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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 : 9108P
Charles Taylor PLC
06 September 2017
PRESS RELEASE
Hot Features
Premium
David Marock, Group Chief Executive
Contacts: Officer 020 3320 8988
Mark Keogh, Group Chief Financial
Officer 020 3320 2241
Charles Taylor plc
Announcement of results for six months ended 30 June 2017
-- Revenue significantly increased, underlining solid business growth -- Statutory profit before tax reduced, largely due to amortisation of intangible assets -- Adjusted profit before tax and earnings increased, after business investments -- Net debt in line with expected levels post acquisitions -- Good progress on driving key strategic growth initiatives -- Interim dividend increased
David Marock, Group Chief Executive Office, Charles Taylor plc said:
"The Group has had a steady start to 2017 and we anticipate that our full year performance will be in line with the board's expectations.
We are making good progress in delivering our growth strategy:
-- Our Management Services business provides a solid core to our business with deep, long-lasting client relationships and delivers steady, reliable growth.
-- The Adjusting Services business is a well-established, global loss adjusting business, with leadership positions in key markets. It is well-positioned to drive growth and increased profitability through improving the underlying performance of our existing business lines, building capabilities and diversifying our income streams.
-- The Insurance Support Services business includes established and newer businesses with the potential to deliver a material change in earnings in the longer term.
We are very positive about the long-term prospects for Charles Taylor. We are taking forward numerous growth initiatives and, as set out in this report, our investments are delivering positive results. The Group has delivered strong revenue growth and we believe we are well-positioned to deliver further growth, increased profit and greater shareholder value."
Consolidated financial highlights
For the six months ended 30 June 2017
Revenue GBP100.7m increased (2016: GBP74.0m)
by 36.1%
Adjusted profit GBP6.1m increased (2016: GBP6.0m)
before tax (1) by 1.2%
Statutory profit GBP3.1m decreased (2016: GBP5.3m)
before tax by 41.4%
Net debt GBP35.6m (2016: GBP3.3m
net cash)
Adjusted earnings 9.04p increased
per share (1) by 5.8% (2016: 8.55p)
Statutory earning 4.62p decreased
per share by 35.8% (2016: 7.19p)
3.31p increased
Dividend per share by 5.0% (2016: 3.15p)
Notes:
Movements are calculated using unrounded numbers so minor rounding differences may exist.
June June
2017 2016
GBPm GBPm
Statutory profit before tax 3.1 5.3
Acquired intangible assets
amortisation 2.3 1.0
Other adjustments 0.7 -
Non-controlling interests
- profit before tax - (0.2)
Adjusted profit before tax 6.1 6.0
Income tax expense - (0.3)
Adjusted earnings 6.1 5.7
1. Adjusted eps is calculated by dividing the adjusted earnings by weighted average number of ordinary shares as disclosed in note 6.
This announcement contains inside information within the meaning of article 7 of the EU Market Abuse Regulation (MAR).
Group Chief Executive Officer's Review
Charles Taylor performed steadily in the first half of 2017, continuing its record of strong revenue growth. Adjusted profits before tax and earnings have increased, although at a lower rate than revenue. This was largely due to our ongoing programme of investing in the Group to expand our service offering for our clients globally and to deliver long-term growth in profits for shareholders.
These investments are focused on the four key strategic initiatives, identified in the 2016 Annual Report: these are to build Charles Taylor InsureTech, to develop global medical claims and assistance capabilities, to extend our Third Party Administration (TPA) services and to develop our turnkey managing agency to be second syndicate ready.
Within Adjusting Services, we have also invested to diversify into more profitable, less volatile income streams with lower working capital requirements, while building capabilities and driving underlying performance of our existing business lines.
These initiatives are progressing well with 2017 highlights to date including:
-- Developing within Charles Taylor InsureTech the ground-breaking TIDE delegated underwriting authority management solution.
-- Securing multiple new UK client contracts for CEGA, the Group's medical claims and assistance business, including one major mainstream UK insurance brand.
-- Launching a market-challenger medical underwriting technology proposition and securing its first client.*
-- Investing in a funding round for Fadata to enable a strategic investment in a German-based digital insurance technology specialist and to support further business growth and the lead times to win new business.*
-- Securing new client contracts for Charles Taylor TPA in the UK and US.
-- Acquiring Metro Risk Management, a US West Coast-based TPA specialising in US Longshore and State Act workers' compensation claims.*
-- Acquiring Criterion Adjusters (Criterion), a strongly-performing loss adjusting business focused on the UK high net worth insurance sectors.*
-- Reshaping energy adjusting teams in London, Singapore and Houston, and addressing several smaller underperforming offices, in response to the current market environment.
* Contract signed after 30 June 2017 but prior to the publication of this report; however much of the preparatory work and negotiation took place during H1 2017
Statutory profits were down, as expected, largely due to the increase in the amortisation of intangible customer relationship assets following the successful CEGA acquisition and the rationalisation of the structures relating to the provision of management services to The Strike Club, which included the closure of the Group's Monaco office. Neither of these factors relate to the Group's underlying performance.
Professional services business performance:
-- The overall performance of our Management Services business was solid with an increase in revenue and profit. The UK and international business line achieved steady progress in meeting the strategic objectives of our mutual clients, The Standard Club and The Strike Club. The Americas business delivered a good performance for its major client, Signal Mutual.
-- The Adjusting Services business continued to achieve top line growth and delivered a modest increase in profits after allowing for the negative impact of a GBP0.4m foreign exchange loss on translating non-sterling working capital and earnings. This compares to a GBP0.5m foreign exchange gain in HY 2016. Our programme of diversifying the business to increase its regular, repeatable income streams while reducing working capital requirements and increasing margins over time, took a positive step forward with the acquisition of Criterion. We diversified the business further by extending our UK and US property and casualty teams. We also took pro-active steps to improve the underlying performance of our existing businesses in response to the ongoing benign claims environment, through addressing under-performing offices, re-shaping our energy teams and continuing to refine reward structures.
-- The Insurance Support Services business delivered strong top line growth, benefiting from a full half year's contribution from CEGA and increased revenue from our turn-key managing agency. Overall profit was down, largely because of our investments to build the capabilities of our Insurance technology business. We also invested in a funding round for Fadata in early July, which enabled it to make a strategic investment in IMPEO, a German-based insurance technology specialist.
Owned Insurance Companies
The Group's owned life insurance companies increased profit marginally. We successfully completed the transfer of LCL Life & Pensions (formerly Nordea Life & Pensions) into LCL International Life Assurance Company Limited and are working towards the transfer and consolidation of the Group's other life insurance businesses.
