Delivering substantial progress Results for the half year to 30 June - - PowerPoint PPT Presentation

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Delivering substantial progress Results for the half year to 30 June - - PowerPoint PPT Presentation

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Professional services for global insurance markets Delivering substantial progress Results for the half year to 30 June 2015 August 2015 Charles Taylor plc Investor Presentation 2015 Half Year Results 28 August 2015 Delivered substantial

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SLIDE 1

Delivering substantial progress

Results for the half year to 30 June 2015 August 2015

Professional services for global insurance markets

Charles Taylor plc Investor Presentation 2015 Half Year Results 28 August 2015

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SLIDE 2

Delivered substantial progress in H1 2015

2 2

  • Increased Revenue

+21.7% to £69.1m

  • Increased Statutory PBT

+28.1% to £5.3m

  • Increased Adjusted PBT

+14.1% to £5.9m

  • Increased Statutory EPS1.

+1.5% to 7.84p

  • Increased Adjusted EPS2.

+10.2% to 8.00p

  • Progressed numerous growth initiatives - including:
  • Completed Rights Issue
  • Launched Lloyd’s turn-key managing agent
  • Acquired international life insurer
  • Agreed to acquire significant stake in insurance software specialist –

expected to complete October 2015

  • Interim dividend of 3.00p (2014: 2.85p1.)

Charles Taylor plc Investor Presentation 2015 Half Year Results 28 August 2015

1. 2014 figures rebased to allow for the increased shares in circulation following the Rights Issue in April 2015. 2. Adjusted EPS figures have an adjustment applied to share capital to allow for the full effect of the Rights Issue in both H1 2015 and 2014.

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SLIDE 3

Focusing on organic growth from professional services with targeted acquisitions

3 3

Strong fundamentals

  • Well established in

global insurance market

  • Long-standing, loyal

client relationships

  • Highly skilled,

technically excellent staff

Consistently profitable

  • Reliable revenue

streams

  • Diversified, resilient

business

  • Well supported

dividend

Positive prospects

  • Driving forward four

key growth themes:

  • Grow mutual-related

businesses

  • Expand Adjusting Services
  • Build on existing ISS skills

and services

  • Consolidate run-off life

insurers

  • Healthy acquisition

pipeline

Charles Taylor plc Investor Presentation 2015 Half Year Results 28 August 2015

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SLIDE 4

Ins Cos 5%

Adjusted EPS H1 20152

Professional Services – revenue principally from fees Owned Insurance Companies

Management Adjusting Insurance Support

Owns and consolidates life insurance companies. Owns and runs-off non-life insurance companies End to end insurance company management Loss adjusting for larger and more complex losses Stand-alone professional insurance support services 25% 56% 19%

Positioned for growth in global insurance markets

4

35% 43% 22% Insurance Support Management Adjusting

Revenue H1 20151 Staff breakdown H1 2015

Adjusting Management Insurance Support

  • 1. Stated before inter-segment eliminations. 2. Excludes acquired intangible amortisation of £0.7m and non-recurring costs of £0.1m.
  • 3. As at 27 August 2015.
  • •
  • • •
  • •
  • •
  • • •
  • We have over 1,200 staff in 69 offices in 28 countries worldwide 3.
  • Professional

Services 95%

Expanding global network

  • •
  • Charles Taylor plc

Investor Presentation 2015 Half Year Results 28 August 2015

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SLIDE 5

Strong first half from ISS, steady performance from MS – market-wide reduction in claims and investment for growth slows AS

H1 Results 2015 (£m) Revenue Operating segment profit

H1 2015 H1 2014 H1 2015 H1 2014

Management 23.6 20.3 3.1 3.1 Adjusting 29.4 26.4 0.8 1.4 Insurance Support 15.3 9.7 2.6 1.1 Professional Services 1 68.3 56.4 6.6 5.6 Owned Ins Cos 2.5 2.0 0.2 0.0 Eliminations (1.6) (1.6)

  • Group 1

69.1 56.8 6.8 5.6 5 Group

H1 2015 H1 2014

Adjusted PBT (£m) 5.9 5.2 Statutory PBT (£m) 5.3 4.1 Adjusted EPS (p) 2. 8.00 7.25 Statutory EPS (p) 3. 7.84 7.73 Statutory EPS - rebased (p) 3. 6.96 5.99 Dividend per share (p)3. 3.00p 2.85 Charles Taylor plc Investor Presentation 2015 Half Year Results 28 August 2015

1. Small rounding differences arise in the total amounts above 2. Adjusted EPS figures have an adjustment applied to share capital to allow for the full effect of the Rights Issue in both H1 2015 and 2014. 3. 2014 figures rebased to allow for the increased shares in circulation following the Rights Issue in April 2015.

