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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Charles Taylor Plc | LSE:CTR | London | Ordinary Share | GB0001883718 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 345.00 | 344.00 | 345.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
TIDMCTR
RNS Number : 4062X
Charles Taylor PLC
28 August 2015
PRESS RELEASE
Hot Features
Premium
David Marock, Group Chief Executive 020 3320
Contacts: Officer 8988
Damian Ely, Group Chief Operating 020 3320
Officer 2202
Mark Keogh, Group Chief Financial 020 3320
Officer 2241
Charles Taylor plc
Announcement of results for six months ended 30 June 2015
Consolidated financial highlights
For the six months ended 30 June 2015
Revenue GBP69.1m increased (2014: GBP56.8m)
by 21.7%
Adjusted profit GBP5.9m increased (2014: GBP5.2m)
before tax (1) by 14.1%
Statutory profit GBP5.3m increased (2014: GBP4.1m)
before tax by 28.1%
Professional services GBP6.6m increased (2014: GBP5.6m)
profit by 16.9%
Net cash/debt GBP1.8m net cash (2014: GBP21.9m
net debt)
Average annual net GBP18.2m reduced (2014: GBP23.7m)
debt by 23.2%
Adjusted earnings 8.00p increased
per share (1, 2) by 10.2% (2014: 7.25p)
Statutory earning 7.84p increased
per share (3) by 1.5% (2014: 7.73p)
Dividend per share
(3) 3.00p (2014: 2.85p)
Notes:
Movements are calculated using unrounded numbers so minor rounding differences may exist.
1. The adjusted figures exclude the following: (GBPm) 2015 2014 ---------------------------------- ------ ------ Acquired intangible amortisation 0.7 0.7 Non-recurring costs (see note 17) 0.1 0.2 Non-controlling interests - profit before tax (0.1) 0.2 ---------------------------------- ------ ------ Adjustments to profit before tax 0.7 1.1 Tax on non-recurring costs (0.1) (0.1) ---------------------------------- ------ ------ Adjustments to earnings 0.6 1.0 ---------------------------------- ------ ------
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.
"Charles Taylor has made progress in the first half of 2015. We completed a successful Rights Issue and have delivered on numerous significant initiatives in the first half year."
David Marock
Group Chief Executive Officer
Business highlights
-- Strong growth in revenue to GBP69.1m (2014: GBP56.8m)
-- Increased statutory profit before tax of GBP5.3m (2014: GBP4.1m) and adjusted profit before tax of GBP5.9m (2014: GBP5.2m)
-- Substantial progress in delivering growth strategy -- Successful Rights Issue in April 2015, raised GBP28.9m after expenses. -- Interim dividend increased to 3.00p (2014:2.85p(3) )
Group Chief Executive Officer's Review
Charles Taylor has made substantial progress in the first half of 2015. We completed a successful Rights Issue and delivered on numerous important initiatives in the first half year. These include the launch of the Group's Lloyd's managing agency, the acquisition of an international life insurer, signing an agreement to acquire a significant stake in an insurance software specialist, the expansion of our international office network and the appointment of key staff and senior loss adjusters.
The Group delivered strong growth in revenue, as the benefits of previously announced growth initiatives started to flow through, combined with solid growth in adjusted profit before tax. We benefited from our broad diversification of operations across the global insurance market. A strong performance from our Insurance Support Services business and steady progress by our Management Services and Owned Insurance Companies businesses have more than compensated for the weaker trading conditions experienced by the Adjusting Services business.
Group revenue for the first six months of 2015 increased to GBP69.1m (2014: GBP56.8m). Statutory profit before tax of GBP5.3m (2014: GBP4.1m) and adjusted profit before tax of GBP5.9m (2014: GBP5.2m) were both up on the prior half year. Earnings per share figures have been restated to reflect the Rights Issue, undertaken in April 2015, which significantly increased the Group's number of shares in circulation. Adjusted earnings per share increased to 8.00p (2014: 7.25p) (1, 2) and statutory earnings per share were up to 7.84p (2014: 7.73p)(3) .
Professional Services
The Group's core Professional Services businesses performed well overall. An increased contribution from the Insurance Support Services business resulted in a more equal balance in performance across the three Professional Services businesses:
-- Management Services performed steadily in the first half after a period of sustained growth. The mutuals managed by the Group performed well overall on behalf of their members.
-- Adjusting Services had a challenging first half, with the market-wide reduction in complex claims continuing. Despite this, the business maintained a good overall volume of claims and its top line benefited from a full half year contribution from Knowles, foreign exchange movements, along with the recruitment and deployment of various senior adjusters. Revenue growth was offset by increased operating costs associated with investing in new offices and senior adjusters along with the strengthening of the business' operations and foreign exchange movements.
-- Insurance Support Services delivered a strong first half. The core business delivered a steady performance, supported by a strongly increased contribution from the new business initiatives introduced under the Group's growth strategy in recent years.
Owned Insurance Companies
The Owned Insurance Companies business performed steadily overall. The life insurance companies continued to make a positive contribution to the Group, including the benefits that are anticipated to flow from the most recent acquisitions. At the same time, we continue to explore options for the Group's non-life insurance companies. Revenue increased to GBP2.5m (2014: GBP2.0m) and operating segment profit was up to GBP0.2m (2014: GBP0.0m).
Group results H1 2015
Six months Six months % change
to 30 to 30
June 2015 June 2014
-------------------- ----------- ----------- ---------
Revenue (GBPm) 69.1 56.8 +21.7%
-------------------- ----------- ----------- ---------
Adjusted profit
before tax (GBPm) 5.9 5.2 +14.1%
-------------------- ----------- ----------- ---------
Statutory profit
before tax (GBPm) 5.3 4.1 +28.1%
-------------------- ----------- ----------- ---------
Adjusted earnings
per share (p) 8.00 7.25 +10.2%
-------------------- ----------- ----------- ---------
Statutory earnings
per share (p) 7.84 7.73 +1.5%
-------------------- ----------- ----------- ---------
Dividend (p) 3.00 2.85(3) +5.3%
-------------------- ----------- ----------- ---------
Net debt (GBPm) 1.8 cash 21.9 n/a
-------------------- ----------- ----------- ---------
Professional Services performance H1 2015
(GBPm) Revenue Operating segment
profit
--------------------- ------------------------ ------------------------
Six months Six months Six months Six months
to 30 to 30 to 30 to 30
June 2015 June 2014 June 2015 June 2014
--------------------- ----------- ----------- ----------- -----------
Management Services 23.6 20.3 3.1 3.1
--------------------- ----------- ----------- ----------- -----------
Adjusting Services 29.4 26.4 0.8 1.4
--------------------- ----------- ----------- ----------- -----------
Insurance Support
Services 15.3 9.7 2.6 1.1
--------------------- ----------- ----------- ----------- -----------
Unallocated 0.0 0.0 0.1 0.1
--------------------- ----------- ----------- ----------- -----------
Total 68.3 56.4 6.6 5.6
--------------------- ----------- ----------- ----------- -----------
Owned Insurance Companies performance H1 2015
(GBPm) Revenue Operating segment
profit
----------------- ------------------------ ------------------------
Six months Six months Six months Six months
to 30 to 30 to 30 to 30
June 2015 June 2014 June 2015 June 2014
----------------- ----------- ----------- ----------- -----------
Owned Insurance
Companies 2.5 2.0 0.2 0.0
----------------- ----------- ----------- ----------- -----------
Revenue figures are stated before inter-segment eliminations
Rights Issue and agreement to acquire a stake in Fadata
(MORE TO FOLLOW) Dow Jones Newswires
August 28, 2015 02:02 ET (06:02 GMT)
We have been successfully executing our growth strategy since 2011. As a result, we are in a position to be able to consider an increased number and range of potential acquisition, joint venture and business investment opportunities. In order to take advantage of these, we undertook a Rights Issue in April 2015, raising GBP28.9m after expenses.
We are evaluating a number of opportunities. As previously stated, such opportunities need to be a good strategic, cultural and financial fit with the Group's existing businesses. The first of these to be announced, has been our agreement with The Riverside Company, a global private equity firm, to acquire collectively a majority interest in Fadata, a specialist provider of software solutions to the global insurance industry. We are excited by the potential of this joint venture, which will both support the growth of Fadata's software business globally and further expand our own technology capabilities and service offering for our insurance-related clients worldwide. This is expected to complete by October 2015.