Group results H1 2017 - continuing business
Six months Six months % change
to 30 June to 30 June
2017 2016
-------------------- ------------ ------------ ---------
Revenue (GBPm) 100.7 74.0 +36.1%
-------------------- ------------ ------------ ---------
Adjusted profit
before tax (GBPm) 6.1 6.0 +1.2%
-------------------- ------------ ------------ ---------
Statutory profit
before tax (GBPm) 3.1 5.3 -41.4%
-------------------- ------------ ------------ ---------
Adjusted earnings
per share (p) 9.04 8.55 +5.8%
-------------------- ------------ ------------ ---------
Statutory earnings
per share (p) 4.62 7.19 -35.8%
-------------------- ------------ ------------ ---------
Dividend (p) 3.31 3.15 +5.0%
-------------------- ------------ ------------ ---------
Net debt/(cash)
(GBPm) 35.6 (3.3) n/a
-------------------- ------------ ------------ ---------
Professional Services performance H1 2017
(GBPm) Revenue (1) Adjusted operating
profit
--------------------- ------------------------ ------------------------
Six months Six months Six months Six months
to 30 to 30 to 30 to 30
June 2017 June 2016 June 2017 June 2016
--------------------- ----------- ----------- ----------- -----------
Management Services 27.9 25.4 3.5 3.3
--------------------- ----------- ----------- ----------- -----------
Adjusting Services 35.2 31.7 1.7 1.6
--------------------- ----------- ----------- ----------- -----------
Insurance Support
Services 37.4 16.0 1.4 2.4
--------------------- ----------- ----------- ----------- -----------
Unallocated - - - (0.3)
--------------------- ----------- ----------- ----------- -----------
Total 100.5 73.1 6.6 6.9
--------------------- ----------- ----------- ----------- -----------
1. Revenue figures are stated before inter-segment eliminations.
Owned Insurance Companies performance H1 2017
(GBPm) Revenue Adjusted operating
profit
----------------- ------------------------ ------------------------
Six months Six months Six months Six months
to 30 to 30 to 30 to 30
June 2017 June 2016 June 2017 June 2016
----------------- ----------- ----------- ----------- -----------
Owned Insurance
Companies 2.2 2.3 0.3 0.1
----------------- ----------- ----------- ----------- -----------
Balance sheet
We are managing the Group's finances while investing for growth. Net debt was GBP35.6m at the period end (H1 2016: GBP3.3m net cash) following the investment of the Rights Issue proceeds. The Group's annual average net debt, which we believe better represents the Group's overall borrowing, was GBP30.1m at the period end (H1 2016: GBP1.2m net cash). The board believes, taking into account the Group's annual cashflow profile, that this is an appropriate level of debt. After the period end, we increased our facilities by GBP5.0m to fund the acquisition of Criterion. Free cash flow decreased to GBP10.9m (H1 2016: GBP15.5m) primarily due to an increase in working capital and tax and interest paid.
The Group's pension deficit at 30 June 2017 was GBP44.8m, or GBP37.2m net of deferred tax, compared with GBP52.5m at the year end, net of deferred tax GBP43.5m. The Group's pension scheme deficit fell during the first half of 2017, largely due to changes in mortality assumptions and positive market conditions which resulted in good investment returns. We have long-term plans in place and work closely with the scheme's trustees to manage the deficit. We continue to monitor the Company's pension scheme exposures and take action, as appropriate.
Dividend
An interim dividend of 3.31p (H1 2016: 3.15p) has been declared and will be paid on 10 November 2017 to shareholders on the register on 13 October 2017.
Board
We are pleased to welcome Tamer Ozmen as a Non-Executive Director of the Company, with effect from 29 June 2017. Tamer has also joined the Audit, Remuneration and Nominations Committees with effect from the same date.
Tamer is an accomplished technology professional with over 20 years' senior management experience. He currently runs Microsoft UK Services, which supports UK customers to digitally transform themselves and works with them to disrupt their business models to achieve more.
Current trading and outlook
The Group has had a steady start to 2017 and we anticipate that our full year performance will be in line with the board's expectations.
We are making good progress in delivering our growth strategy:
-- Our Management Services business provides a solid core to our business with deep, long-lasting client relationships and delivering steady, reliable growth.
-- The Adjusting Services business is a well-established, global loss adjusting business, with leadership positions in key markets. It is well-positioned to drive growth and increased profitability through improving the underlying performance of our existing business lines, building capabilities and diversifying our income streams.
-- The Insurance Support Services business includes established and newer businesses with the potential to deliver a material change in earnings in the longer term.
We are very positive about the long-term prospects for Charles Taylor. We are taking forward numerous growth initiatives and, as set out in this report, our investments are delivering positive results. The Group has delivered strong revenue growth and we believe we are well-positioned to deliver further growth, increased profit and greater shareholder value.
David Marock
Group Chief Executive Officer
5 September 2017
Financial Review
The results for the period ended 30 June 2017 are summarised in the table below and explained in more detail in the Group Chief Executive Officer's review.
H1 2017 H1 2016
----------------------------- -------- --------
Revenue (GBPm) 100.7 74.0
----------------------------- -------- --------
Operating profit (GBPm) 3.5 5.7
----------------------------- -------- --------
Adjustments 3.0 1.0
----------------------------- -------- --------
Finance costs/other (GBPm) (0.4) (0.4)
----------------------------- -------- --------
Non-controlling interests
before tax (GBPm) - (0.2)
----------------------------- -------- --------
Adjusted profit before tax
(GBPm) 6.1 6.0
----------------------------- -------- --------
Tax (GBPm) - (0.3)
----------------------------- -------- --------
Adjusted earnings (GBPm) 6.1 5.7
----------------------------- -------- --------
Adjusted earnings per share
(p) 9.04 8.55
----------------------------- -------- --------
Note: Small rounding differences arise in the total amounts above.
The above financial measures are adjusted as set out in the table below:
(GBPm) H1 2017 H1 2016 ---------------------------- -------- -------- Statutory profit before tax 3.1 5.3 Acquired intangible assets amortisation 2.3 1.0 Other adjustments 0.7 - Non-controlling interests - profit before tax - (0.2) ---------------------------- -------- -------- Adjusted profit before tax 6.1 6.0 ---------------------------- -------- --------
Note: Small rounding differences arise in the total amounts above.