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SLIDE 6

Benign claims market - losses continue to be below 10-year average

6 Charles Taylor plc Investor Presentation 2015 Half Year Results 28 August 2015

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SLIDE 7

Long term trend in insured losses is still upwards

7

Munich Re: “It would be wrong to conclude any trend reversal based

  • n the last few years. The loss trend of the past decades is clearly

upwards, primarily driven by the rise in exposed values.”

Source: Munich Re, NatCatSERVICE (2015)

Insured losses US$m Trend Insured losses US$m

Charles Taylor plc Investor Presentation 2015 Half Year Results 28 August 2015

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SLIDE 8

Net debt (£m) (Net debt)/ cash (Average annual net debt)/cash At 30 June 2014

(21.9) (23.7)

At 31 Dec 2014

(32.6) (24.6)

At 30 June 2015

1.8 (18.2)

Adjusting Services working capital (months) WIP Debtors Working capital months At 30 June 2014

5.3 5.3 10.6

At 31 Dec 2014

4.8 4.9 9.7

At 30 June 2015

4.9 4.5 9.4

Retirement benefit

  • bligation (£m)

At 30 June 2014

31.4

At 31 Dec 2014

41.5

At 30 June 2015

36.2

Balance sheet strengthened following Rights Issue and improved working capital performance in AS

8 Movement primarily due to changes in financial assumptions arising from movements in corporate bond yields Charles Taylor plc Investor Presentation 2015 Half Year Results 28 August 2015 We are focused on managing Adjusting Services’ working capital:

  • Appointed a dedicated working capital manager in 2015
  • Started rolling out new case management system
  • Net debt benefits from Rights Issue proceeds
  • We have again benefited from the advanced fee payment by an

insurance company client reducing debt from the y/e figure

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SLIDE 9

Geared for recovery New services gaining traction Building record of acquisitions and releases Comment Benefits flowing through 9 Delivered H1 Pipeline Grow Mutual- related businesses

Key growth themes

Expand Adjusting Services Build on existing ISS skills & services Consolidate run-off life insurers

  • Secured Strike

Club management contact

  • Opened new
  • ffices
  • Hired senior

loss adjusters

  • Launched

CTMA and won 1st client

  • Agreed to

acquire Fadata

  • Acquired

Scottish Widows International Select

  • pportunities

in the short/ medium term Select

  • pportunities

in the short/ medium term Seeking new

  • pportunities

Long gestation period Select

  • pportunities

in the short/ medium term

Delivering on growth themes

Deliver increased revenues by growing alongside the mutual insurers managed by Charles Taylor,

  • ffering new products and services,

and winning new contracts Grow adjusting revenues by expanding into new locations and expanding the services offered from each office Generate new revenues by extending our professional services capabilities for global insurance markets Secure capital releases by acquiring and consolidating international run-

  • ff life insurance businesses

Charles Taylor plc Investor Presentation 2015 Half Year Results 28 August 2015

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SLIDE 10

Accelerating growth and shareholder value

  • Charles Taylor is a strong, resilient and diversified Group
  • Our people are highly regarded, technically excellent and committed to service

excellence

  • Our people are supported by strong leadership across all business lines
  • Our extensive and growing office network ensures we are located close to our clients
  • We are successfully executing on our business strategy for growth:

– Management Services has secured a new mutual insurance company client; we are working on many new initiatives to deliver further growth – Adjusting Services is geared for growth in profits when market claims reverts to

  • norm. We are expanding our network and recruiting experienced adjusters

– Insurance Support Services is delivering strong results and is working on numerous insurance services initiatives – Owned Insurance Companies is acquiring and consolidating run-off life insurers

  • We have successfully completed a Rights Issue to support our targeted strategy to

source and complete attractive opportunities for acquisitions joint ventures and business investments across all business lines

10 Charles Taylor plc Investor Presentation 2015 Half Year Results 28 August 2015

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SLIDE 11

Background materials

11 Charles Taylor plc Investor Presentation 2015 Half Year Results 28 August 2015

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SLIDE 12

Half year results – H1 2015 vs. H1 2014

12 Six months to 30 June 2015 Professional Services Owned Ins Cos Eliminations/other Total Revenue (£m)

68.3 2.5 (1.6) 69.1

Operating segment profit (£m)

6.6 0.2 - 6.8

Finance costs/other (£m)

  • - (0.7) (0.7)

Non-controlling interests before tax (£m) (0.2) 0.1 -

(0.1)

Adjusted profit before tax (£m)

6.5 0.3 (0.7) 5.9

Tax (£m)

(0.7) - - (0.7)

Tax on non-controlling interests (£m)

(0.1) - - (0.1)

Adjusted earnings (£m)

5.6 0.3 (0.7) 5.2

Adjusted earnings per share (p)1.