Management Services
Our Management Services business performed steadily after a period of sustained growth, achieving a good increase in revenue in H1 2015 with operating segment profit in line with the prior year. The mutuals managed by the Group performed well overall on behalf of their members.
Management Services - UK & International
Delivered good results for The Standard Club: We have managed The Standard Club since it was founded in 1884. The club provides protection and indemnity (P&I) insurance to approximately 10% of the global shipping market. Our work is delivering positive results for the club. At the February 2015 renewal, the club achieved a 'breakeven' underwriting result, consistent with its aim of providing cover to the mutual's members 'at cost'. Tonnage increased by 3% to 135m gross tons from the 2014 renewal and free reserves increased by 3% to $380m.
We have supported the club to progress a number of initiatives during H1:
-- The Singapore War Risks Mutual, a class within Standard Asia and Singapore's first war risks mutual insurer, commenced underwriting on 20 February 2015.
-- Syndicate 1884 at Lloyd's began underwriting on 1 April 2015 offering a range of fixed premium marine and energy covers to club members and other insureds.
These initiatives are intended to diversify the club's business and income streams and add further to the financial strength of the club.
Acquired the management contract of The Strike Club: In early 2015, we were appointed by the Strike Club to manage the club, which is the only dedicated mutual insurer covering the running costs of vessels delayed by strikes, shore delays, collisions, groundings and other incidents outside an owner's or charterer's control. To facilitate this appointment, we acquired some of the previous independent manager's companies. We are preparing the club for Solvency II, the EU-wide capital requirements and risk management standards that are being introduced in January 2016.
Effectively managed of Offshore Pollution Liability Association (OPOL): We provide financial and administrative management support and IT support to OPOL, a mutual insurance association, established to meet offshore pollution claims under the Offshore Pollution Liability Agreement 1974. We delivered high quality management support services to the mutual in H1 2015.
Management Services - Americas
Delivered growth for Signal Mutual: We have managed Signal Mutual, since it was founded in 1986. Signal Mutual is the largest provider of Longshore workers' compensation insurance to the US maritime industry. The mutual is performing well. Ten new members have joined the mutual since the membership year commenced on 1 October 2014. The projected payroll of the member companies is expected to reach US$4b this membership year. Safeshore, the new Longshore workers' compensation program for smaller employers, backed by Signal Mutual and launched in October last year, is delivering a good performance as well.
Achieved steady performance for SCALA: We have managed SCALA, which provides marine workers compensation to the majority of Canada's ship owners since 1978. The mutual secured a new Canadian member and delivered a steady performance in H1 2015 under our management.
Adjusting Services
Adjusting Services had a challenging first half, with the market-wide reduction in complex claims continuing. The business maintained a good overall volume of claims and its top line benefited from a full half year contribution from Knowles, foreign exchange movements, along with the recruitment and deployment of various senior adjusters. Revenue growth was offset by increased operating costs associated with investing in new offices and senior adjusters along with the strengthening of the business' operations and foreign exchange movements. The further expansion in our network and teams positions the business well to benefit from an upturn in market-wide complex claims.
Munich Re NatCatSERVICE Natural catastrophes in the first half of 2015 - Insured losses in US$ (published July 2015) --------------------------------------------------------------------------------------- H1 2015 H1 2014 10 year average --------------------- --------------------- ----------------------------------------- US$12bn US$23bn US$27bn --------------------- --------------------- ----------------------------------------- Swiss Re preliminary Sigma estimates Global disaster events in the first half of 2015 - Insured losses in US$ (published August 2015) ----------------------------------------------------------------------------------------- H1 2015 H1 2014 10 year average ------------------------ ------------------------ ------------------------------------- US$16.5bn US$23.6bn US$29.0bn ------------------------ ------------------------ -------------------------------------
Investing for growth: We have further extended our office network, recruited senior adjusters with strong market followings to drive further business growth and strengthened the operational capability of the business in the first half of 2015.
Effective succession planning: We are pleased to announce that Damian Ely will be appointed as Chief Executive Officer of the Adjusting Services business on 1 January 2016, in succession to Arthur Clarke, who will retire from the company on 31 December 2015. Damian has long experience of working in the international insurance markets. He joined Charles Taylor in 1988 and is currently the Group Chief Operating Officer and an Executive Director of Charles Taylor. He originally joined Charles Taylor's Management Services - Americas business and then spent ten years based in the US, latterly as Chief Operating Officer - Americas. Damian will continue as an Executive Director of Charles Taylor.
We would like to thank Arthur for his contribution to Charles Taylor. During his tenure, Adjusting Services has grown from an operation with a turnover of just GBP18m in 2002 to today's global adjusting business with revenues of GBP56m in 2014. He has also driven the significant expansion of our Adjusting operations which has seen offices opened in every continent and the loss adjusting headcount more than double.
Insurance Support Services
The Insurance Support Services business had a strong first half. The core business delivered a steady performance, supported by a significantly increased contribution from the new business initiatives introduced under the Group's growth strategy.
Insurance Support Services - non-life business
The non-life Insurance Support Services business includes Charles Taylor Insurance Services (CTIS), Charles Taylor Managing Agency (CTMA) and our investment management, captive management, risk consulting and specialty risks business lines.
Increased traction for Charles Taylor Insurance Services (CTIS): CTIS provides outsourced back office insurance services to the Lloyd's, London and international insurance markets. The business has built on the improved performance reported in 2014 and delivered a steady overall performance in H1, with a number of services gaining greater traction in the market. These include increases in business volume for our static claims and elective claims management services. We have supported a leading European acquirer of run-off insurance companies by providing run-off claims management services for their portfolio of insurance companies. CTIS is also participating in a market-wide initiative to integrate claims management software services into Lloyd's Electronic Claims Files (ECF).
Increased contribution from other non-life business lines: The Group's other non-life insurance business lines performed well overall in the first half. It is particularly pleasing to see that our investments in many non-life growth initiatives are now making a meaningful contribution to the business' bottom line. Charles Taylor Managing Agency (CTMA), the Group's Lloyd's turn-key managing agency, performed well. It has been appointed by its first syndicate, Syndicate 1884, which commenced underwriting in April 2015. We intend that CTMA will offer its syndicate management capabilities to other Lloyd's syndicates in the future. Charles Taylor Third Party Administration (CTTPA) also had a good first half and received invitations to tender for additional workers' compensation claims handling mandates. Our Risk Consulting business is integrating the small risk business acquired at the end of 2014 in order to build our presence in North
America.
(MORE TO FOLLOW) Dow Jones Newswires
August 28, 2015 02:02 ET (06:02 GMT)
Focus on insurance technology services: Charles Taylor delivers a wide range of specialist and bespoke technology solutions, along with systems development and implementation support to numerous insurance-related clients. These include the technology related services provided by Charles Taylor KnowledgeCenter and CTIS. We are driving forward the development of the Group's insurance technology business and have appointed a senior executive in H1 to lead the development of the Group's insurance technology business strategy.
Insurance Support Services - Life business
The Group's international life run-off servicing business based in the Isle of Man performed well. We are actively marketing our new insurance fund services business, launched to provide specialised fund services for life companies' unitised funds and portfolio bonds, to prospective clients.
Owned Insurance Companies
The insurance companies business performed steadily overall.
Focused on integrating life businesses
The life business had a good first half. In line with our business strategy, we are focused on seeking acquisition opportunities in the UK international life insurance sector. In H1, we made good progress in integrating the former Nordea Life and Pension and Scottish Widows International Life businesses and anticipate that we will receive court approval to transfer both businesses into our wholly owned life insurance business by the year end.
Reduced exposure to non-life Run-off
The performance of the Group's non-life insurance companies was up in H1. We have clearly stated our intention to reduce our exposure to the non-life insurance run-off sector. We are exploring options for our non-life insurance companies to do so.