Revenue was GBP100.7m (2016: GBP74.0m) primarily benefiting from a full half year's contribution from CEGA and growth across each of the Group's businesses, Management, Adjusting and Insurance Support Services businesses. Adjusted profit before tax was GBP6.1m (2016: GBP6.0m) following good top line performance by the Group's businesses, a full year's administrative costs from CEGA, investments in delivering the Group's growth strategy and the negative impact of foreign exchange on translating the Group's non-sterling working capital and earnings.
Statutory profit before tax was GBP3.1m (2016: GBP5.3m) lower than the H1 2016, as expected, due to the increase in the amortisation of intangible customer relationship assets following the successful CEGA acquisition and the rationalisation of the structures relating to the provision of management services to The Strike Club, which included the closure of the Group's Monaco office.
Adjustments
The Group makes adjustments to statutory profit before tax in order to report profit before tax that reflects the Group's underlying performance ("adjusted profit before tax"). The basis on which such adjustments are made in relation to the Professional Services business and the Owned Life Insurance business are explained below.
Within our Professional Services businesses, we are continually developing new capabilities through carefully targeted acquisitions, joint ventures and business investments which have a compelling strategic rationale, strong cultural fit, a persuasive financial rationale and an acceptable risk profile. Our strategy includes the execution of selected larger investments. Material acquisitions and the significant expansion of new businesses, in any given financial year, are infrequent so the associated costs of such investments are not representative of the underlying performance of these businesses.
The Owned Life Insurers business consolidates life insurance businesses which are primarily in run-off, creating value through targeted acquisitions and operational efficiencies resulting from economies of scale. This business has acquired five life companies over the last five years. Profit releases on acquisitions are dependent on the merging of businesses, which requires regulatory approval, leading to some profit fluctuations. These profits, along with acquisition-related costs and changes to estimates in deferred consideration on acquisition, are considered to be a core element of this business's underlying and ongoing performance.
The following adjustments relate to H1 2017:
- Amortisation of acquired intangible assets: The amortisation of intangible assets recognised on acquisition by the Professional Services business of GBP2.3m (2016: GBP1.0m) is adjusted because this expense, which is higher in H1 2017 than H1 2016 because of the CEGA acquisition, does not relate to underlying performance.
- Other adjustments: In H1 2017, the Professional Services business rationalised the structures relating to the provision of management services to one of its mutual insurance clients, The Strike Club, which included the closure of the Group's Monaco office. The net total of these costs, GBP0.7m, has been adjusted.
Net debt, cash flow and financing
Net debt at the half year was GBP35.6m (2016: GBP3.3m net cash) and free cash flow decreased to GBP10.9m (2016: GBP15.5m) primarily due to an increase in working capital and tax and interest paid.
The Group's senior banking facilities comprise an amortising senior term loan of GBP10.0m and a GBP35.0m revolving credit facility. After the period end we increased our facilities by GBP5.0m to fund the acquisition of Criterion. In addition, the Group has GBP5.0m uncommitted overdraft facilities in the UK, uncommitted overseas facilities of the local currency equivalent of GBP4.0m and committed overseas facilities of the local currency equivalent of GBP5.8m. Interest rates are mostly linked to 3 month Libor plus margins of 2.25-3.25%. The senior term loan and revolving credit facility are available until 7 November 2018. The other facilities are primarily renewed on an annual basis.
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 statutory profit for the period was 0.0%, (2016: 5.2%). The movement in the effective tax rate reflects the recognition of deferred tax assets in respect of brought forward UK tax losses. Based on the 2017 full year tax charge, it is estimated that there will be c. GBP1.4m in unrecognised UK losses at 31 December 2017.
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 2017 fall into the three categories of business, financial, and legal and regulatory risks. These remain unchanged from those explained in the 2016 Annual Report. The Group's risk management systems are designed to manage the risk of failing to achieve our business objectives. We have an embedded and continuous 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, being 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
5 September 2017
Condensed Consolidated Income Statement
Six months Six months
to 30 June to 30 June Year to
31 December
2017 2016 2016
GBP000 GBP000 GBP000
Note (Unaudited) (Unaudited) (Audited)
-------------------------------------- ---- ------------ ------------ -------------
Continuing operations
Revenue from Professional Services 98,498 71,683 164,551
Revenue from Owned Insurance
Companies
Gross revenue 2,680 2,743 5,567
Outward reinsurance premiums (502) (430) (854)
-------------------------------------- ---- ------------ ------------ -------------
Net revenue 2,178 2,313 4,713
-------------------------------------- ---- ------------ ------------ -------------
Total revenue 3 100,676 73,996 169,264
Expenses from Owned Insurance
Companies
Claims incurred (42,267) 35,465 (120,926)
Reinsurance recoveries 217 1,122 2,950
Other gains/(losses) from insurance
activities 43,240 (36,109) 120,464
Net operating expenses (3,074) (2,458) (5,212)
-------------------------------------- ---- ------------ ------------ -------------
Net losses (1,884) (1,980) (2,724)
Administrative expenses (94,900) (66,011) (154,275)
Share of results of associates (434) (284) (1,028)
-------------------------------------- ---- ------------ ------------ -------------
Operating profit 3,458 5,721 11,237
Investment and other income 447 182 823
Finance costs (799) (605) (1,333)
-------------------------------------- ---- ------------ ------------ -------------
Profit before tax 3,106 5,298 10,727
Income tax expense 4 - (312) -
-------------------------------------- ---- ------------ ------------ -------------
Profit for the period from continuing
operations 3,106 4,986 10,727
-------------------------------------- ---- ------------ ------------ -------------
Attributable to:
Owners of the Company 3,113 4,755 10,541
Non-controlling interests (7) 231 186
-------------------------------------- ---- ------------ ------------ -------------
3,106 4,986 10,727
-------------------------------------- ---- ------------ ------------ -------------
Earnings per share from continuing
operations
Statutory basic (p) 6 4.62 7.19 15.85
Statutory diluted (p) 6 4.56 7.14 15.73
-------------------------------------- ---- ------------ ------------ -------------
Condensed Consolidated Statement of Comprehensive Income
Six months Six months
to 30 June to 30 June Year to
