Building the future of insurance services Charles Taylor plc Half - PowerPoint PPT Presentation

Building the future of insurance services Charles Taylor plc Half Year Results 2018 12 September 2018

Highlights H1 2018 Delivering growth strategy Delivered strong top line growth in H1 2018 − Completed London property strategy, expected to marginally reduce long-term occupancy costs Revenue Optimise whilst providing opportunity to expand + 21% − Strengthened sales collaboration through business business development forums, enhanced pipeline operations & relationship management Adjusted EBITDA − Creating scalable Finance & HR platform + 15% Deliver − Won global insurance technology contracts Adjusted PBT growth in − Growing and diversifying loss adjusting contributing to improving margins + 10% core − Started contract to provide medical assistance businesses services to top three UK insurer Adjusted EPS - 11% − Acquired insurance technology provider, which is Capture new already delivering new UK business opportunities strategic − Acquired US claims management business, which Dividend opportunities has already supported new business wins + 5% − Integrated Zurich International life business 1

Growth strategy update

Delivering growth in core businesses We are working to achieve leadership positions for all the Group’s businesses and to develop new, closely-related technical services and solutions. H1 initiatives included: - Delivered 7% growth in insured tonnage for The Standard Club Management Services - Preparing The Standard Club for Brexit - Achieved 6% growth in members’ payroll for Signal Mutual - Drove diversification strategy and operational efficiencies, delivering margin improvement from 5% to 7% year-on-year Adjusting Services - Expanded capabilities in US and Middle East markets - Developed UK major loss capabilities - Embedded presence in HNW adjusting market - Secured a multi-year contract to deliver a delegated authority solution to the Lloyd’s and London company insurance markets Insurance Support - Appointed to implement core operating platform for Seguros SURA, a top Services Latin American insurer in multiple jurisdictions - Embedded contract win to provide assistance services to a top-3 UK insurer. 3

Capturing new strategic opportunities We are developing new capabilities and building our businesses through acquisitions, joint ventures and business investments. H1 successes included: Initiative Progress - May 2018: Acquired Inworx, a Latin - Broadens global technology capabilities American based insurance-focused - Expands presence in Latin America technology software provider, - Added multiple international and local funded through an oversubscribed market clients Insurance placing of the Group’s shares - Delivering opportunities to implement Support Inworx solutions for UK clients Services - March 2018: Acquired Aasgard - Supports growth in claim management Summit, a provider of marine services in the USA claims management and related - Secures Charles Taylor’s position as a technical services focusing on the specialist provider of claims services to US West Coast states the maritime community 4

Inworx is performing as expected and integration is progressing well Inworx integration progressing well Software - solutions being aligned - 2018 1988 1998 2000s 2008 2011 with product gap analysis and updated documentation in English Won 3 major Established Acquired and Spanish global Acquired Acquired by as Pragma Renamed as Smartix broking Telesoft CRM Charles Taylor Sales - governance and processes Systems by Inworx distribution solution clients in InsureTech being developed and integrated. current CEO platform early 2000s Customer and supplier contracts being novated to Charles Taylor Owns IP in advanced cloud-based SAAS product suite: - Inbroker/Inbroker Re: core platform for (re)insurance brokers Operations – integration activities underway - Smartix: i nsurance distribution platform for all types of insurance distributors - Inlender : point-of-sale finance portal that integrates with Smartix to provide a joined-up Finance - invoicing and reporting insurance and finance solution for retailers, finance providers and insurers being integrated - Telesoft: CRM solution for insurers and banks HR - all Inworx staff being - BPM: workflow and business process management to support implementation projects transferred onto Charles Taylor contracts Deal terms: Marketing - campaigns, materials - Initial consideration includes US$19m cash and US$3.5m shares and website being integrated - Further US$21m deferred over four years, calculated on EBITDA delivered - Total consideration capped at US$50.5m Contract discussions to implement Inworx solutions for UK clients already in progress Charles Taylor InsureTech aims to transform Inworx to global insurance technology provider and for Inworx to accelerate Charles Taylor InsureTech’s growth in LatAm 5

