Charles Taylor Regulatory News (CTR)

Date: 3 May 2018

On behalf of: Charles Taylor plc

Embargoed until: 0700hrs

NEITHER THIS ANNOUNCEMENT NOR THE INFORMATION CONTAINED IN IT IS FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO ANY JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO DO SO. PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED UNDER THE MARKET ABUSE REGULATION (EU) NO. 596/2014.

Charles Taylor plc

Agreement to acquire insurance technology business in Latin America, Inworx

Charles Taylor plc ("Company" and, together with its subsidiaries, "Charles Taylor" or the "Group") announces today that its subsidiaries, Charles Taylor InsureTech Limited and Charles Taylor Insurance Services Limited have agreed to acquire the principal entities of the Inworx group of companies from its shareholders [1], and Charles Taylor InsureTech Mexico S.A. de C.V. has also agreed to acquire the business and assets of Inworx S.A de CV (collectively, the "Inworx Acquisition"). The initial consideration payable by Charles Taylor pursuant to the Inworx Acquisition will be US$22.5 million, and the maximum consideration (including performance-related deferred consideration) will be US$50.5 million. The acquisition is conditional on the placement of new ordinary shares of the Company, details of which are contained in a separate announcement by the Company.

Inworx is an insurance-focused technology consultancy and software provider to insurance brokers, insurers and non-traditional insurance players in 15 countries across Latin America, and employs around 270 staff in Argentina, Mexico and Peru. The Inworx Acquisition is classified as a class two transaction for the purposes of the UK Listing Rules.

[1] Insurance Software Products LLC, Leonardo Ruben Mato, Marcelo Antonio Massimino and Lautaro Mon

Inworx will become part of Charles Taylor InsureTech, which aims to become a global insurance technology player, and has secured major, multi-year technology contracts in recent months. The acquisition will build on this momentum by providing the following benefits:

· Extending Charles Taylor's client base in Latin America, adding major global insurance brokers as technology clients;

· Bringing a suite of insurance broker-focused and other proprietary software products that complement Charles Taylor InsureTech's existing product offerings;

· Increasing significantly Charles Taylor's contacts and leads in the region, providing the potential to cross-sell Charles Taylor InsureTech's existing software products;

· Enabling Charles Taylor InsureTech to market Inworx broker-focused and other software products globally;

· Providing a high-margin, growing earnings stream; the transaction is expected to have a neutral impact on reported earnings per share in 2018, and to enhance reported earnings per share in 2019.

The businesses to be acquired under the transaction are:

· Inworx Argentina S.A (Argentina)

· Softseg S.A. (Argentina)

· Inworx Peru SAC (Peru)

· The business and assets of Inworx S.A de CV (Mexico), Inworx IT Solutions LLC and Inworx S.A.

Terms of the transaction

The initial consideration payable at closing for the Inworx Acquisition will comprise US$19.0 million in cash and US$3.5 million in new ordinary shares of the Company (the "Consideration Shares"). The cash component of the initial consideration will be funded by the proceeds of a non-pre-emptive placement of new ordinary shares of the Company with certain of the Company's existing shareholders pursuant to an accelerated bookbuild being launched today, details of which are contained in a separate announcement by the Company (the "Placing"). Deferred consideration, calculated based on the EBITDA delivered by Inworx, will be paid over the four years following the Acquisition. Based on management's projections, the deferred consideration is expected to amount to US$21.0 million. The total consideration is capped at US$50.5 million.

The Inworx Acquisition is conditional upon consummation of the Placing and is expected to be completed on or around 10 May 2018.

Inworx reported revenue of US$14.7m and adjusted profit before tax of US$3.7 million[2] in the year to 30 September 2017. Inworx has achieved greater than 20% PBT margin and greater than 10% annual PBT growth over the last two years, and there is the opportunity to accelerate growth and improve profitability under Charles Taylor ownership. The gross assets of Inworx were US$6.1million2, as at 30 September 2017; Inworx will be consolidated into Charles Taylor's accounts for the year ending 31 December 2018. Taking into account integration-related costs, taxation charges and dilution following the issue of ordinary shares of the Company in connection with the Inworx Acquisition, the Inworx Acquisition is expected to have a neutral impact on reported Group earnings per share in 2018. The transaction is expected to enhance reported earnings per share in 2019.

On completion of the Inworx Acquisition, the founder and CEO of Inworx, Leonardo Mato, will become a Director of Charles Taylor InsureTech and transition to become Chairman of Charles Taylor InsureTech Latin America. He will be responsible for managing regional client relationships and driving sales. Inworx Chief Product Officer, Marcelo Massimino will join Charles Taylor InsureTech as Chief Product Officer for the Inworx portfolio of products. Inworx Chief Commercial Officer, Lautaro Mon will join Charles Taylor InsureTech as Practice Director for Inworx insurance distribution platform globally.