Other business strategy initiatives
In H1, we undertook a group-wide staff engagement survey. This reported that nine out of ten Charles Taylor staff would recommend the Group as a great place to work. This is an excellent result, which compares particularly well with other organisations and demonstrates that the overwhelming majority of staff are fully committed to the businesses and the work we deliver for our clients. We also launched a Learning and Development core curriculum, to put more emphasis on training and personal development of the Group's staff.
Governance update
Rupert Robson, Chairman of the Company, will retire from the role on 28 August 2015, following the release of the Company's half year results. Edward Creasy, who has been an independent Non-executive Director of Charles Taylor since 1 January 2014, will succeed Rupert as Chairman. Edward's appointment follows a thorough search process which was led by Gill Rider, Senior Independent Non-Executive Director.
Edward Creasy has had a long career in the London Market insurance industry and was formerly Chief Executive Officer of Kiln plc and latterly Chairman of the Kiln Group from 2001 to 2010. He currently holds a various other senior non-executive directorships. He is a Member of the Council of Lloyd's Market Supervision and Review Committee and was previously a Director of the Lloyd's Franchise Board.
The Board would like to thank Rupert for his contribution to the progress and development of Charles Taylor during his time as Chairman.
Current trading and outlook
The Group has had a positive start to the second half of 2015. Management Services is performing well and Insurance Support Services is building on its strong first half. Adjusting Services is receiving a steady volume of claims and is well placed to capitalise when the volume of large and complex insured claims in the market returns to the long-term norm. The Owned Insurance Companies business is well positioned to benefit from its recent life company acquisitions.
We have made significant progress in delivering our growth strategy in the first half with numerous initiatives taken forward, including the acquisition of Scottish Widows International, reaching an agreement to invest in Fadata and the launch of the Group's Lloyd's turn-key managing agent. The Group completed a successful Rights Issue, which has given us the resources and flexibility to drive forward our strategy. We are currently evaluating a number of acquisition, joint venture and business investment opportunities which have the potential to be a good strategic, cultural and financial fit with the Group's existing businesses.
We are very positive about the future prospects of Charles Taylor. The potential for growth in the professional services delivered by the Group to global insurance markets, along with the life company acquisition market, is high. We are successfully executing our strategy for growth and are building on a significant number of initiatives which we believe will deliver further growth for the benefit of shareholders, clients and our highly professional team of people.
David Marock
Group Chief Executive Officer
27 August 2015
Group Chief Financial Officer's Report
Results
The results for the period are summarised in the following table and are explained in more detail in the Group Chief Executive Officer's Review.
Six months to 30 June Six months to 30 June
2015 2014
----------------- ------------------------------------------------- -------------------------------------------------
Professional Owned Eliminations/ Total Professional Owned Eliminations/ Total
Services Insurance other Services Insurance other
Companies Companies
----------------- ------------- ---------- -------------- ------ ------------- ---------- -------------- ------
Revenue
(GBPm) 68.3 2.5 (1.6) 69.1 56.4 2.0 (1.6) 56.8
----------------- ------------- ---------- -------------- ------ ------------- ---------- -------------- ------
Operating
segment
profit
(GBPm) 6.6 0.2 - 6.8 5.6 0.0 - 5.6
----------------- ------------- ---------- -------------- ------ ------------- ---------- -------------- ------
Finance
costs/other
(GBPm) - - (0.7) (0.7) - - (0.6) (0.6)
----------------- ------------- ---------- -------------- ------ ------------- ---------- -------------- ------
Non-controlling
interests
before
tax (GBPm) (0.2) 0.1 - (0.1) (0.0) 0.2 - 0.2
----------------- ------------- ---------- -------------- ------ ------------- ---------- -------------- ------
Adjusted
profit
before
tax (GBPm) 6.5 0.3 (0.7) 5.9 5.6 0.2 (0.6) 5.2
----------------- ------------- ---------- -------------- ------ ------------- ---------- -------------- ------
Tax (GBPm) (0.7) - - (0.7) (0.8) - - (0.8)
----------------- ------------- ---------- -------------- ------ ------------- ---------- -------------- ------
Tax on
non-controlling
interests
(GBPm) (0.1) - - (0.1) 0.0 - - 0.0
----------------- ------------- ---------- -------------- ------ ------------- ---------- -------------- ------
Adjusted
earnings
(GBPm) 5.6 0.3 (0.7) 5.2 4.8 0.2 (0.6) 4.4
----------------- ------------- ---------- -------------- ------ ------------- ---------- -------------- ------
Adjusted
earnings
per share
(p) 8.72 0.42 (1.14) 8.00 7.89 0.34 (0.98) 7.25
----------------- ------------- ---------- -------------- ------ ------------- ---------- -------------- ------
Note: Small rounding differences can arise in the total amounts above.
The adjusted financial measures exclude acquired customer relationship intangible charges, non-recurring items and non-controlling interests as set out in the table below.
GBPm Six months Six months
to 30 June to 30 June
2015 2014
--------------------------- ------------ ------------
Statutory profit before
tax 5.3 4.1
--------------------------- ------------ ------------
Amortisation of acquired
intangible assets 0.7 0.7
--------------------------- ------------ ------------
Non-recurring items
(note 17) 0.1 0.2
--------------------------- ------------ ------------
Non-controlling interests
before tax (0.1) 0.2
--------------------------- ------------ ------------
Adjusted profit before
tax 5.9 5.2
--------------------------- ------------ ------------
The full impact of the Rights Issue has been included in the number of shares used in the adjusted EPS calculations for both 2015 and 2014.
Net debt, cash flow and financing
(MORE TO FOLLOW) Dow Jones Newswires
August 28, 2015 02:02 ET (06:02 GMT)
Net cash at the half year was GBP1.8m, which includes the net proceeds from the Rights Issue, GBP28.9m, compares to net debt of GBP21.9m at June 2014. The movement also reflects an increase in working capital following the launch of CTMA and continued investment in IT systems during the period. We have benefited again from the advance payment of the annual fee by one of our Management Services clients which reduced debt from the year-end figure.
At 30 June 2015, our 12-month rolling average net debt was GBP18.2m, down from GBP23.7m at 30 June 2014. We continue to focus on managing our debt and in particular our working capital while investing for the future.
Retirement benefit scheme
The retirement benefit obligation in the Group balance sheet at 30 June 2015 was GBP36.2m, compared to GBP41.5m at the year end and GBP31.4m at 30 June 2014. The decrease in obligation since December 2014 is primarily a result of changes in financial assumptions arising from movements in corporate bond yields.
Dividends
An interim dividend of 3.00p per share (2014: 2.85p(3) ) has been declared and will be paid on 27 November 2015 to shareholders on the register on 16 October 2015.
Foreign Exchange
The Group manages its exposure to foreign currency fluctuations by use of forward foreign exchange contracts and options to sell currency in the future.
Taxation
The effective tax rate on adjusted profits for the period is 12.1%, (2014: 14.2%). The movement in the effective tax rate reflects the profit mix across different taxation jurisdictions.
Related party transactions
There have been no related party transactions in the period that have materially affected the financial position or performance of the company.
Principal risks and uncertainties
The nature of the principal risks and uncertainties for the first half of 2015 fall into the three categories of business, financial, and regulatory compliance risks. These remain unchanged from those explained in the 2014 annual report and accounts. The Group's risk management systems are designed to manage the risk of failing to achieve our business objectives. We have an embedded and continuing process for identifying, evaluating and managing the principal risks which the Group faces.
Going concern
The directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly they continue to adopt the going concern basis in preparing the condensed financial statements.
