groupOs adjustingbusiness sectors. Mexico was included in the Non-Marine business in 2005 whereasit is included in Energy in 2006. For consistency purposes therefore the 2005percentages of revenue quoted below have been restated to reflect this. Aviation: 25% of Services Revenue (2005 - 23%): Aviation revenues overall rose strongly during the year driven by an increase inclaims instructions in Asia Pacific, together with the continued development ofthe liability business. In the USA a good performance from the new Miami office,which handled a range of Latin American claims, helped offset a moredisappointing year for our general (light aircraft) Aviation business in theUSA. Energy: 41% of Services Revenue (2005 - 43%): Revenues were similar to the prior year as a result of the UK business seeingcertain large claims arising out of the 2005 hurricanes in the Gulf of Mexicosettled earlier than anticipated and a quiet hurricane season during 2006.However, Mexico produced a strong performance helped by the significant claimsthey had received from Hurricane Rita. Our Canadian operations also performedwell overall. Marine: 23% of Services Revenue (2005 - 24%): The Marine business performed well in 2006. There were a number of largecasualties entrusted to the group which benefited the UK offices in particular.Jakarta, Piraeus and notably Shanghai also performed better than expected.Revenues were down in Singapore. Non-marine: 11% of Services Revenue (2005 - 10%): Non-marine performed well, particularly in London, the largest office, as wellas Miami, which improved considerably on 2005. Madrid suffered from a lack ofnew instructions. Progress was made in developing the Middle East businessthrough the Dubai office. Run-off Division Run-off Services: The group is now the largest third-party provider of run-off services to thelife insurance sector on the Isle of Man following the acquisition of twothird-party administration businesses. The outlook to develop further lifeadministration business in 2007 is promising. On the non-life business, LCL considered a significant number of potentialacquisitions during the year, none of which have been completed to date, asituation which reflects the general market background which saw a very lowlevel of completed acquisitions. The division intends to pursue opportunitiesaggressively where a deal satisfactory to all parties can be achieved. Insurance Companies: Property & Casualty Business The management of the group-owned Bestpark International Limited and AssociatedInternational Insurance (Bermuda) Limited has continued during the year with, inthe case of Bestpark, deterioration on some large exposures being broadly offsetby successful commutations. A minority interest in Bestpark International Limited was sold during the year. Life Business The life business has seen the successful consolidation of several of oursmaller offshore life companies into the groupOs life assurer on the Isle ofMan, LCL International Life Assurance. This company paid dividends of £4.8mduring the year. Segmental information is provided on the activities of the Management, Servicesand Run-off divisions in note 2 to this press release. Results In 2006, turnover rose from £67.7m to £79.1m. Adjusted profit before tax rosefrom £10.4m to £13.4m. Total Shareholder Return Total shareholder return was a satisfactory 27.6% in 2006, with the share priceat 391.25p at 29 December 2006 compared to 316.25p at 30 December 2005 and234.00p at 31 December 2004 and dividends paid in 2006 of 10.40p compared to9.38p in 2005. Dividends and Earnings per Share The proposed final dividend for 2006 is 7.64p (2005 - 6.04p) so that the totaldividend for the year is 12.00p. This represents a year-on-year increase of 20%.It remains the intention of the board to maintain a progressive dividend policy,while retaining sufficient cash in the business to fund organic and acquisitiongrowth. Adjusted dividend cover of 2.6 times compares to 2.8 times the previousyear. Adjusted earnings per share rose from 27.5p to 31.3p, an increase of 14%. There remain 3.1m shares under option at the end of the year, which produce anadjusted diluted earnings per share of 31.1p. Of the outstanding share options,1.7 million were exercisable below the companyOs share price at the close ofbusiness on 31 December 2006 - 391.25p. Key Performance Indicators The board uses a range of key performance indicators to measure past performanceand as a basis for future business planning. At a corporate level, theseindicators are all financial measures. Note 2006 2005DefinitionEarnings per share (p) 1 31.3 27.5Revenue growth (%) 2 17.4 7.3Operating margin (%) 3 19.5 16.8Total shareholder return (%) - one year 4 27.6 40.6Total shareholder return (%) - three year 5 65.0 39.2Interest cover (times) 6 5.3 7.8Dividend cover (times) 7 2.6 2.8Free cash flow (£m) 8 17.8 6.5 Notes: 1. Adjusted earnings divided by weighted average number of shares. 