31 December
2017 2016 2016
GBP000 GBP000 GBP000
(Unaudited) (Unaudited) (Audited)
------------------------------------ ------------ ------------ -------------
Profit for the period 3,106 4,986 10,727
---------------------------------------- ------------ ------------ -------------
Items that will not be reclassified
subsequently to profit or loss
Actuarial gains/(losses) on defined
benefit pension schemes 6,227 (17,901) (15,224)
Tax on items taken directly to
equity (1,304) 3,003 1,790
---------------------------------------- ------------ ------------ -------------
4,923 (14,898) (13,434)
--------------------------------------- ------------ ------------ -------------
Items that may be reclassified
subsequently to profit or loss
Exchange differences on translation
of foreign operations (566) 4,116 6,091
Gains/(losses) on cash flow hedges 474 (884) (374)
---------------------------------------- ------------ ------------ -------------
(92) 3,232 5,717
--------------------------------------- ------------ ------------ -------------
Other comprehensive income/(loss)
for the period, net of tax 4,831 (11,666) (7,717)
---------------------------------------- ------------ ------------ -------------
Total comprehensive income/(loss)
for the period 7,937 (6,680) 3,010
---------------------------------------- ------------ ------------ -------------
Attributable to:
Owners of the Company 8,028 (7,074) 2,570
Non-controlling interests (91) 394 440
---------------------------------------- ------------ ------------ -------------
7,937 (6,680) 3,010
--------------------------------------- ------------ ------------ -------------
Condensed Consolidated Balance Sheet
At At
30 June 30 June At
31 December
2017 2016 2016
GBP000 GBP000 GBP000
Note (Unaudited) (Unaudited) (Audited)
------------------------------------- ---- ------------ ------------ -------------
Non-current assets
Goodwill 7 57,503 45,007 58,264
Other intangible assets 8 37,989 18,318 34,180
Property, plant and equipment 8,838 6,043 8,690
Investments 983 1,857 1,486
Financial assets 7,378 6,060 6,682
Deferred tax assets 11,374 9,857 12,707
------------------------------------- ---- ------------ ------------ -------------
Total non-current assets 124,065 87,142 122,009
------------------------------------- ---- ------------ ------------ -------------
Current assets
Total assets in insurance businesses 1,135,134 1,131,713 1,251,017
Trade and other receivables 87,949 76,039 78,178
Cash and cash equivalents 138,675 109,620 141,436
------------------------------------- ---- ------------ ------------ -------------
Total current assets 1,361,758 1,317,372 1,470,631
------------------------------------- ---- ------------ ------------ -------------
Total assets 1,485,823 1,404,514 1,592,640
------------------------------------- ---- ------------ ------------ -------------
Current liabilities
Total liabilities in insurance
businesses 1,124,468 1,113,058 1,236,898
Trade and other payables 52,197 50,804 37,074
Deferred consideration 5,745 9,713 2,979
Current tax liabilities 180 1,247 458
Borrowings 13 21,892 5,795 10,002
Client funds 12 118,917 95,095 125,198
------------------------------------- ---- ------------ ------------ -------------
Total current liabilities 1,323,399 1,275,712 1,412,609
------------------------------------- ---- ------------ ------------ -------------
Net current assets 38,359 41,660 58,022
------------------------------------- ---- ------------ ------------ -------------
Non-current liabilities
Borrowings 13 33,411 5,426 43,670
Deferred tax liabilities 6,003 - 6,309
Retirement benefit obligation 15 44,807 56,282 52,467
Provisions 410 337 338
Obligations under finance leases 35 50 41
Deferred consideration 3,695 5,806 7,044
------------------------------------- ---- ------------ ------------ -------------
Total non-current liabilities 88,361 67,901 109,869
------------------------------------- ---- ------------ ------------ -------------
Total liabilities 1,411,760 1,343,613 1,522,478
------------------------------------- ---- ------------ ------------ -------------
Net assets 74,063 60,901 70,162
------------------------------------- ---- ------------ ------------ -------------
Equity
Share capital 11 684 669 674
Share premium account 72,928 71,476 72,372
Merger reserve 6,872 6,872 6,872
Capital reserve 662 662 662
Own shares (399) (587) (430)
Accumulated losses (8,684) (20,322) (12,126)
------------------------------------- ---- ------------ ------------ -------------
Equity attributable to owners
of the Company 72,063 58,770 68,024
Non-controlling interests 2,000 2,131 2,138
------------------------------------- ---- ------------ ------------ -------------
Total equity 74,063 60,901 70,162
------------------------------------- ---- ------------ ------------ -------------
The financial statements were approved by the board of directors and authorised for issue on 5 September 2017.
Mark Keogh
Director
5 September 2017
Condensed Consolidated Cash Flow Statement
Six months
Six months to 30 June
Year to 31
December
to 30 June 2016 2016
2017 GBP000 GBP000
Note GBP000 (Unaudited) (Unaudited) (Audited)
--------------------------------------- ---- -------------------- ------------ -----------
Net cash from operating activities 12 8,113 46,755 71,200
Investing activities
Interest received 204 168 394
Proceeds on disposal of property,
plant and equipment 74 107 278
Purchases of property, plant
and equipment (1,216) (2,844) (1,753)
Acquisition of other intangible
assets (2,584) (1,951) (6,091)
Purchase of investments (511) (1,413) (3,320)
Acquisition of subsidiaries -
net of cash acquired (1,852) - (23,507)
Payment of deferred consideration (683) (546) (8,214)
--------------------------------------- ---- -------------------- ------------ -----------
Net cash used in investing activities (6,568) (6,479) (42,213)
--------------------------------------- ---- -------------------- ------------ -----------
Financing activities
Proceeds from issue of shares 137 89 442
Dividends paid 5 (4,974) (4,622) (6,732)
Repayments of borrowings 10 (52,756) (11,785) (12,590)
Repayments of obligations under
finance leases (6) (5) (16)
New bank loans raised 10 49,270 2,000 40,587
Increase/(decrease) in bank overdrafts 5,243 (751) 3,465
--------------------------------------- ---- -------------------- ------------ -----------
Net cash (used in)/generated
from financing activities (3,086) (15,074) 25,156
--------------------------------------- ---- -------------------- ------------ -----------
Net (decrease)/increase in cash
and cash equivalents (1,541) 25,202 54,143
Cash and cash equivalents at
beginning of period 141,436 80,170 80,170
Effect of foreign exchange rate
changes (1,220) 4,248 7,123
--------------------------------------- ---- -------------------- ------------ -----------
Cash and cash equivalents at
end of period 13 138,675 109,620 141,436
--------------------------------------- ---- -------------------- ------------ -----------
Condensed Consolidated Statement of Changes in Equity
Share
Share premium Merger Capital Own Accumulated Non-controlling
capital account reserve reserve shares losses interests Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- -------- -------- -------- -------- ------- ----------- --------------- -------
At 1 January 2017
(audited) 674 72,372 6,872 662 (430) (12,126) 2,138 70,162