Mark Keogh
Group Chief Financial Officer
27 August 2015
Condensed consolidated income statement
Year
to
Six
months
Six to 30
months June 31 December
to 2014 2014
30
June
2015
GBP000 GBP000 GBP000
Note (Unaudited) (Unaudited) (Audited)
-------------------------------------- ---- ------------ ------------ ------------
Continuing operations
Revenue from Professional Services 66,665 54,853 118,607
Revenue from Owned Insurance
Companies
Gross revenue 2,981 2,505 5,211
Outward reinsurance premiums (504) (545) (1,059)
-------------------------------------- ---- ------------ ------------ ------------
Net revenue 2,477 1,960 4,152
-------------------------------------- ---- ------------ ------------ ------------
Total revenue 3 69,142 56,813 122,759
Expenses from Owned Insurance
Companies
Claims incurred (34,142) (9,140) (5,812)
Reinsurance recoveries 1,137 1,081 676
Other gains from insurance
activities 33,787 8,170 6,835
Net operating expenses (2,768) (1,749) (4,438)
-------------------------------------- ---- ------------ ------------ ------------
Net losses (1,986) (1,638) (2,739)
Administrative expenses (61,123) (50,443) (109,038)
Share of results of associates 27 18 121
-------------------------------------- ---- ------------ ------------ ------------
Operating profit 6,060 4,750 11,103
Investment and other income 69 85 64
Finance costs (837) (704) (1,601)
-------------------------------------- ---- ------------ ------------ ------------
Profit before tax 5,292 4,131 9,566
Income tax expense 4 (685) (637) (1,165)
-------------------------------------- ---- ------------ ------------ ------------
Profit for the period from continuing
operations 4,607 3,494 8,401
-------------------------------------- ---- ------------ ------------ ------------
Attributable to:
Owners of the Company 4,509 3,675 8,211
Non-controlling interests 98 (181) 190
-------------------------------------- ---- ------------ ------------ ------------
4,607 3,494 8,401
-------------------------------------- ---- ------------ ------------ ------------
Earnings per share from continuing
operations
Statutory basic (p) 6 7.84 7.73 17.06
Statutory diluted (p) 6 7.80 7.66 16.93
-------------------------------------- ---- ------------ ------------ ------------
Condensed consolidated statement of comprehensive income
Year
to
Six Six
months months
to 30 to 30
June June 31 December
2015 2014 2014
GBP000 GBP000 GBP000
(Unaudited) (Unaudited) (Audited)
-------------------------------------------- ------------ ------------ ------------
Profit for the period 4,607 3,494 8,401
------------------------------------------------ ------------ ------------ ------------
Items that will not be reclassified
subsequently to profit or loss
Actuarial gains/(losses) on defined
benefit pension schemes 4,053 (5,897) (16,936)
Tax on items taken directly to equity (1,060) 957 2,978
------------------------------------------------ ------------ ------------ ------------
2,993 (4,940) (13,958)
----------------------------------------------- ------------ ------------ ------------
Items that may be reclassified subsequently
to profit or loss
Exchange differences on translation
of foreign operations (1,380) (710) 450
Gains/(losses) on cash flow hedges 215 (124) (135)
------------------------------------------------ ------------ ------------ ------------
(1,165) (834) 315
----------------------------------------------- ------------ ------------ ------------
Other comprehensive income/(loss)
for the period, net of tax 1,828 (5,774) (13,643)
------------------------------------------------ ------------ ------------ ------------
Total comprehensive income/(loss)
for the period 6,435 (2,280) (5,242)
------------------------------------------------ ------------ ------------ ------------
Attributable to:
Owners of the Company 6,372 (2,055) (5,473)
Non-controlling interests 63 (225) 231
------------------------------------------------ ------------ ------------ ------------
6,435 (2,280) (5,242)
----------------------------------------------- ------------ ------------ ------------
(MORE TO FOLLOW) Dow Jones Newswires
August 28, 2015 02:02 ET (06:02 GMT)
Condensed consolidated balance sheet
At At At
30 June 30 June 31 December
2015 2014 2014
GBP000 GBP000 GBP000
Note (Unaudited) (Unaudited) (Audited)
------------------------------------- ---- ------------ ------------ ------------
Non-current assets
Goodwill 7 45,379 41,997 42,196
Other intangible assets 8 17,338 12,636 12,898
Property, plant and equipment 5,126 3,914 4,011
Investments 700 631 748
Deferred tax assets 7,610 6,896 8,613
------------------------------------- ---- ------------ ------------ ------------
Total non-current assets 76,153 66,074 68,466
------------------------------------- ---- ------------ ------------ ------------
Current assets
Total assets in insurance businesses 842,318 308,105 795,628
Trade and other receivables 64,318 60,492 60,061
Cash and cash equivalents 76,988 48,608 52,185
------------------------------------- ---- ------------ ------------ ------------
Total current assets 983,624 417,205 907,874
------------------------------------- ---- ------------ ------------ ------------
Total assets 1,059,777 483,279 976,340
------------------------------------- ---- ------------ ------------ ------------
Current liabilities
Total liabilities in insurance
businesses 788,924 270,647 756,057
Trade and other payables 39,843 37,189 24,097
Deferred consideration 10,556 4,676 4,032
Current tax liabilities 308 645 326
Obligations under finance leases - 298 112
Borrowings 17,040 7,168 5,345
Client funds 51,159 38,134 41,886
------------------------------------- ---- ------------ ------------ ------------
Total current liabilities 907,830 358,757 831,855
------------------------------------- ---- ------------ ------------ ------------
Net current assets 75,794 58,448 76,019
------------------------------------- ---- ------------ ------------ ------------
Non-current liabilities
Borrowings 6,932 24,819 37,402
Retirement benefit obligation 15 36,246 31,400 41,534
Provisions 235 414 308
Obligations under finance leases 56 71 60
Deferred consideration 15,003 9,802 10,505
------------------------------------- ---- ------------ ------------ ------------
Total non-current liabilities 58,472 66,506 89,809
------------------------------------- ---- ------------ ------------ ------------
Total liabilities 966,302 425,263 921,664
------------------------------------- ---- ------------ ------------ ------------
Net assets 93,475 58,016 54,676
------------------------------------- ---- ------------ ------------ ------------
Equity
Share capital 11 664 427 434
Share premium account 71,380 35,259 35,650
Merger reserve 6,872 6,872 6,872
Capital reserve 662 662 662
Own shares (408) (353) (223)
Retained earnings (8,039) (6,424) (10,699)
------------------------------------- ---- ------------ ------------ ------------
Equity attributable to owners
of the Company 71,131 36,443 32,696
Non-controlling interests 22,344 21,573 21,980
------------------------------------- ---- ------------ ------------ ------------
Total equity 93,475 58,016 54,676
------------------------------------- ---- ------------ ------------ ------------
The financial statements were approved by the board of directors and authorised for issue on 27 August 2015.