2. Annual growth at constant exchange rates. 3. Adjusted profit as a percentage of revenue. 4. Annual movement in share price plus dividends paid (assuming reinvested) divided by share price at beginning of year. 5. Three-year movement in share price plus dividends paid (assuming reinvested) divided by share price at beginning of period. 6. Total profit from operations adjusted for amortisation of goodwill and acquired intangible assets plus investment and other income from non-insurance activities divided by finance costs. 7. Adjusted profit for the year divided by dividends paid and declared for the year. 8. Net cash from operating activities excluding movement in client monies plus interest received less expenditure on acquisition of tangible and intangible assets plus disposal proceeds. Note: 2006 figures have been adjusted to exclude a goodwill charge of £1,100,000and amortisation of acquired customer relationship intangibles of £139,000. In addition to these corporate measures, the financial performance of everybusiness unit is monitored regularly against budget and both financial andnon-financial measures are employed as appropriate to each business, for examplefee earner productivity, numbers of new instructions, value and ageing of workin progress and debtors and cash collections for the time-based businesses,membership numbers and premium trends for mutual management businesses, andsolvency and actuarial reserves for insurance companies. Treasury The group continues to manage its exposure to foreign currency fluctuations bythe use of forward foreign exchange contracts. The contracts open during theyear and at the year-end were all to protect the groupOs exposure to movementsin the US$: £ sterling rate. Over recent years, the US$ has weakened significantly against the £ sterling. In2003, the US$ profits of the group were translated at 1.63 to £1 and this hadmoved to 1.85 by 2006. In addition, the group uses working capital overdrafts in billing currenciesother than the accounting currency, as a way to manage the exposure to currencyfluctuations. With interest rates at historically low levels in recent years, the group hastended to maintain borrowings mostly at floating rates. In view of the increasedborrowings since December 2005, the group took out an interest rate cap in May2006 which covers a principal of £20.65m (reducing as borrowings are repaid) andcaps three-month LIBOR at 5.5% for three years. The borrowings in £ sterling and US$ are principally at rates that are linked toLIBOR plus margins of 1.25 - 1.75%. Interest cover has reduced to 5.3 times (2005 - 7.8 times), resulting from afull yearOs interest charge on the increased level of borrowings undertaken tofinance the acquisition of LCL. The level of cover remains satisfactory. Taxation During 2006, the effective tax rate on profits was 8.6%, an increase on the 2005level (3.8%), reflecting a higher level of UK and overseas taxable profits andlower prior yearOs adjustments. Cash tax liabilities are significantly lower asa result of the UK tax relief available from Bestpark International LimitedOslosses. Financing During the year, £17.8m of free cash flow was generated (representing 123% ofadjusted profit from operations, compared to 60% in 2005) and loan repayments of£11.7m were made. Net debt reduced by £9.2m to £35.5m, with a reduction of £5.8min borrowings, a reduction of £4.3m in client funds and a reduction of £0.9m incash and cash equivalents. The group has issued share capital (including share premium) of £29.2m at 31December 2006. During the year, a number of executive and share scheme options were exercisedproducing cash of £375,000. During 2007, 1.5 million options are exercisable atbelow the market price at 31 December 2006. If they were all exercised theywould generate £4.7m in cash for the group. Acquisitions In June 2006, the group acquired MGI Loss Adjusters Inc. The maximumconsideration will amount to £2.0m and is subject to profitability targets beingachieved. Three small acquisitions were completed within the Run-off Division in the year,two of which are third-party administration businesses on the Isle of Man(Vertex Administration and the remaining 40% minority interest in FITAdministration) and one closed life company, Premium Life International. Retirement Benefit Schemes The group has four defined benefit pension schemes, two of which haveliabilities which exceed their assets by a material amount. Arrangements haveexisted for some time to fund the scheme deficits over a period agreed with thetrustees of the