Issue of share
capital (note
11) 10 - - - - - - 10
Share premium
arising on issue
of
share capital - 556 - - - - - 556
Profit for the
financial period - - - - - 3,113 (7) 3,106
Dividends paid
(note 5) - - - - - (4,974) - (4,974)
Actuarial gains
on defined benefit
pension schemes - - - - - 6,227 - 6,227
Tax on items taken
to equity - - - - - (1,304) - (1,304)
Gains on cash
flow hedges - - - - - 474 - 474
Foreign exchange
translation differences - - - - - (482) (84) (566)
Movement in share--based
payments - - - - - 388 - 223
Movement in own
shares - - - - 31 - - 196
Other movements - - - - - - (47) (47)
------------------------- -------- -------- -------- -------- ------- ----------- --------------- -------
At 30 June 2017
(unaudited) 684 72,928 6,872 662 (399) (8,684) 2,000 74,063
------------------------- -------- -------- -------- -------- ------- ----------- --------------- -------
Share
Share premium Merger Capital Own Accumulated Non-controlling
capital account reserve reserve shares losses interests Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- -------- -------- -------- -------- ------- ----------- --------------- --------
At 1 January 2016
(audited) 665 71,239 6,872 662 (489) (8,869) 19,404 89,484
Issue of share
capital (note
11) 4 - - - - - - 4
Share premium
arising on issue
of
share capital - 237 - - - - - 237
Profit for the
financial period - - - - - 4,755 231 4,986
Dividends paid
(note 5) - - - - - (4,622) - (4,622)
Actuarial losses
on defined benefit
pension schemes - - - - - (17,901) - (17,901)
Tax on items taken
to equity - - - - - 3,003 - 3,003
Losses on cash
flow hedges - - - - - (884) - (884)
Foreign exchange
translation differences - - - - - 3,952 164 4,116
Movement in share--based
payments - - - - - 129 - 129
Movement in own
shares - - - - (98) - - (98)
Sale and closure
of non-life operations - - - - - - (17,954) (17,954)
Other movements - - - - - 115 286 401
------------------------- -------- -------- -------- -------- ------- ----------- --------------- --------
At 30 June 2016
(unaudited) 669 71,476 6,872 662 (587) (20,322) 2,131 60,901
------------------------- -------- -------- -------- -------- ------- ----------- --------------- --------
Own shares comprise 384,315 (30 June 2016: 619,994; 31 December 2016: 311,120) shares held by the Charles Taylor Employee Share Ownership Plan Trust (ESOP). The market value of these shares was GBP0.9m (30 June 2016: GBP1.5m; 31 December 2016: GBP0.8m) 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
These condensed interim financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2016 were approved by the board of directors on 8 March 2017 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006. These condensed interim financial statements have been reviewed, not audited.
2. Accounting policies
Basis of preparation
These condensed interim financial statements for the six months ended 30 June 2017 have been prepared in accordance with the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority and with IAS 34, 'Interim financial reporting', as adopted by the European Union. The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2016, which have been prepared in accordance with IFRSs as adopted by the European Union.
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.
Accounting policies
The accounting policies adopted are consistent with those of the previous financial year except as described below:
-- A number of amendments to IFRSs became effective for the financial year beginning on 1 January 2017, however the group did not have to change its accounting policies or make material retrospective adjustments as a result of adopting these new standards.
-- Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss.
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 - provides end-to-end management services to insurance companies, mutuals and associations.
-- Adjusting Services business -provides loss adjusting services across the aviation, energy, marine, property & casualty and special risks sectors.
-- Insurance Support Services business - provides a wide range of professional, technology and support services, enabling our clients to select the specific services they require.
-- Owned Life Insurers business - consolidates life insurance businesses which are primarily in run-off, creating value through targeted acquisitions and operational efficiency.
Management information about these businesses is regularly provided to the Group's chief operating decision maker 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 profit for the individual segments includes an allocation of central costs. The Adjustments column includes elimination of inter-segment revenue, share of results of associates and the adjustments set out in the Financial Review. Reconciliations of segmental results to the group profit before tax are set out below.
Information about major customers
The Group derived revenue of GBP18.0m (to 30 June 2016: GBP17.2m, full year 2016: GBP34.3m) from one external customer which accounts for more than 10% of group revenue, included in the Management Services business.
Owned
Professional Services Life
businesses Insurers Adjustments Group
------------------------------------------------------- ---------- ------------------ --------
Six months to Insurance
30 June 2017 Management Adjusting Support Insurance
Continuing Services Services Services Unallocated Total Companies Eliminations/other Total
operations GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------- ---------- --------- --------- ----------- -------- ---------- ------------------ --------
Revenue from
external
clients 27,893 35,228 35,371 6 98,498 2,178 - 100,676
Revenue from other
operating segments - - 2,050 - 2,050 - (2,050) -
------------------- ---------- --------- --------- ----------- -------- ---------- ------------------ --------
Total revenue 27,893 35,228 37,421 6 100,548 2,178 (2,050) 100,676
Depreciation and
amortisation (130) (360) (1,788) - (2,278) (137) - (2,415)
Other expenses (24,221) (33,211) (34,246) (6) (91,684) (1,748) (1,371) (94,803)
------------------- ---------- --------- --------- ----------- -------- ---------- ------------------ --------
Operating
profit/(loss) 3,542 1,657 1,387 - 6,586 293 (3,421) 3,458
------------------- ---------- --------- --------- ----------- -------- ---------- ------------------ --------
Investment and
other income 447
Finance costs (799)
------------------- ---------- --------- --------- ----------- -------- ---------- ------------------ --------
Profit before
tax 3,106
------------------- ---------- --------- --------- ----------- -------- ---------- ------------------ --------
Owned
Professional Services Life
businesses Insurers Adjustments Group
------------------------------------------------------- ---------- ------------- --------
Insurance
Six months to Management Adjusting Support Insurance Eliminations/
30 June 2016 Services Services Services Unallocated Total Companies other Total
Continuing operations GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------- ---------- --------- --------- ----------- -------- ---------- ------------- --------
Revenue from external
clients 25,366 31,676 14,641 - 71,683 2,313 - 73,996
Revenue from other
operating segments - - 1,393 - 1,393 - (1,393) -