Mark Keogh
Director
27 August 2015
Condensed consolidated cash flow statement
Year
to
Six Six
months months
to 30 to 30
June June 31 December
2015 2014 2014
GBP000 GBP000 GBP000
Note (Unaudited) (Unaudited) (Audited)
------------------------------------------ ---- ------------ ------------ ------------
Net cash from operating activities 12 22,896 13,956 9,835
Investing activities
Interest received 33 26 30
Proceeds on disposal of property,
plant and equipment 40 64 91
Purchases of property, plant and
equipment (2,006) (610) (1,534)
Acquisition of other intangible
assets (1,946) (1,124) (2,774)
Purchase of investments (1,239) (822) (957)
Acquisition of subsidiaries (2,239) - -
Payment of deferred consideration (251) - -
Net cash acquired with subsidiary 3,831 440 440
------------------------------------------ ---- ------------ ------------ ------------
Net cash used in investing activities (3,777) (2,026) (4,704)
------------------------------------------ ---- ------------ ------------ ------------
Financing activities
Proceeds from issue of shares 29,672 89 487
Dividends paid (3,431) (2,788) (4,167)
Repayments of borrowings 10 (43,095) (28,591) (29,125)
Repayments of obligations under
finance leases (113) (283) (477)
New bank loans raised 10 12,563 18,000 31,061
Increase in bank overdrafts 11,708 1,873 48
------------------------------------------ ---- ------------ ------------ ------------
Net cash from/(used in) financing
activities 7,304 (11,700) (2,173)
------------------------------------------ ---- ------------ ------------ ------------
Net increase in cash and cash equivalents 26,423 230 2,958
Cash and cash equivalents at beginning
of period 52,185 48,757 48,757
Effect of foreign exchange rate
changes (1,620) (379) 470
Cash and cash equivalents at end
of period 13 76,988 48,608 52,185
------------------------------------------ ---- ------------ ------------ ------------
Condensed consolidated statement of changes in equity
Share
Share premium Merger Capital Own Retained Non-controlling
capital account reserve reserve shares earnings interests Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- -------- -------- -------- -------- ------- --------- --------------- -------
At 1 January 2015
(audited) 434 35,650 6,872 662 (223) (10,699) 21,980 54,676
Issue of share
capital (note
11) 230 - - - - - - 230
Share premium
arising on issue
of share capital
(note 11) - 35,730 - - - - - 35,730
Profit/(loss)
for the financial
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period - - - - - 4,509 98 4,607
Dividends paid
(note 5) - - - - - (3,431) - (3,431)
Actuarial gains
on defined benefit
pension schemes - - - - - 4,053 - 4,053
Tax on items taken
to equity - - - - - (1,060) - (1,060)
Gains on cash
flow hedges - - - - - 215 - 215
Foreign exchange
translation differences - - - - - (1,346) (34) (1,380)
Movement in share--based
payments - - - - - (280) - (280)
Movement in own
shares - - - - (185) - - (185)
Other movements - - - - - - 300 300
------------------------- -------- -------- -------- -------- ------- --------- --------------- -------
At 30 June 2015
(unaudited) 664 71,380 6,872 662 (408) (8,039) 22,344 93,475
------------------------- -------- -------- -------- -------- ------- --------- --------------- -------
Share
Share premium Merger Capital Own Retained Non-controlling
capital account reserve reserve shares earnings interests Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- -------- -------- -------- -------- ------- --------- --------------- -------
At 1 January 2014
(audited) 415 32,704 6,872 662 (433) (1,378) 21,831 60,673
Issue of share
capital (note
11) 12 - - - - - - 12
Share premium
arising on issue
of share capital
(note 11) - 2,555 - - - - - 2,555
Profit for the
financial period - - - - - 3,675 (181) 3,494
Dividends paid
(note 5) - - - - - (2,788) - (2,788)
Actuarial gains
on defined benefit
pension schemes - - - - - (5,897) - (5,897)
Tax on items taken
to equity - - - - - 957 - 957
Losses on cash
flow hedges - - - - - (124) - (124)
Foreign exchange
translation differences - - - - - (666) (44) (710)
Movement in share--based
payments - - - - - (203) - (203)
Movement in own
shares - - - - 80 - - 80
Other movements - - - - - - (33) (33)
------------------------- -------- -------- -------- -------- ------- --------- --------------- -------
At 30 June 2014
(unaudited) 427 35,259 6,872 662 (353) (6,424) 21,573 58,016
------------------------- -------- -------- -------- -------- ------- --------- --------------- -------
Own shares comprise 571,990 (30 June 2014: 251,905; 31 December 2014: 299,123) shares held by the Charles Taylor Employee Share Ownership Plan Trust ("ESOP"). The market value of these shares was GBP1,258,378 (30 June 2014: GBP579,382; 31 December 2014: GBP747,808) at the balance sheet date.
The trustee of the ESOP is Summit Trust International SA, an independent professional trust company registered in Switzerland. The ESOP is a discretionary trust for the benefit of employees of the Group and provides a source of shares to distribute to the Group's employees (including executive directors and officers) under the Group's various bonus and incentive schemes, at the discretion of the trustee acting on the recommendation of a committee of the Board.
The assets, liabilities, income and costs of the ESOP are incorporated into the condensed set of financial statements.
There are no significant restrictions on the ability of subsidiaries to transfer funds to the parent in the form of cash dividends or to repay loans or advances other than company law requirements dealing with distributable profits, and in the case of the insurance companies' regulatory permissions and solvency limits.
Notes to the condensed set of financial statements
1. General information
The information for the year ended 31 December 2014 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor reported on those accounts; its report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
2. Accounting policies
Basis of preparation
The annual financial statements of Charles Taylor plc are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting, as adopted by the European Union. The same accounting policies and methods of computation are followed in the interim financial statements as in the most recent annual financial statements.
Going concern
The directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the condensed financial statements.
Changes in accounting policy
In the current financial year, the Group has adopted for the first time IFRIC 21 Levies. IFRIC 21 addresses the issue as to when to recognise a liability to pay a levy imposed by a government. The interpretation defines a levy, and specifies that the obligating event that gives rise to the liability is the activity that triggers the payment of the levy, as identified by legislation. The directors do not consider that any change to the financial statements would be required as a result of this change in accounting policy.
3. Segmental information
Identification of segments
For management and internal reporting purposes the Group is currently organised into four operating businesses whose principal activities are as follows:
-- Management Services business - mutual management service.
-- Adjusting Services business - energy, aviation, non marine and marine (including average) adjusting.
-- Insurance Support Services business - non-life and life insurance support services, including Lloyds' turn-key managing agent, captive management, investment management and risk management.
-- Insurers in Run-off business - non-life and life insurance companies closed to new business.
Management information about these businesses is regularly provided to the Group CEO to assess their performance and to make decisions about the allocation of resources. Accordingly, these businesses correspond with the Group's operating segments under IFRS 8 Operating Segments. Businesses forming part of each business which might otherwise qualify as reportable operating segments have been aggregated where they share similar economic characteristics and meet the other aggregation criteria in IFRS 8.
In the Management Services business, a higher proportion of revenue arises in the second half of the financial year. There is no significant seasonality or cyclicality in the other businesses.
Measurement of segmental results and assets
Transactions between reportable segments are accounted for on the basis of the contractual arrangements in place for the provision of goods or services between segments and in accordance with the Group's accounting policies. Reportable segment results and assets are also measured on a basis consistent with the Group's accounting policies. Operating segment profit includes an allocation of central costs across the four businesses and excludes non-recurring adjusting items. Reconciliations of segmental results to the Group profit before tax are set out below.
Information about major customers
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The Group derived revenue of GBP19.2m (to 30 June 2014: GBP15.5m, full year 2014: GBP35.4m) from one external customer which accounts for more than 10% of Group revenue, and is included within both the Management Services and Insurance Support Services businesses.
Owned
Professional Services Insurance
businesses Companies Other Group
------------------------------------------------------- ---------- ------------- --------
Insurance
Management Adjusting Support Insurance Inter-segment
Six months to Services Services Services Unallocated Total Companies eliminations Total
30 June 2015 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------- ---------- --------- --------- ----------- -------- ---------- ------------- --------
Revenue from external
clients 23,591 29,379 13,694 1 66,665 2,477 - 69,142
Revenue from other
operating segments - - 1,637 - 1,637 - (1,637) -
---------------------- ---------- --------- --------- ----------- -------- ---------- ------------- --------
Total revenue 23,591 29,379 15,331 1 68,302 2,477 (1,637) 69,142
Depreciation and
amortisation (605) (716) (244) - (1,565) (194) - (1,759)
Other expenses (19,864) (27,883) (12,517) 98 (60,166) (2,076) 1,637 (60,605)