8.72 0.42 (1.14) 8.00

Six months to 30 June 2014 Professional Services Owned Ins Cos Eliminations/other Total Revenue (£m)

56.4 2.0 (1.6) 56.8

Operating segment profit (£m)

5.6 0.0 - 5.6

Finance costs/other (£m)

  • - (0.6) (0.6)

Non-controlling interests before tax (£m) (0.0) 0.2 -

0.2

Adjusted profit before tax (£m)

5.6 0.2 (0.6) 5.2

Tax (£m)

(0.8) - - (0.8)

Tax on non-controlling interests (£m)

0.0 - - 0.0

Adjusted earnings (£m)

4.8 0.2 (0.6) 4.4

Adjusted earnings per share (p)

7.89 0.34 (0.98) 7.25

Charles Taylor plc Investor Presentation 2015 Half Year Results 28 August 2015

Note: Small rounding differences arise in the total amounts above 1. Adjusted EPS figures have an adjustment applied to share capital to allow for the full effect of the Rights Issue in both H1 2015 and 2014.

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SLIDE 13

Analysis of adjusted profit before tax – H1 2015 vs. H1 2014

13 H1 2015 £m H1 2014 £m Statutory profit before tax 5.3 4.1 Amortisation of acquired intangible assets 0.7 0.7 Non-recurring items – reorganisation costs 0.1 0.2 Non-controlling interests before tax (0.1) 0.2 Adjusted profit before tax 5.9 5.2

Note: Small rounding differences arise in the total amounts above

Charles Taylor plc Investor Presentation 2015 Half Year Results 28 August 2015

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SLIDE 14

H1 2015 Segmental results

14

£m Professional Services Owned Insurers Other Group Six months to 30 June 2015 Management Services Adjusting Services Insurance Support Unallocated Total Eliminations Total Revenue from external clients 23.6 29.4 13.7 0.0 66.7 2.5 - 69.1 Revenue from other operating segments

  • - 1.6 - 1.6 - (1.6) -

Total revenue 23.6 29.4 15.3 0.0 68.3 2.5 (1.6) 69.1 Depreciation and amortisation (0.6) (0.7) (0.2) - (1.6) (0.2) - (1.8) Other expenses (19.9) (27.9) (12.5) 0.1 (60.2) (2.1) 1.6 (60.6) Operating segment profit 3.1 0.8 2.6 0.1 6.6 0.2 - 6.8 Finance costs / other (0.8) Non-controlling interests before tax (0.1) Profit before tax – adjusted 5.9 Amortisation of acquired intangible assets (0.7) Non-recurring costs (0.1) Non-controlling interests before tax 0.1 Profit before tax - statutory 5.3 Note: Small rounding differences arise in the total amounts above

Charles Taylor plc Investor Presentation 2015 Half Year Results 28 August 2015

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Free cash flow – H1 2015 vs. H1 2014

15 15 £m H1 2015 H1 2014 Operating cash flow before movement in working capital Change in working capital Change in insurance company net assets 7.8 6.9 (0.0) 6.4 9.9 0.7 Cash flow generated by operations whereof Professional Services whereof Insurers in Run-off Income tax paid Interest paid 14.6 14.7 (0.0) (0.6) (0.5) 16.9 16.2 0.7 (0.5) (0.6) Net cash flow before movement in client funds Net capital expenditure Deferred consideration Interest received 13.6 (3.9) (0.3) 0.0 15.8 (1.7)

  • 0.0

Free cash flow 9.5 14.2

Note: Small rounding differences arise in the total amounts above

Charles Taylor plc Investor Presentation 2015 Half Year Results 28 August 2015

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£m H1 2015 H1 2014 Revenue Expenses

69.1

(62.3) 56.8 (51.2) Operating segment profit Finance costs /other Non-controlling interests before tax 6.8

(0.8) (0.1)

5.6 (0.6) 0.2 Adjusted profit before tax 5.9 5.2 Tax Tax on non-controlling interests

(0.7)

0.0 (0.8) 0.0 Adjusted earnings 5.2 4.4 Adjusted earnings per share (p)1. 8.00 7.25

Income statement – H1 2015 vs. H1 2014

16 16 Charles Taylor plc Investor Presentation 2015 Half Year Results 28 August 2015

Note: Small rounding differences arise in the total amounts above 1. Adjusted EPS figures have an adjustment applied to share capital to allow for the full effect of the Rights Issue in both H1 2015 and 2014.