----------------------- ---------- --------- --------- ----------- -------- ---------- ------------- --------
Total revenue 25,366 31,676 16,034 - 73,076 2,313 (1,393) 73,996
Depreciation and
amortisation (349) (639) (253) - (1,241) (224) - (1,465)
Other expenses (21,749) (29,483) (13,426) (273) (64,931) (2,033) 154 (66,810)
----------------------- ---------- --------- --------- ----------- -------- ---------- ------------- --------
Operating profit 3,268 1,554 2,355 (273) 6,904 56 (1,239) 5,721
----------------------- ---------- --------- --------- ----------- -------- ---------- ------------- --------
Investment and
other income 182
Finance costs (605)
----------------------- ---------- --------- --------- ----------- -------- ---------- ------------- --------
Profit before
tax 5,298
----------------------- ---------- --------- --------- ----------- -------- ---------- ------------- --------
Owned
Professional Services Life
businesses Insurers Adjustments Group
-------------------------------------------------------- ---------- ------------- ---------
Insurance
Year to 31 December Management Adjusting Support Insurance Eliminations/
2016 Continuing Services Services Services Unallocated Total Companies Other Total
operations GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------- ---------- --------- --------- ----------- --------- ---------- ------------- ---------
Revenue from external
clients 54,746 65,420 44,380 5 164,551 4,713 - 169,264
Revenue from other
operating segments - - 2,664 - 2,664 - (2,664) -
---------------------- ---------- --------- --------- ----------- --------- ---------- ------------- ---------
Total revenue 54,746 65,420 47,044 5 167,215 4,713 (2,664) 169,264
Depreciation and
amortisation (1,003) (1,282) (973) - (3,258) (379) - (3,637)
Other expenses (45,091) (62,314) (42,247) (5) (149,657) (2,327) (2,406) (154,390)
---------------------- ---------- --------- --------- ----------- --------- ---------- ------------- ---------
Operating
profit/(loss) 8,652 1,824 3,824 - 14,300 2,007 (5,070) 11,237
---------------------- ---------- --------- --------- ----------- --------- ---------- ------------- ---------
Investment and
other income 823
Finance costs (1,333)
---------------------- ---------- --------- --------- ----------- --------- ---------- ------------- ---------
Profit before
tax 10,727
---------------------- ---------- --------- --------- ----------- --------- ---------- ------------- ---------
At 31 December
At 30 June 2017 At 30 June 2016 2016
GBP000 GBP000 GBP000
-------------------------------------- -------------------------------------- --------------------------------------
Professional Owned Professional Owned Professional Owned
Services Life Services Life Services Life
businesses Insurers Group businesses Insurers Group businesses Insurers Group
---------------- ------------ ----------- ----------- ------------ ----------- ----------- ------------ ----------- -----------
Management
Services
business 6,269 - 6,269 2,544 - 2,544 3,643 - 3,643
Adjusting
Services
business 199,662 - 199,662 179,237 - 179,237 209,560 - 209,560
Insurance
Support
Services
business 117,763 - 117,763 62,521 - 62,521 106,021 - 106,021
Unallocated
assets and
eliminations 25,159 - 25,159 26,346 - 26,346 20,427 - 20,427
Owned Insurance
Companies
business - 1,136,970 1,136,970 - 1,133,866 1,133,866 - 1,252,989 1,252,989
---------------- ------------ ----------- ----------- ------------ ----------- ----------- ------------ ----------- -----------
Total assets 348,853 1,136,970 1,485,823 270,648 1,133,866 1,404,514 339,651 1,252,989 1,592,640
Non-current
assets 122,230 1,835 124,065 84,989 2,153 87,142 120,037 1,972 122,009
Current assets 226,623 1,135,135 1,361,758 185,659 1,131,713 1,317,372 219,614 1,251,017 1,470,631
---------------- ------------ ----------- ----------- ------------ ----------- ----------- ------------ ----------- -----------
Total assets 348,853 1,136,970 1,485,823 270,648 1,133,866 1,404,514 339,651 1,252,989 1,592,640
Current
liabilities (193,186) (1,124,468) (1,317,654) (153,488) (1,112,511) (1,265,999) (172,732) (1,236,898) (1,409,630)
Deferred
consideration (5,745) - (5,745) (1,641) (8,072) (9,713) (2,979) - (2,979)
---------------- ------------ ----------- ----------- ------------ ----------- ----------- ------------ ----------- -----------
Net current
assets 27,692 10,667 38,359 30,530 11,130 41,660 43,903 14,119 58,022
Non-current
liabilities (84,666) - (84,666) (62,095) - (62,095) (102,825) - (102,825)
Deferred
consideration (3,695) - (3,695) (1,374) (4,432) (5,806) (4,612) (2,432) (7,044)
---------------- ------------ ----------- ----------- ------------ ----------- ----------- ------------ ----------- -----------
Total
liabilities (287,292) (1,124,468) (1,411,760) (218,598) (1,125,015) (1,343,613) (283,148) (1,239,330) (1,522,478)
---------------- ------------ ----------- ----------- ------------ ----------- ----------- ------------ ----------- -----------
Net assets 61,561 12,502 74,063 52,050 8,851 60,901 56,503 13,659 70,162
Non-controlling
interests (2,000) - (2,000) (2,131) - (2,131) (2,138) - (2,138)
---------------- ------------ ----------- ----------- ------------ ----------- ----------- ------------ ----------- -----------
Equity
attributable
to owners
of
the Company 59,561 12,502 72,063 49,919 8,851 58,770 54,365 13,659 68,024
---------------- ------------ ----------- ----------- ------------ ----------- ----------- ------------ ----------- -----------
Revenue Non-current assets(1)
---------------------------- ---------------------------
Six Six Year
months months to At At At
to 30 to 31 30 30 31
June 30 June December June June December
2017 2016 2016 2017 2016 2016
Geographical information GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------- ------- -------- --------- ------- ------- ---------
United Kingdom 41,088 21,949 59,467 96,396 64,730 96,813
Other Europe 9,167 5,557 11,381 6,866 3,071 2,683
Middle East 2,162 1,909 3,885 153 117 116
North America 8,390 6,921 14,462 6,756 6,715 6,918
Central and South America 2,490 2,778 5,483 182 193 180
Asia Pacific 9,286 8,347 17,676 1,452 1,585 1,637
Bermuda 28,093 26,535 56,910 886 874 955
-------------------------- ------- -------- --------- ------- ------- ---------
100,676 73,996 169,264 112,691 77,285 109,302
-------------------------- ------- -------- --------- ------- ------- ---------
1. Excluding deferred tax.
4. Income tax expense
Income tax expense is recognised based on management's estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate used for the year to 31 December 2017 is nil (the estimated tax rate for the six months ended 30 June 2016 was 5.2%).
5. Dividends
Six Six Year
months months to
to 30 to 30 31
June June December
2017 2016 2016
GBP000 GBP000 GBP000
------------------------------------------ ------- ------- ---------
Ordinary dividends paid comprise:
Final dividend (2016: 7.35p) 4,974 - -
Second interim dividend paid (2015: 7.0p) - 4,622 4,622
Interim dividend paid (2016: 3.15p) - - 2,110
------------------------------------------ ------- ------- ---------
4,974 4,622 6,732
------------------------------------------ ------- ------- ---------
The interim dividend of 3.31p per share was approved by the Board on 5 September 2017 and has not been included as a liability as at 30 June 2017.