---------------------- ---------- --------- --------- ----------- -------- ---------- ------------- --------
Operating segment
profit 3,122 780 2,570 99 6,571 207 - 6,778
Share of results
of associates 27
Amortisation of
acquired intangible
assets (673)
Non-recurring
costs (note 17) (72)
---------------------- ---------- --------- --------- ----------- -------- ---------- ------------- --------
Operating profit 6,060
Investment and
other income 69
Finance costs (837)
---------------------- ---------- --------- --------- ----------- -------- ---------- ------------- --------
Profit before
tax 5,292
Amortisation of
acquired intangible
assets 673
Non-recurring
costs (note 17) 72
Non-controlling
interests before
tax (104)
---------------------- ---------- --------- --------- ----------- -------- ---------- ------------- --------
Profit before
tax - adjusted 5,933
---------------------- ---------- --------- --------- ----------- -------- ---------- ------------- --------
Owned
Professional Services Insurance
businesses Companies Other Group
------------------------------------------------------- ---------- ------------- --------
Insurance
Management Adjusting Support Insurance Inter-segment
Six months to Services Services Services Unallocated Total Companies eliminations Total
30 June 2014 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------- ---------- --------- --------- ----------- -------- ---------- ------------- --------
Revenue from external
clients 20,307 26,390 8,155 1 54,853 1,960 - 56,813
Revenue from other
operating segments - - 1,592 - 1,592 - (1,592) -
---------------------- ---------- --------- --------- ----------- -------- ---------- ------------- --------
Total revenue 20,307 26,390 9,747 1 56,445 1,960 (1,592) 56,813
Depreciation and
amortisation (610) (564) (262) - (1,436) (190) - (1,626)
Other expenses (16,639) (24,474) (8,366) 91 (49,388) (1,767) 1,592 (49,563)
---------------------- ---------- --------- --------- ----------- -------- ---------- ------------- --------
Operating segment
profit 3,058 1,352 1,119 92 5,621 3 - 5,624
Share of results
of associates 18
Amortisation of
acquired intangible
assets (681)
Non-recurring
costs (note 17) (211)
---------------------- ---------- --------- --------- ----------- -------- ---------- ------------- --------
Operating profit 4,750
Investment and
other income 85
Finance costs (704)
---------------------- ---------- --------- --------- ----------- -------- ---------- ------------- --------
Profit before
tax 4,131
Amortisation of
acquired intangible
assets 681
Non-recurring
costs (note 17) 211
Non-controlling
interests before
tax 177
---------------------- ---------- --------- --------- ----------- -------- ---------- ------------- --------
Profit before
tax - adjusted 5,200
---------------------- ---------- --------- --------- ----------- -------- ---------- ------------- --------
Owned
Professional Services Insurance
businesses Companies Other Group
-------------------------------------------------------- ---------- ------------- ---------
Insurance
Management Adjusting Support Insurance Inter-segment
Year to 31 December Services Services Services Unallocated Total Companies eliminations Total
2014 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------- ---------- --------- --------- ----------- --------- ---------- ------------- ---------
Revenue from external
clients 43,864 56,067 18,655 21 118,607 4,152 - 122,759
Revenue from other
operating segments - - 3,147 - 3,147 - (3,147) -
---------------------- ---------- --------- --------- ----------- --------- ---------- ------------- ---------
Total revenue 43,864 56,067 21,802 21 121,754 4,152 (3,147) 122,759
Depreciation and
amortisation (984) (1,160) (536) - (2,680) (367) - (3,047)
Other expenses (35,145) (52,678) (19,286) 224 (106,885) (3,254) 3,147 (106,992)
---------------------- ---------- --------- --------- ----------- --------- ---------- ------------- ---------
Operating segment
profit 7,735 2,229 1,980 245 12,189 531 - 12,720
Share of results
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of associates 121
Amortisation of
acquired intangible
assets (1,527)
Non-recurring
costs (note 17) (211)
---------------------- ---------- --------- --------- ----------- --------- ---------- ------------- ---------
Operating profit 11,103
Investment and
other income 64
Finance costs (1,601)
---------------------- ---------- --------- --------- ----------- --------- ---------- ------------- ---------
Profit before
tax 9,566
Amortisation of
acquired intangible
assets 1,527
Non-recurring
costs (note 17) 211
Non-controlling
interests before
tax (225)
---------------------- ---------- --------- --------- ----------- --------- ---------- ------------- ---------
Profit before
tax - adjusted 11,079
---------------------- ---------- --------- --------- ----------- --------- ---------- ------------- ---------
At 31 December
At 30 June 2015 At 30 June 2014 2014
GBP000 GBP000 GBP000
---------------------------------- ---------------------------------- ----------------------------------
Professional Owned Professional Owned Professional Owned
Services Insurance Services Insurance Services Insurance
businesses Companies Group businesses Companies Group businesses Companies Group
---------------- ------------ --------- --------- ------------ --------- --------- ------------ --------- ---------
Management
Services
business 8,038 - 8,038 3,247 - 3,247 2,961 - 2,961
Adjusting
Services
business 132,224 - 132,224 113,299 - 113,299 121,278 - 121,278
Insurance
Support
Services
business 37,657 - 37,657 31,549 - 31,549 31,651 - 31,651
Unallocated
assets and
eliminations 36,529 - 36,529 24,245 - 24,245 22,140 - 22,140
Owned Insurance
Companies
business - 845,329 845,329 - 310,939 310,939 - 798,310 798,310
---------------- ------------ --------- --------- ------------ --------- --------- ------------ --------- ---------
Total assets 214,448 845,329 1,059,777 172,340 310,939 483,279 178,030 798,310 976,340
Non-current
assets 73,142 3,011 76,153 63,240 2,834 66,074 65,784 2,682 68,466
Current assets 141,306 842,318 983,624 109,100 308,105 417,205 112,246 795,628 907,874
---------------- ------------ --------- --------- ------------ --------- --------- ------------ --------- ---------
Total assets 214,448 845,329 1,059,777 172,340 310,939 483,279 178,030 798,310 976,340
Current
liabilities (108,350) (788,924) (897,274) (83,434) (270,647) (354,081) (71,766) (756,057) (827,823)
Deferred
consideration (810) (9,746) (10,556) (625) (4,051) (4,676) (646) (3,386) (4,032)
---------------- ------------ --------- --------- ------------ --------- --------- ------------ --------- ---------
Net current
assets 32,146 43,648 75,794 25,041 33,407 58,448 39,834 36,185 76,019
Non-current
liabilities (43,469) - (43,469) (56,704) - (56,704) (79,304) - (79,304)
Deferred
consideration (2,548) (12,455) (15,003) (2,040) (7,762) (9,802) (1,758) (8,747) (10,505)
---------------- ------------ --------- --------- ------------ --------- --------- ------------ --------- ---------
Total
liabilities (155,177) (811,125) (966,302) (142,803) (282,460) (425,263) (153,474) (768,190) (921,664)
---------------- ------------ --------- --------- ------------ --------- --------- ------------ --------- ---------
Net assets 59,271 34,204 93,475 29,537 28,479 58,016 24,556 30,120 54,676
Non-controlling
interests (1,477) (20,867) (22,344) (1,007) (20,566) (21,573) (1,046) (20,934) (21,980)
---------------- ------------ --------- --------- ------------ --------- --------- ------------ --------- ---------
Equity
attributable
to owners
of the Company 57,794 13,337 71,131 28,530 7,913 36,443 23,510 9,186 32,696
---------------- ------------ --------- --------- ------------ --------- --------- ------------ --------- ---------
Revenue Non-current assets(1)
------------------------------ --------------------------------
Six Six
months months Year
to 30 to 30 to At At At
June June 31 December 30 June 30 June 31 December
2015 2014 2014 2015 2014 2014
Geographical information GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------- ------- ------- ------------ -------- -------- ------------
United Kingdom 21,008 14,738 34,107 54,967 48,083 48,310
Other Europe 4,735 3,447 6,812 4,715 3,097 2,954
Middle East 1,919 1,497 2,955 119 66 65
North America 6,102 5,793 11,342 6,375 5,705 5,974
Central and South America 2,166 1,261 4,236 199 195 192
Asia Pacific 7,560 7,556 15,137 1,394 1,244 1,540
Bermuda 25,652 22,521 48,170 774 788 818
-------------------------- ------- ------- ------------ -------- -------- ------------
69,142 56,813 122,759 68,543 59,178 59,853
-------------------------- ------- ------- ------------ -------- -------- ------------
1 Excluding deferred tax.
4. Income tax expense
Tax for the six month period is charged at 12.1% (to 30 June 2014: 14.2%) representing the best estimate of the average annual effective tax rate expected for the full year, applied to the pre-tax income adjusted for certain amortisation costs, of the six month period.
5. Dividends
Six Six
months months Year
to 30 to 30 to
June June 31 December
2015 2014 2014
GBP000 GBP000 GBP000
------------------------------------------ ------- ------- ------------
Ordinary dividends paid comprise:
Final dividend paid (2014: 0.0p, 2013:
6.75p - rebased 5.92p) - 2,788 2,788
Second interim dividend paid (2014: 7.50p
- rebased 6.57p, 2013: 0.0p) 3,431 - -
Interim dividend paid (2014: 3.25p -
rebased 2.85p) - - 1,379
------------------------------------------ ------- ------- ------------
3,431 2,788 4,167
------------------------------------------ ------- ------- ------------
The rebased dividend above reflects the impact of the Rights Issue. The interim dividend of 3.00p per share was approved by the Board on 27 August 2015 and has not been included as a liability as at 30 June 2015.
6. Earnings per share
Earnings per ordinary share have been calculated by dividing the profit on ordinary activities after taxation and non-controlling interests for each period by the weighted average number of shares in issue. The shares held by the ESOP have been excluded from the calculation because the trustees have waived the right to dividends on these shares.