schemes involved, but it is recognised that, in order to meetthe reasonable expectations of scheme members and indeed the new statutoryfunding objective, the group is likely to seek complete funding within a shorterperiod. The company intends to address its obligations fully, while balancingthe various requirements of scheme members, shareholders and other stakeholders. Principal Risks and Uncertainties The principal risks facing the group and the processes by which they are managedwill be explained in the groupOs Annual Report and Financial Statements. John RoweChief Executive Damian ElyGroup Chief Operating Officer George FitzsimonsGroup Finance Director22 March 2007 Consolidated Income StatementFor the year ended 31 December 2006 Year to Year to 31 December 31 December 2006 2005 Note £000 £000Continuing operationsRevenue 73,581 67,330 Revenue from insurance contracts acquired 8,059 592Outward reinsurance premiums (2,527) (242) ________ ________Net revenue from insurance contracts acquired 5,532 350 Total revenue 2 79,113 67,680 Claims from insurance contracts acquired (31,999) (1,603)Reinsurance recoveries 9,128 1,628Expenses of managing insurance companies (10,614) (314)Investment and other income from insurance activities 28,952 564 _______ ________Net expenses and other income from insurance contracts acquired (4,533) 275 Amounts written off goodwill (1,100) -Administrative expenses (59,567) (56,812)Share of results of associates 127 139Share of results of joint ventures 139 97 ________ ________Profit from insurance contracts acquired 999 625 ________ ________Profit from other activities 13,180 10,754 ________ ________Total profit from operations 14,179 11,379 Investment and other income from non-insurance activities 1,091 580Finance costs (3,114) (1,534) ________ ________Profit before tax 12,156 10,425Income tax expense (1,041) (398) ________ ________Profit for the year from continuing operations 11,115 10,027 ________ ________ Attributable to:Equity holders of the parent 11,027 9,915Minority interest 88 112 ________ ________ 11,115 10,027 ________ ________ Earnings per share from continuing operations Basic (p) 3 28.14 27.45 ________ ________Diluted (p) 3 27.96 27.27 ________ ________Basic adjusted (p) 3 31.30 27.45 ________ ________Diluted adjusted (p) 3 31.10 27.27 ________ ________ Consolidated Balance SheetAt 31 December 2006 At 31 December At 31 December 2006 2005 Note £000 £000Non-current assetsGoodwill 38,742 39,047Intangible assets 10,617 13,567Property, plant and equipment 4,160 4,392Interests in associates 926 883Interests in joint ventures 543 517Investments 31 31Deferred tax assets 6,299 7,652 ________ ________ 61,318 66,089 ________ ________Current assetsTotal assets in insurance businesses 324,976 405,792Trade and other receivables 4 44,834 46,764Cash and cash equivalents 30,922 31,828 ________ ________ 400,732 484,384 ________ ________Total assets 462,050 550,473 ________ ________Current liabilitiesTotal liabilities in insurance businesses 312,048 391,083Trade and other payables 5 17,221 23,263Tax liabilities 2,153 888Obligations under finance leases 149 115Bank overdrafts and loans 18,888 17,718Client funds 20,790 25,100 ________ ________ 371,249 458,167 ________ ________Net current assets 29,483 26,217 ________ ________Non-current liabilitiesBank loans 26,282 33,385Retirement benefit obligation 19,609 24,159Provisions 2,597 4,229Obligations under finance leases 280 206Deferred consideration - LCL acquisition 6,174 7,369Deferred consideration - other 430 - ________ ________ 55,372 69,348 ________ ________Total liabilities 426,621 527,515 ________ ________ Net assets 35,429 22,958 ________ ________EquityShare capital 397 384Share premium account 28,824 24,979Merger reserve 6,872 6,872Capital reserve 662 662Own shares (211) (1,501)Retained earnings (1,804) (8,731) ________ ________Equity attributable to equity holders of the parent 34,740 22,665Minority interest 689 293 ________ ________Total equity 35,429 22,958 ________ ________ The financial statements were approved by the board of directors and authorisedfor issue on 22 March 2007. George FitzsimonsDirector22 March 2007 Consolidated Cash Flow StatementFor the year ended 31 December 2006 Year to Year to 31 December 31 December 2006 2005 Note £000 £000GroupNet cash from operating activities 7 14,623 14,765 Investing activitiesInterest received 681 317Proceeds on disposal of property, plant and equipment 240 115Purchases of property, plant and equipment (1,273) (976)Acquisition of intangible assets (782) (784)Purchases of investments (77) (9)Proceeds from sale of investments 1,568 232Acquisition of subsidiaries (2,562) (27,887)Payment of deferred consideration obligation acquired with LCL companies (2,926) -Net cash