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Segmental balance sheet – H1 2015 vs. H1 2014

17

£m 30 June 2015 30 June 2014 Professional Services Owned Ins Cos Group Professional Services Owned Ins Cos Group Management Services

8.0 - 8.0 3.2 - 3.2

Adjusting Services

132.2 - 132.2 113.3 - 113.3

Insurance Support Services

37.7 - 37.7 31.6 - 31.6

Unallocated and eliminations 36.5 - 36.5 24.2 - 24.2 Owned Ins Cos

  • 845.3 845.3 - 310.9 310.9

Total assets

214.4 845.3 1,059.7 172.3 310.9 483.2

– Non-current assets

73.1 3.0 76.1 63.2 2.8 66.0

– Current assets

141.3 842.3 983.6 109.1 308.1 417.2

Total assets

214.4 845.3 1,059.7 172.3 310.9 483.2

Current liabilities

(108.4) (788.9) (897.3) (83.5) (270.5) (354.0)

Deferred consideration

(0.8) (9.7) (10.5) (0.6) (4.1) (4.7)

Net current assets

32.1 43.7 75.8 25.0 33.5 58.5

Non-current liabilities

(43.4) - (43.4) (56.7) - (56.7)

Deferred consideration

(2.5) (12.5) (15.0) (2.0) (7.8) (9.8)

Total liabilities

(155.1) (811.1) (966.2) (142.8) (282.4) (425.2)

Net assets

59.3 34.2 93.5 29.5 28.5 58.0

Non-controlling interests

(1.5) (20.9) (22.4) (1.0) (20.6) (21.6)

Equity attributable to owners

  • f the Company

57.8 13.3 71.1 28.5 7.9 36.4

Charles Taylor plc Investor Presentation 2015 Half Year Results 28 August 2015

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SLIDE 18

TERP adjustment factor

18 Charles Taylor plc Investor presentation interim results 2012 31 August 2012 Basis of calculation pence 3 shares for every 7 shares held (3:7) Share price on day before go ex rights: 263.5 Rights issue price: 155 Calculation 7 shares at 263.5p (Share price on day before go ex rights) = 1844.5 plus 3 shares at 155p (Rights issue price) = 465 means that 10 shares = 2309.5 The theoretical ex-rights price (TERP) is: 2,309.5p divided by 10 = 230.95 The TERP adjustment factor is 263.5p divided by 230.95p = 1.14094

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Rights Issue restatement of earnings per share

19 Statutory IFRS Adjusted June 2015 June 2014 June 2015 June 2014

Earnings (£m)

4.5 3.7 5.2 4.4 Share capital pre-Rights Issue (m) 45.5 41.9 45.5 41.9 TERP/RI adjustment (m) 12.4 5.9 19.7 19.7 Share capital post-Rights Issue (m) 57.9 47.8 65.2 61.6 ESOP (m) (0.4) (0.3) (0.4) (0.3) Weighted share capital - reported (m) 57.5 47.5 64.8 61.4 eps - statutory (p) 7.84 7.73 - - eps - adjusted (p)

  • - 8.00 7.25

Weighted share capital - no Rights Issue (m) 45.0 41.6 45.0 41.6 eps - statutory (p) 10.01 8.83 - - eps - adjusted (p)

  • - 11.50 10.69

Charles Taylor plc Investor Presentation 2015 Half Year Results 28 August 2015

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SLIDE 20

Disclaimer

This presentation contains certain forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will or may occur in the future. Actual results may differ from those expressed in such statements, depending on a variety of factors, including demand and pricing,

  • perational problems, general economic conditions, political stability

and economic growth in relevant areas of the world, changes in laws and governmental regulations, exchange rate fluctuations and other changes in business conditions, the actions of competitors and other factors.

20 Charles Taylor plc Investor Presentation 2015 Half Year Results 28 August 2015

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Delivering substantial progress

Results for the half year to 30 June 2015 August 2015

Professional services for global insurance markets

Charles Taylor plc Investor Presentation 2015 Half Year Results 28 August 2015