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The calculation of the statutory basic, statutory diluted and adjusted earnings per share is based on the following data:
Six Six
months months Year
to 30 to 30 to
June June 31 December
2015 2014 2014
GBP000 GBP000 GBP000
------------------------------------------- ------- ------- ------------
Earnings
Earnings for the purposes of adjusted
earnings per share being adjusted profit
after tax attributable to owners of the
Company 5,178 4,450 9,765
Amortisation of acquired intangible assets (673) (681) (1,527)
Non-recurring costs (note 17) (72) (211) (211)
Tax on non-recurring costs 76 117 183
------------------------------------------- ------- ------- ------------
Earnings for the purposes of statutory
basic and statutory diluted earnings
per share being net profit attributable
to owners of the Company 4,509 3,675 8,210
------------------------------------------- ------- ------- ------------
Number Number Number
-------------------------------------- ----------- ------------ ------------
Number of shares
Weighted average number of ordinary
shares for the purposes of adjusted
earnings per share 64,767,592 61,353,999 61,862,033
Rebase adjustment * (7,277,534) (19,722,762) (19,722,762)
-------------------------------------- ----------- ------------ ------------
Weighted average number of ordinary
shares for the purposes of statutory
basic earnings per share 57,490,058 41,631,237 42,139,271
Effect of dilutive potential ordinary
shares:
Share options 346,046 447,430 380,219
-------------------------------------- ----------- ------------ ------------
Weighted average number of ordinary
shares for the purposes of statutory
diluted earnings per share 57,836,104 42,078,667 42,519,490
-------------------------------------- ----------- ------------ ------------
(*) The rebase adjustment allows for the effect of the Rights Issue, had it taken place on the last day of each of the respective periods.
7. Goodwill
The increase in goodwill from GBP42.2m at 31 December 2014 to GBP45.4m at 30 June 2015 was due to GBP3.4m goodwill arising on the acquisitions of CTMAH (GBP2.9m) and LCL Assurance Limited (GBP0.5m) (see note 9), offset by GBP0.2m of expense as a result of foreign exchange differences.
8. Other intangible assets
During the period we recognised an additional GBP1.4m of customer relationships as part of the acquisition of Vesta Group (see note 9) and capitalised a further GBP4.6m of IT assets.
9. Acquisition of subsidiaries
Vesta Group
On 26 February 2015 the Group acquired the entire issued share capital of SC Management SAM, SC Services (Monaco) SARL and S.C. Management (Luxembourg) S.A. (collectively "Vesta "). Vesta provides management services to the Strike Club, which is a marine mutual that insures ship owners and ship charterers against delays due to strikes and other incidents.
The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are set out in the table below:
Vesta Group
------------------------------------------
Carrying
amount Amount
before recognised
acquisition Adjustments at acquisition
GBP000 GBP000 GBP000
------------------------------------ ------------ ----------- ---------------
Identifiable intangible assets - 1,414 1,414
Property, plant and equipment 43 - 43
Trade and other receivables 108 - 108
Cash and cash equivalents 327 - 327
Trade and other payables (225) - (225)
------------------------------------ ------------ ----------- ---------------
Identifiable assets and liabilities 253 1,414 1,667
------------------------------------ ------------ ----------- ---------------
Consideration 1,667
------------------------------------ ------------ ----------- ---------------
Satisfied by:
Initial cash consideration 253
Deferred consideration 1,414
------------------------------------ ------------ ----------- ---------------
Consideration 1,667
------------------------------------ ------------ ----------- ---------------
Almond One Limited (renamed Charles Taylor Managing Agency Holdings Limited ("CTMAH") and Almond Two Limited
On 19 February 2015, the Group acquired 50.1% of the issued share capital of CTMAH and 100% of the issued share capital of Almond Two Limited from the Standard Club. These acquisitions have enabled the Group to provide managing agency services to new syndicates at Lloyd's on a "turnkey" basis.
The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are set out in the table below:
Carrying
amount before
acquisition
----------------- ----------- ---------------
Almond Amount
Two recognised
Limited CTMAH Adjustments at acquisition
GBP000 GBP000 GBP000 GBP000
------------------------------------ -------- ------- ----------- ---------------
Trade and other receivables - 166 - 166
Cash and cash equivalents 3,000 252 - 3,252
------------------------------------ -------- ------- ----------- ---------------
Identifiable assets and liabilities 3,000 418 - 3,418
Goodwill 2,869
------------------------------------ -------- ------- ----------- ---------------
Consideration 6,287
------------------------------------ -------- ------- ----------- ---------------
Satisfied by:
Ordinary shares of the Company 6,287
------------------------------------ -------- ------- ----------- ---------------
Consideration 6,287
------------------------------------ -------- ------- ----------- ---------------
LCL Assurance Limited
On 1 April 2015, the Group acquired 100% of the issued share capital of Scottish Widows International Limited, a Jersey registered life insurer which is closed to new business. Existing business comprises personalised and unit linked life insurance products primarily for UK residents. Scottish Widows International Limited was renamed LCL Assurance Limited ("LCLAL") on 1 April 2015 immediately after acquisition. On 2 July 2015, LCLAL was redomiciled to the Isle of Man.
The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are set out in the table below:
LCL Assurance
Limited
--------------------------------------------- ------------------------------------------
Carrying
amount Amount
before recognised
acquisition Adjustments at acquisition
GBP000 GBP000 GBP000
--------------------------------------------- ------------ ----------- ---------------
Investment contract assets 77,645 - 77,645
Life Insurance contracts assets 8,950 - 8,950
Cash and cash equivalents 9,480 - 9,480
Prepayments and accrued income 12 - 12
Loans and receivables 451 - 451
Insurance technical balances (14,672) - (14,672)
Investment contracts unit linked liabilities (70,062) - (70,062)
Other creditors (204) - (204)
--------------------------------------------- ------------ ----------- ---------------
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Identifiable assets and liabilities 11,600 - 11,600 Goodwill 500 --------------------------------------------- ------------ ----------- --------------- Consideration 12,100 --------------------------------------------- ------------ ----------- --------------- Satisfied by: Initial cash consideration 1,986 Deferred consideration 10,114 --------------------------------------------- ------------ ----------- --------------- Consideration 12,100 --------------------------------------------- ------------ ----------- ---------------
If the three acquisitions had been completed on the first day of the financial year the combined revenue for the Group and statutory profit before tax would have been GBP72.3m and GBP4.3m respectively.
10. Bank overdrafts and loans
Loans raised during the period amounted to GBP12.6m (to 30 June 2014: GBP18.0m, full year 2014: GBP31.1m) and repayments on loans amounted to GBP43.1m (to 30 June 2014: GBP28.6m, full year 2014: GBP29.1m). As noted in last year's annual audited financial statements, the Group's senior banking facilities were renewed on 7 November 2013 for a five-year term.
11. Share capital
Share capital as at 30 June 2015 amounted to GBP664,000 (at 30 June 2014: GBP427,000, at 31 December 2014: GBP434,000). 22,958,160 1p shares were issued during the period (to 30 June 2014: 1,193,197, full year 2014: 1,886,667), including 19,722,762 shares as part of a Rights Issue by way of an offer of three shares for every seven held. The consideration above 1p per share is reflected in the share premium account and amounts to GBP35,730,000 (to 30 June 2014: GBP2,555,000, full year 2014: GBP2,946,000).