6. Earnings per share
The earnings and weighted average number of shares used in the calculation of earnings per share are as shown below. The shares held by the ESOP have been excluded from the calculation because the trustees have waived the right to dividends on these shares.
Six Six Year
months months to
to 30 to 30 31
June June December
2017 2016 2016
GBP000 GBP000 GBP000
-------------------------------------------- ------- ------- ---------
Earnings
Earnings for the purposes of basic and
diluted earnings per share from continuing
operations 3,113 4,756 10,541
-------------------------------------------- ------- ------- ---------
Number Number Number
------------------------------------------- ---------- ---------- ----------
Number of shares
------------------------------------------- ---------- ---------- ----------
Weighted average number of ordinary
shares for the purposes of basic earnings
per share 67,434,793 66,113,754 66,526,347
Effect of dilutive potential ordinary
shares:
Share options 752,853 480,693 473,825
------------------------------------------- ---------- ---------- ----------
Weighted average number of ordinary
shares for the purposes of statutory
diluted
earnings per share 68,187,646 66,594,447 67,000,172
------------------------------------------- ---------- ---------- ----------
7. Goodwill
Goodwill has reduced since the year end, by GBP0.8m due to the impact of foreign exchange differences and revised figures for acquisitions within 12 months.
8. Other intangible assets
During the period a further GBP2.6m of IT assets were capitalised and a value of business acquired (VOBA) of GBP4.9m recognised, arising on the acquisition of a life insurance business (see note 9). These additions, net of amortisation result in an increase in other intangible assets of GBP3.8m.
9. Acquisition of subsidiary
Closed book of Zurich International Portfolio Bonds and Allied Dunbar International Fund Managers Limited
On 28 April 2017, Charles Taylor Group completed the acquisition of the closed book of Zurich International Portfolio Bonds (the Book) from Zurich International Life Limited and 100% of the equity of Allied Dunbar International Fund Managers Limited (ADIFM) from Zurich Insurance Company Ltd.
The transaction will enable Charles Taylor to increase its revenue by managing the closed book and by providing policy administration services. The acquisition of ADIFM, which manages a collective investment scheme, will also enable Charles Taylor to generate fund management revenues and further extend its range of professional services by entering the international fund administration services market. Charles Taylor Group's wholly owned Isle of Man life insurance subsidiary, LCL International Life Assurance Company Limited, will reinsure the Book and subsequently accept the legal transfer of the majority of the Book, subject to regulatory and court approval.
ADIFM has been renamed as Charles Taylor International Fund Managers (IoM) Limited.
As the reinsurance agreement for the Book had an effective date of 1 January 2017, a full year`s worth of surplus will be recognised in 2017. The acquisitions have contributed GBP1.3m revenue and GBP0.7m profit before tax to the Group since the effective acquisition date. The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are as set out in the table below.
9. Acquisition of subsidiary (continued)
The Book plus
ADIFM
------------------------------------------
Carrying
amount Amount
before recognised
acquisition Adjustments at acquisition
GBP000 GBP000 GBP000
--------------------------------------------- ------------ ----------- ---------------
Investment contract assets 271,299 - 271,299
Cash and cash equivalents 1,177 - 1,177
Loans and receivables 584 - 584
Investment contracts unit linked liabilities (271,253) - (271,253)
Other creditors (723) (84) (807)
--------------------------------------------- ------------ ----------- ---------------
Identifiable assets and liabilities 1,084 (84) 1,000
VOBA 4,909
Goodwill -
--------------------------------------------- ------------ ----------- ---------------
Consideration 5,909
--------------------------------------------- ------------ ----------- ---------------
Satisfied by:
Initial cash consideration 2,518
Deferred consideration 3,391
--------------------------------------------- ------------ ----------- ---------------
Consideration 5,909
--------------------------------------------- ------------ ----------- ---------------
Deferred consideration
Included in the opening deferred consideration of GBP11.7m, as set out below, is an amount of GBP1.7m included within the total liabilities in insurance businesses. Acquisitions include the Book from Zurich, as described above, offset by revisions for acquisitions within 12 months. GBP5.7m of the total is due within one year.
Deferred
consideration
GBP000
----------------------------------- --------------
At 1 January 2017 11,694
Acquisitions 2,742
Amounts paid (2,529)
Revaluation through profit or loss (2,574)
Interest unwind 107
At 30 June 2017 9,440
------------------------------------- --------------
10. Bank overdrafts and loans
Loans raised during the period amounted to GBP49.3m (to 30 June 2016: GBP2.0m, full year 2016: GBP40.6m) and repayments on loans amounted to GBP52.8m (to 30 June 2016: GBP11.8m, full year 2016: GBP12.6m). The Group's senior banking facilities were renewed on 7 November 2013 for a five-year term.
11. Called-up share capital
At
At At 31
30 June 30 June December
2017 2016 2016
GBP000 GBP000 GBP000
---------------------------------------- -------- -------- ---------
Issued and fully paid:
68,405,170 ordinary shares of 1p each
(30 June 2016: 66,937,097, 31 December
2016: 67,357,957) 684 669 674
---------------------------------------- -------- -------- ---------
The number of allotted and fully paid shares of the Company increased during the six month period to 30 June 2017 due to:
-- 865,945 shares issued under employee share schemes; and
-- 181,268 shares issued to former owners of the KLA Group under deferred consideration arrangements.
12. Notes to the condensed consolidated cash flow statement
Six Six Year
months months to
to to 31
30 June 30 June December
2017 2016 2016
GBP000 GBP000 GBP000
----------------------------------------- --------- -------- ---------
Operating profit 3,458 5,721 11,237
----------------------------------------- --------- -------- ---------
Adjustments for:
Depreciation of property, plant and
equipment 936 595 1,403
Amortisation of intangibles 3,734 1,820 5,253
Other non-cash items (1,384) 862 (85)
Decrease in provisions (1,442) (1,186) (2,334)
Share of results of associates and joint
ventures 434 481 1,028
----------------------------------------- --------- -------- ---------
Operating cash flows before movements
in working capital 5,736 8,293 16,502
Increase in receivables (8,670) (10,418) (10,296)
Increase in payables 15,677 20,605 3,612
Decrease/(increase) in insurance company
assets 385,883 (43,793) (163,732)
Decrease/(increase) in insurance company
liabilities (382,430) 46,000 169,841
----------------------------------------- --------- -------- ---------
Cash generated by operations 16,196 20,687 15,927
----------------------------------------- --------- -------- ---------
Income taxes paid (829) (92) (922)
Interest paid (973) (529) (597)
----------------------------------------- --------- -------- ---------
Net cash before movement in client funds 14,394 20,066 14,408
Movement in client funds (6,281) 26,689 56,792
----------------------------------------- --------- -------- ---------
Net cash from operating activities 8,113 46,755 71,200
----------------------------------------- --------- -------- ---------
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 GBP118.9m (30 June 2016: GBP95.1m, 31 December 2016: GBP125.2m).