acquired with subsidiary 155 2,032 ________ ________Net cash used in investing activities (4,976) (26,960) ________ ________ Financing activitiesProceeds from issue of shares 375 494Dividends paid (4,083) (3,371)Repayments of borrowings (11,666) (4,093)Repayments of obligations under finance leases (154) (140)New bank loans raised 1,468 30,706Increase/(decrease) in bank overdrafts 4,466 (4,065) ________ ________Net cash (used in)/from financing activities (9,594) 19,531 ________ ________Net increase in cash and cash equivalents 53 7,336Cash and cash equivalents at beginning of year 31,828 24,222Effect of foreign exchange rate changes (959) 270 ________ ________Cash and cash equivalents at end of year 30,922 31,828 ________ ________ Consolidated Statement of Recognised Income and ExpenseFor the year ended 31 December 2006 Year to Year to 31 December 31 December 2006 2005 £000 £000Unrealised (losses)/gains on available-for-sale investments (1,069) 372Exchange differences on translation of foreign operations 1,308 766Actuarial gains on defined benefit pension schemes 4,107 1,437Tax on items taken directly to equity (1,371) (431) ________ ________Net income recognised directly in equity 2,975 2,144 ________ ________Profit for the year 7,032 6,656 ________ ________Total recognised income and expense for the year 10,007 8,800 ________ ________Attributable to:Equity holders of the parent 9,919 8,688Minority interests 88 112 ________ ________ 10,007 8,800 ________ ________ Notes to the AccountsFor the year ended 31 December 2006 1. Basis of preparation The financial information set out above does not constitute the company'sstatutory accounts for the years ended 31 December 2006 or 2005, but is derivedfrom those accounts. Statutory accounts for 2005 have been delivered to theRegistrar of Companies and those for 2006 will be delivered following thecompany's annual general meeting. The auditors have reported on those accounts;their reports were unqualified and did not contain statements under s. 237 (2)or (3) Companies Act 1985. 2. Segmental information For management purposes, the group is currently organised into three operatingdivisions - Management, Services and Run-off Services. Principal activities are as follows: Management - Mutual management, captive management, investment management andrisk management. Services - Energy, Aviation, Non-marine and Marine (including Average)adjusting. Run-off Services Insurance company acquisition and run-off services. Theresults of insurance companies have been shown separately in the segmentalinformation. Segmental information about these businesses is presented below: Year to Year to 31 December 31 December 2006 2005 £000 £000RevenueManagement 35,420 32,981Services 35,449 34,196Run-off services 8,359 536Insurance companies - life and non-life 5,532 350Eliminations (5,647) (383) ________ ________Consolidated 79,113 67,680 ________ ________ Year to Year to 31 December 31 December 2006 2005 £000 £000ResultManagement 7,959 6,285Services 5,024 4,644Run-off services 1,042 106Insurance companies - life and non-life 999 625 ________ ________Consolidated 15,024 11,660 ________ ________ Amounts written off goodwill (1,100) -Unallocated foreign exchange (11) (517)Share of results of associates and joint ventures 266 236 ________ ________Profit from operations 14,179 11,379Investment income 1,091 580Finance costs (3,114) (1,534) ________ ________Profit before tax 12,156 10,425Tax (1,041) (398) ________ ________Profit after tax 11,115 10,027 ________ ________ Year to Year to 31 December 31 December 2006 2005 £000 £000Other informationCapital additionsManagement 430 152Services 617 644Run-off services 40 1Unallocated corporate assets 186 179 ________ ________Consolidated 1,273 976 ________ ________Depreciation and amortisationManagement 265 239Services 606 525Run-off services 214 23Insurance companies 33 -Unallocated corporate assets 157 89 ________ ________Consolidated 1,275 876 ________ ________ At At 31 December 31 December 2006 2005 £000 £000Balance sheetAssetsManagement 66,578 59,420Services 100,653 110,875Run-off services 29,453 27,390Insurance companies - life and non-life 324,976 405,792Unallocated corporate assets and eliminations (59,610) (53,004) ________ ________Consolidated total assets 462,050 550,473 ________ ________LiabilitiesManagement 42,403 39,012Services 80,058 92,186Run-off Services 25,495 31,056Insurance companies - life and non-life 312,048 391,083Unallocated corporate liabilities and eliminations (33,383) (25,822) ________ ________Consolidated total liabilities 426,621 527,515 ________ ________ Segmental information on a geographical basis is shown below: Year to Year to 31 December 31 December 2006 2005RevenueUnited Kingdom 24,951 21,971Other Europe 6,893 2,413North America 11,551 8,990Asia Pacific 7,796 8,286Bermuda 27,922 26,020 ________ ________Consolidated 79,113 67,680 ________ ________ Year to Year to 31 December 31 December 2006 2005Other informationCapital additionsUnited Kingdom 389 508Other Europe 66 7North America 296 152Asia Pacific 511 278Bermuda 11 31 ________ ________Consolidated 1,273 976 ________ ________ At At 31 December 31 December 2006 2005 £000 £000Balance sheetAssetsUnited Kingdom 360,726 439,338Other Europe 250,785 302,234North America 38,732 42,233Asia Pacific 18,061 16,655Bermuda 32,922 26,071Eliminations (239,176) (276,058) ________ ________Consolidated 462,050 550,473 ________ ________ 3. 