Detica releases Q3 interim results; wins UK insurers contract

Detica Group plc (Detica, the Company or the Group), the specialist IT consultancy, today announces interim results for the six months ended 30 September 2005.

Key points:

• Revenue up 35% to £43.5 million (2004: £32.3 million); government up 44% to £30.0 million; commercial up 17% to £13.5 million.
• Strong profit before tax performance; core UK PBT up 32% to £6.8 million; group PBT up 18% to £4.6 million.
• Core UK operating margins stable at 14.8% (2004: 14.9%).
• Strong group cash position at £18.0 million (2004: £16.1 million).
• Diluted earnings per share up 43% to 18.0 pence (2004: 12.6 pence) including the impact of R&D tax credits.
• Interim dividend up 19% to 2.5 pence (2004: 2.1 pence).
• Acquisition of Evolution, a consultancy and system integrator in the Financial Services sector, for approximately £8.5 million in cash.
• Insurance Fraud Bureau signs five-year contract for fraud detection service.
• US regulatory approvals received, first contract signed, sales pipeline building.
• Significant progress with StreamShield Networks; CSG-3100 product development completed; first commercial deployment commenced and four additional trials or evaluations in progress.

Commenting on these results, Dr Tom Black, Chief Executive of Detica said today: "This is a very pleasing set of results. Our strong revenue growth underlines the forward momentum of the Group and has allowed us to continue with our investments in the US and in StreamShield, both of which are proceeding well. The successful integration of Extraprise during the half year proceeded as planned and when coupled with the acquisition of Evolution after the period end, means that we are achieving critical mass in our Commercial business to complement our strong performance in Government. The Group is trading well and our investments continue to show significant promise. The Board remains confident of another good year."

Separately, Detica announced that it has been awarded a contract on behalf of the UK insurance industry to help the Insurance Fraud Bureau (IFB), a body being established in early 2006, to detect and investigate serious and organised claims fraud. The contract, which has a value of £3.4M and will run for up to five years, is being funded by a consortium of more than 20 UK insurers.

The contract is focusing on distributed claims fraud, through which organised criminals make multiple, fraudulent insurance claims across many insurers. Under the contract, Detica will apply a series of advanced, new data analysis techniques to detecting patterns of fraudulent behaviour in huge volumes of claims data supplied to the IFB by UK insurers. These new techniques have been developed in-house by Detica's own Technology Innovations Group.

The contract will be run as a managed service, with Detica supplying fraud intelligence on an ongoing basis to an external team of insurance fraud investigators.

Richard Davies, Fraud Risk Manager, AXA Insurance commented, "We selected Detica for the quality of their analytical approach after an extensive review of competing suppliers. The consultancy's specialism in intelligence systems and experience of fraud detection across a range of different markets meant that they were ideally qualified for the role."

Richard Love, Head of Detica's anti-fraud team commented, "We are delighted to have secured this groundbreaking fraud detection project which places us at the vanguard of fraud detection in the European financial services industry. Our fraud detection approach is extremely powerful and is already finding applications beyond the financial services market".

Coinciding with the contract signing, Detica has released results from a MORI poll exploring public attitudes towards insurance fraud. A key finding of the research is that while most people think that a proportion of a typical insurance premium does go towards paying for insurance fraud, most overestimate the amount. More than half (54%) believe that fraud adds more than 10% to premiums, including 40% of people who believe this figure to be over 20%. In fact, the true figure is just 3.75% (source: Association of British Insurers).

Many can identify reasons that they think others would use to justify committing insurance fraud, such as poverty and debt (9%) or looking for payback on policies which they have never claimed on (14%). This could suggest that insurance fraud is seen as acceptable by some. However, around half (53%)believe that organised crime has at least "a fair amount" of involvement in funding or benefiting from insurance fraud – and the majority (71%) think that people might be more inclined to report incidents of insurance fraud if they believed a strong link to organised crime existed.

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