13. Net debt
At At At
30 30 31
June June December
2017 2016 2016
GBP000 GBP000 GBP000
-------------------------- --------- -------- ---------
Cash and cash equivalents 138,675 109,620 141,436
Less: client funds (118,917) (95,095) (125,198)
Bank overdrafts (13,979) (4,520) (8,736)
Current loans (7,913) (1,275) (1,266)
Non-current bank loans (33,411) (5,426) (43,670)
Finance leases (35) (50) (41)
-------------------------- --------- -------- ---------
(35,580) 3,254 (37,475)
-------------------------- --------- -------- ---------
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, short-term trade receivables or payables, or funds held at Lloyd's, carrying amount is a reasonable approximation of fair value.
-- The preference shares investment is held to maturity. -- 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:
- Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;
- 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
- 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 financial assets and liabilities of 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 are through profit or loss, including any revaluation of deferred consideration (see note 9). The deferred consideration amounts below do not include amounts held in insurance company liabilities.
At 31 December
At 30 June 2017 At 30 June 2016 2016
------------------------- --------------------------- ---------------------------
Level Level Level Level Level Level
2 3 Total 2 3 Total 2 3 Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------- ------- ------- ------- ------- -------- -------- ------- -------- --------
Funds at Lloyd's - 3,585 3,585 - 2,783 2,783 - 3,120 3,120
Preference shares
held to maturity - 3,793 3,793 - 3,277 3,277 - 3,562 3,562
Trade debtors - 37,433 37,433 - 34,274 34,274 - 35,560 35,560
Accrued income - 28,683 28,683 - 25,310 25,310 - 27,797 27,797
Deferred consideration - (9,440) (9,440) - (15,519) (15,519) - (10,023) (10,023)
FX forward contracts 78 - 78 (906) - (906) (395) - (395)
----------------------- ------- ------- ------- ------- -------- -------- ------- -------- --------
78 64,054 64,132 (906) 50,125 49,219 (395) 60,016 59,621
----------------------- ------- ------- ------- ------- -------- -------- ------- -------- --------
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 3.25% (30 June 2016: 2.75%, 31 December 2016: 2.75%) that reflects the Group's debt funding rate over the relevant maturities.
-- Accrued income is uplifted by 5.27% 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 3.25% (30 June 2016: 2.75%, 31 December 2016: 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 2.49% (30 June 2016: 3.39%, 31 December 2016: 2.90%) 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 2017 has been arrived at by recalculating the 31 December 2016 liabilities using the financial assumptions at 30 June 2017 and rolling forward the liability, allowing for interest and benefit accrual to 30 June 2017. The value of plan assets represents the bid value of invested assets at 30 June 2017 plus cash balances held.
The financial assumptions used to calculate scheme liabilities under IAS 19R Employee benefits are as follows:
At At At
30 30 31
June June December
2017 2016 2016
% % %
---------------------------------------- ------ ------ ----------
Rate of increase in salaries 3.00 3.00 3.00
Rate of increase of pensions in payment
* RPI
- max 5%, min 0% 3.20 2.90 3.30
- max 2.5%, min 0% 2.20 2.10 2.20
- max 5%, min 3% 3.70 3.50 3.70
* CPI
- max 5%, min 0% 2.30 2.10 2.40
- max 2.5%, min 0% 1.80 1.70 1.90
Discount rate 2.60 2.70 2.60
Inflation assumption
* RPI 3.30 3.00 3.40
* CPI 2.30 2.00 2.40
---------------------------------------- ------ ------ ----------
Amount recognised in the balance sheet in respect of the Group's retirement benefit obligations
At At At
30 30 31
June June December
2017 2016 2016
GBP000 GBP000 GBP000
------------------------------------------ --------- --------- ---------
Total market value of assets 100,443 92,526 95,364
Actuarial value of liability (142,779) (146,630) (145,531)
Restrictions on asset recognised (2,143) (1,921) (1,983)
Overseas retirement benefit obligation (328) (257) (317)
------------------------------------------ --------- --------- ---------
Net liability recognised in the balance
sheet (44,807) (56,282) (52,467)
Related deferred tax asset 7,641 10,147 8,945
------------------------------------------ --------- --------- ---------
Pension liability net of related deferred
tax asset (37,166) (46,135) (43,522)
------------------------------------------ --------- --------- ---------
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. There have been no material transactions with associated undertakings in the period.
17. Events after the balance sheet date
These events are outlined in the Group CEO's Review.
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
The directors' confirm that these condensed interim financial statements have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
-- an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
-- material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.
The directors of Charles Taylor plc are listed in the Charles Taylor plc Annual Report for 31 December 2016. A list of current directors is maintained on the Charles Taylor plc website: www.ctplc.com
By order of the Board
David Marock
Group Chief Executive Officer
Mark Keogh
Group Chief Financial Officer
Independent Review Report to Charles Taylor plc
Report on the Condensed Consolidated Interim Financial Statements
Our conclusion
We have reviewed Charles Taylor plc's Condensed Consolidated Interim Financial Statements (the "interim financial statements") in the half year report of Charles Taylor plc for the 6 month period ended 30 June 2017. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the Condensed Consolidated Balance Sheet as at 30 June 2017;
-- the Condensed Consolidated Income Statement and Condensed Consolidated Statement of Comprehensive Income for the period then ended;
-- the Condensed Consolidated Cash Flow Statement for the period then ended; -- the Condensed Consolidated Statement of Changes in Equity for the period then ended; and -- the explanatory notes to the interim financial statements.
The interim financial statements included in the half year report have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
As disclosed in note 2 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The half year report, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half year report in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim financial statements in the half year report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review 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 for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the half year report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.
PricewaterhouseCoopers LLP
London
5 September 2017
This information is provided by RNS
The company news service from the London Stock Exchange
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(END) Dow Jones Newswires
September 06, 2017 02:00 ET (06:00 GMT)
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