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 thefollowing data: Year to Year to 31 December 2006 31 December 2005 £000 £000EarningsEarnings for the purposes of adjusted earnings per share 12,266 9,915Amounts written off goodwill (1,100) -Amortisation of acquired customer relationship intangible assets (139) - ________ ________Earnings for the purposes of basic and diluted earnings per share beingnet profitattributable to equity holders of the parent 11,027 9,915 _________ _________ Number NumberNumber of sharesWeighted average number of ordinary shares for the purposes of basic 39,196,810 36,115,159earnings per shareEffect of dilutive potential ordinary shares:Share options 248,255 241,046 ____________ ____________Weighted average number of ordinary shares for the purposes of diluted 39,445,065 36,356,205earnings per share ____________ ____________ 4. Trade and other receivables At 31 December At 31 December 2006 2005 £000 £000Trade debtors 18,907 19,254Amounts owed by subsidiaries - -Amounts owed by associates 4 24Other debtors 3,806 4,466Prepayments and accrued income 22,041 22,889Corporation tax 76 131 ________ ________ 44,834 46,764 _________ _________ 5. Trade and other payables At 31 December At 31 December 2006 2005 £000 £000'C' Loan stock 79 98Other loans 4,681 450Trade creditors 3,282 4,791Amounts owed to subsidiaries - -Amounts owed to associates 203 146Other taxation and social security 1,103 834Other creditors 1,454 1,975Accruals and deferred income 6,149 10,582Deferred consideration - pre existing obligation of LCL - 4,387Deferred consideration - other 270 - ________ ________ 17,221 23,263 _________ _________ Included in other loans are amounts owed to insurance businesses of £4,219,000.A corresponding asset is included in the balance sheet within 'total assets ininsurance businesses'. 6. Net interest bearing liabilities At 31 December At 31 December 2006 2005 £000 £000Net interest-bearing liabilitiesCash and cash equivalents 30,922 31,828Bank overdrafts and current loans (18,888) (17,718)Non-current bank loans (26,282) (33,385)Loan stock (79) (98)Finance leases (429) (321) ________ ________ (14,756) (19,694)Client funds (20,790) (25,100) ________ ________ (35,546) (44,794) ________ ________ 7. Notes to the cash flow statement Year to Year to 31 December 2006 31 December 2005 £000 £000Profit from operations 13,180 10,754 Adjustments for:Depreciation of property, plant and equipment 1,275 876Amortisation of intangibles 1,428 57Other non-cash items 103 80Decrease in provisions (608) (187)Share of results of associates and joint ventures (266) (236) ________ ________Operating cash flows before movements in working capital 15,112 11,344Decrease/(increase) in receivables 2,429 (7,864) 499 6,808 ________ ________Cash generated by operations 18,040 10,288Income taxes paid (839) (1,090)Interest paid (3,078) (1,377)Dividends from insurance companies 4,810 - ________ ________Net cash before movement in client monies 18,933 7,821Movement in client monies (4,310) 6,944 ________ ________Net cash from operating activities 14,623 14,765 ________ ________ Additions to motor vehicles during the period amounting to £315,000 (2005 -£148,000) 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 groupOs insurance companies. Cash includes client monies of £20,790,000 (2005 - £25,100,000). This Press Release contains certain forward-looking statements. By their nature,forward-looking statements involve risks and uncertainties because they relateto events and depend on circumstances that will or may occur in the future.Actual results may differ from those expressed in such statements, depending ona variety of factors, including demand and pricing; operational problems;general economic conditions; political stability and economic growth in relevantareas of the world; changes in laws and governmental regulations; exchange ratefluctuations and other changes in business conditions; the actions ofcompetitors and other factors. This information is provided by RNS The company news service from the London Stock Exchange