Group results H1 2018

Charles Taylor performed well in H1 and is on track to meet Board’s full year expectation Strategy to create organic growth in core H1 2017 1 Group results H1 2018 Change businesses feeding Revenue (£m) through into strong top- 102.3 123.4 21% line performance Adjusted EBITDA (£m) 10.5 12.1 15% − 81% of H1 revenue increase from organic growth initiatives Adjusted PBT (£m) 7.8 8.5 10% − Acquired revenue growth from acquisitions in the year 30 June Adjusted EPS (p) 11.51 10.22 -11.2% 2017 to 30 June 2018 is £4m. − Tax charge in 2018 of between 15% and 20% following fully Dividend per share (p) 3.31 3.48 5% recognising deferred tax assets at FY 2017 (H1 2018: £1.2m; H1 2017 £Nil) 1. H1 2017 revenue and profit has been restated to amend recognition of revenue from the Signal contract (Management Services) as a 7 result of adopting IFRS 15. No full year impact.

Statutory profit impacted by increased amortisation and deferred consideration arising from acquisitions and the London office move £m Comment Adjusted PBT 8.5 Acquisitions Amortisation of intangibles arising from acquisitions (3.5) No cash impact in current year; intangible asset recognised on acquisition and amortised over the period of the earn out Deferred consideration on the acquisitions of Inworx, Criterion (1.5) No cash impact in current year but supported and Aasgard Summit accounted for as employee remuneration strategic acquisitions Acquisition costs (0.7) Cash cost largely Inworx related Operations Consolidating the Group’s three London offices into a single City (2.4) Cash neutral and expected to reduce long-term location occupancy costs with opportunity to expand Centralising and standardising elements of Finance and HR (0.4) Cash cost but expected to deliver future cost operations savings Non-controlling interests (0.2) No cash impact Statutory PBT 0.2 8

Adjusted Segmental Operating Profit H1 2017 H1 2017 H1 2018 Change H1 2018 Revenue 1 Adjusted Adjusted Revenue Adjusted Adjusted Management Services 29.6 - 29.4 segmental segmental segmental segmental operating operating operating operating Adjusting Services 35.2 +14% 40.2 profit 1 margin profit margin Insurance Support Services 37.4 +40% 52.4 Management Services 29.6 5.2 18% 18% 29.4 5.4 Total Professional 102.2 122.0 +19% Adjusting Services 35.2 1.7 5% 7% 40.2 2.9 Services Owned Insurance Insurance support Services 37.4 1.4 4% 1% 52.4 0.7 2.2 3.6 +65% Companies Total Professional Services 102.2 8.2 8% 7% 122.0 9.1 Eliminations -2.1 - -2.2 Owned Insurance Companies 2.2 0.3 14% 11% 3.6 0.4 Total 102.3 123.4 +21% Eliminations -2.1 - - -2.2 - - Total 102.3 8.5 8% 123.4 9.5 8% 1. H1 2017 revenue and profit has been restated to amend recognition of revenue from the Signal contract (Management Services) as a 9 result of adopting IFRS 15. No full year impact.

Charles Taylor has significant borrowing headroom after allowing for debt-funded growth strategy acquisitions 85.0 83.0 − Net debt lower relative to FY 2017 due to cash incentives received on London property costs not yet incurred 57.2 56.2 − Annual average net debt better 52.7 54.7 reflects the Group’s overall 49.0 borrowing levels 39.5 37.5 − The Group has total available 35.6 facilities of £83.0m, plus £25m 30.1 acquisition accordion facility − The Board considers this an 12.9 appropriate level of debt in relation to the Group’s cashflow profile FY 2016 HY 2017 FY 2017 HY 2018 Net debt (£m) Annual average net debt (£m) Total facilities (£m) 10

Net debt bridge Net debt at 31 December 2017 (57.2) Operating activities Cash generated from operations 21.0 Net interest paid (1.0) Tax paid (1.0) Financing activities Proceeds from issue of shares 17.5 Investing activities Acquisitions and investments (17.5) Payment of deferred consideration (0.2) Capital expenditure (7.3) Purchase of own shares (1.7) Dividends paid (5.3) Net debt at 30 June 2018 (52.7) 11