12. Notes to the condensed consolidated cash flow statement
Six Six
months months Year
to 30 to 30 to
June June 31 December
2015 2014 2014
GBP000 GBP000 GBP000
------------------------------------------ -------- -------- ------------
Operating profit 6,060 4,750 11,103
Adjustments for:
Depreciation of property, plant and
equipment 878 834 1,660
Amortisation of intangibles 1,554 1,473 2,913
Other non-cash items 589 480 1,155
Decrease in provisions (1,300) (1,164) (2,178)
Share of results of associates and joint
ventures (27) (18) (121)
------------------------------------------ -------- -------- ------------
Operating cash flows before movements
in working capital 7,754 6,355 14,532
Increase in receivables (8,799) (5,969) (5,595)
Increase in payables 15,733 15,840 2,684
Decrease in insurance company assets 52,030 11,143 109,444
Decrease in insurance company liabilities (52,071) (10,467) (110,881)
------------------------------------------ -------- -------- ------------
Cash generated by operations 14,647 16,902 10,184
Contributed by:
* Professional Services 14,675 16,190 10,524
* Owned Insurance Companies (28) 712 (340)
------------------------------------------ -------- -------- ------------
Cash generated by operations 14,647 16,902 10,184
Income taxes paid (568) (536) (1,133)
Interest paid (456) (554) (1,112)
------------------------------------------ -------- -------- ------------
Net cash before movement in client funds 13,623 15,812 7,939
Movement in client funds 9,273 (1,856) 1,896
------------------------------------------ -------- -------- ------------
Net cash from operating activities 22,896 13,956 9,835
------------------------------------------ -------- -------- ------------
There were no additions to tangible fixed assets during the period (six months to 30 June 2014: GBP59,000, full year 2014: GBP59,000) financed by new finance leases.
Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and other short-term highly-liquid investments with a maturity of three months or less. Cash includes client funds of GBP51.2m (30 June 2014: GBP38.1m, 31 December 2014: GBP41.9m).
13. Net interest bearing liabilities
At At At
30 June 30 June 31 December
2015 2014 2014
GBP000 GBP000 GBP000
-------------------------- -------- -------- ------------
Cash and cash equivalents 76,988 48,608 52,185
Bank overdrafts (16,195) (6,313) (4,488)
Current loans (845) (855) (857)
Non-current bank loans (6,932) (24,819) (37,402)
Finance leases (55) (369) (172)
-------------------------- -------- -------- ------------
52,961 16,252 9,266
Client funds (51,159) (38,134) (41,886)
-------------------------- -------- -------- ------------
1,802 (21,882) (32,620)
-------------------------- -------- -------- ------------
14. Financial instruments
Valuation techniques and assumptions applied for the purposes of measuring fair value
The fair values of the Group's financial assets and liabilities are determined as follows:
-- For those financial assets and liabilities that are cash or short-term trade receivables or payables, carrying amount is a reasonable approximation of fair value.
-- Retirement benefit obligations are valued by independent actuaries in accordance with IFRS.
-- The Group's remaining financial assets and liabilities are measured, subsequent to initial recognition, at fair value, and they can be grouped into Levels 1 to 3 based on the degree to which the fair value is observable:
o Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;
o Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
o Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Fair value hierarchy
For each of the assets in the table below carrying value is a reasonable approximation to fair value. Excluding insurance companies, there were no level 1 assets, no transfers between level 1 and 2 during the period, nor were there any valuation changes. All movements in the asset or liability values below, except deferred consideration, are through profit or loss.
Deferred consideration has increased by GBP11.3m, being GBP11.5m arising on the acquisition of LCL Assurance Limited (GBP10.1m) and Vesta Group (GBP1.4m) (see note 9), offsetting a distribution of GBP0.5m (50% shares, 50% cash) to former owners of the KLA Group. Other movements in deferred consideration are through the income statement and net to GBP0.3m.
At 31 December
At 30 June 2015 At 30 June 2014 2014
--------------------------- --------------------------- -------------------------
Level Level Level Level Level Level
2 3 Total 2 3 Total 2 3 Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------- ------- -------- -------- ------- -------- -------- ------- ------- -------
Trade debtors - 28,190 28,190 - 26,136 26,136 - 26,203 26,203
Accrued income - 23,671 23,671 - 22,934 22,934 - 23,500 23,500
Deferred consideration - (25,559) (25,559) - (14,478) (14,478) - 14,537 14,537
FX forward contracts 200 - 200 4 - 4 (15) - (15)
----------------------- ------- -------- -------- ------- -------- -------- ------- ------- -------
200 26,302 26,502 4 34,592 34,596 (15) 64,240 64,225
----------------------- ------- -------- -------- ------- -------- -------- ------- ------- -------
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The fair values of the financial assets and liabilities included in the Level 2 category have been independently valued by the Royal Bank of Scotland and HSBC based on observable market conditions prevailing at the valuation date, including relevant foreign exchange rates and the zero-coupon yield curve.
The fair values of the financial assets and liabilities included in the Level 3 category above have been determined in accordance with generally accepted pricing models based on a discounted cash flow analysis with the most significant inputs being the discount rate that reflects substantially the same terms and characteristics including the credit quality of the instrument:
-- Trade debtors are reduced by a discount to reflect the time value of money at a discount rate of 2.75% (30 June 2014: 2.75%, 31 December 2014: 2.75%) that reflects the Group's debt funding rate over the relevant maturities.
-- Accrued income is uplifted by 6.8% for anticipated unrecorded income, which is based on average over-recovery of unrecorded income during 2015, and then discounted for the time value of money at 2.75% (30 June 2014: 2.75%, 31 December 2014: 2.75%) that reflects the Group's debt funding rate over the relevant maturities.
-- Deferred consideration is reduced by a discount to reflect the time value of money at a discount rate of 3.30% (30 June 2014: 4.03%, 31 December 2014: 3.36%) that reflects the Group's debt funding rate over the relevant maturities.
The sensitivity of the fair values of trade debtors and accrued income to changes in the discount rate is negligible, irrespective of the change in discount rate. The sensitivity of the fair value of deferred consideration to reasonably likely changes in the discount rate is immaterial.
15. Pensions
The Group contributes to a number of defined benefit pension schemes on behalf of employees. The present value of the retirement benefit obligation at 30 June 2015 has been arrived at by recalculating the 31 December 2014 liabilities using the financial assumptions at 30 June 2015 and rolling forward the liability, allowing for interest and benefit accrual to 30 June 2015. The value of plan assets represents the bid value of invested assets at 30 June 2015 plus cash balances held.
The financial assumptions used to calculate scheme liabilities under IAS 19R Employee benefits are as follows:
At At At
30 June 30 June 31 December
2015 2014 2014
% % %
---------------------------------------- -------- -------- ------------
Rate of increase in salaries 3.30 3.40 3.10
Rate of increase of pensions in payment
* RPI
- maximum 5% 3.20 3.40 3.10
- maximum 2.5% 2.20 2.50 2.50
- minimum 3%, maximum 5% 3.70 3.40 3.10
* CPI
- maximum 5% 2.30 2.65 2.35
- maximum 2.5% 1.80 2.50 2.35
- maximum 3% 2.00 2.65 2.35
Discount rate 3.80 4.30 3.50
Inflation assumption
* RPI 3.30 3.40 3.10
* CPI 2.30 2.65 2.35
---------------------------------------- -------- -------- ------------
Amount recognised in the balance sheet in respect of the Group's retirement benefit obligations
At At At
30 June 30 June 31 December
2015 2014 2014
GBP000 GBP000 GBP000
------------------------------------------ --------- --------- ------------
Total market value of assets 87,580 81,986 86,728
Actuarial value of liability (121,540) (111,095) (126,124)
Restrictions on asset recognised (2,093) (2,140) (1,955)
Overseas retirement benefit obligation (193) (151) (183)
------------------------------------------ --------- --------- ------------
Net liability recognised in the balance
sheet (36,246) (31,400) (41,534)
Related deferred tax asset 7,256 6,301 8,316
------------------------------------------ --------- --------- ------------
Pension liability net of related deferred
tax asset (29,990) (25,099) (33,218)
------------------------------------------ --------- --------- ------------
16. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
17. Non-recurring costs
In the prior year the directors removed certain costs from the business in order to improve operational efficiency. The GBP0.1m cost incurred to date represents further restructuring costs arising from the reduction of headcount in certain business segments. The directors consider these costs to be of a non-recurring nature.
Forward-looking statements
This interim report 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; operational 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.
Responsibility Statement
We confirm that to the best of our knowledge:
(a) the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting;
(b) the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and
(c) the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).
By order of the Board
David Marock
Group Chief Executive Officer
Damian Ely
Group Chief Operating Officer
Mark Keogh
Group Chief Financial Officer
Independent review report to Charles Taylor plc
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2015 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated balance sheet, the condensed consolidated cash flow statement, the condensed consolidated statement of changes in equity, and related notes 1 to 17. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of Review
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