Application will be made for the Consideration Shares to be admitted to the premium listing segment of the Official List of the Financial Conduct Authority and to be admitted to trading on the London Stock Exchange's main market for listed securities (together, "Admission"). On Admission, the newly issued Consideration Shares will rank pari passu in all respects with the existing ordinary shares in the capital of the Company.

[2] 2017 adjusted PBT and 2017 gross assets based on the most recently filed statutory accounts for all but one of the relevant entities (based on management accounts for other entity), adjusted for differences in accounting standards and reporting currency and to remove the impact of intercompany payments with entities not in scope. 2017 revenue based on management accounts

Background to the transaction:

Charles Taylor InsureTech is becoming established as a global insurance technology provider, having been selected to deliver large, high-profile, multi-year projects in Europe and Latin America. The acquisition of Inworx accelerates this strategy and builds on the Group's deep insurance expertise and long-established technology capabilities.

Inworx will significantly strengthen Charles Taylor's presence and technology capabilities in Latin America and expand Charles Taylor InsureTech's client base in the region, including the Latin American operations of many global insurance brokers. The transaction underlines Charles Taylor InsureTech's commitment to Latin America. It established a Technology Centre of Excellence in Mexico City in 2016 and has secured contracts to implement core technology solutions for two of the region's leading insurers across all lines of business and in multiple countries in the region.

Inworx has developed a proprietary suite of the insurance-related software products, which complement Charles Taylor InsureTech's existing product suite, enabling the combined business to offer solutions to global clients along the whole insurance value chain:

· Inbroker/Inbroker Re: core platform for (re)insurance brokers;

· Smartix: insurance distribution platform for all types of insurance products and distributors;

· Inlender: point-of-sale finance portal that integrates with Smartix and Inbroker to provide a joined-up insurance and finance solution for retailers, finance providers, insurers and insurance brokers;

· Telesoft: CRM solution for insurers and banks;

· BPM: workflow and business process management solution to support implementation projects.

The Directors believe that Inworx is an excellent and complementary commercial and cultural fit with Charles Taylor InsureTech:

· Insurance domain expertise:  Charles Taylor InsureTech has an in-depth understanding of the insurance industry. It has recruited senior technology and management staff from leading life, health and general insurers and consultancies. This expertise is backed by Charles Taylor Group's depth of knowledge of the insurance market that supports every stage of the insurance lifecycle and every aspect of the insurance operating model.

Inworx's strong business relationships across Latin America will enable Charles Taylor InsureTech to further develop client relationships and market its services and solutions across the region. Inworx will benefit from Charles Taylor InsureTech's global reach through the Group's international network and reputation, to distribute its broker-focused and other software products globally.

· Insurance Transformation:  Charles Taylor InsureTech enables insurance businesses to respond to the changing needs of their customers, transforming their operations by better analysing data, and removing friction from the insurance value chain.

Inworx will increase Charles Taylor InsureTech's capabilities to deliver business transformation to the global (re)insurance sector. Inworx's flagship product, Inbroker, is the platform of choice for the Latin American operations of many top-tier insurance brokers. 

Charles Taylor InsureTech will make Inbroker available to global insurance corporates, creating a global broking platform that the directors believe will be superior to its competition in both functionality and technology.

The deal also brings other platforms such as the digital and affinity solution Smartix. By combining Charles Taylor InsureTech's and Inworx's capabilities. Charles Taylor InsureTech will be able to offer solutions to tackle the challenges insurance corporates face today to deliver business value.

· Solution implementation:  Charles Taylor InsureTech has been chosen to deliver large and high-profile, multi-year contracts in Latin America and Europe. These include being selected to deliver TIDE, a delegated authority management solution for the London insurance market and implementing life, health and general insurance policy administration systems in Latin America.

Inworx's expertise in implementing insurance broking solutions for top-tier global insurance brokers will build on Charles Taylor InsureTech's capabilities across the region and globally.

· Owned software intellectual property (IP): Charles Taylor InsureTech believes it has gained a competitive advantage by developing, acquiring and investing in market leading insurance software. This includes INSIS the only insurance policy administration solution to cover life, general and health insurance lines, TIDE, the delegated authority management solution of choice for the London insurance market, TRAX, claims management software and the KCenter workflow and document management platform.

Inworx's Inbroker, end-to-end insurance platform for insurance and reinsurance brokers, Smartix digital and affinity platform and other insurance solutions complement and will be integrated with Charles Taylor InsureTech's existing products.

David Marock, Group Chief Executive Officer, Charles Taylor plc said:

"This acquisition marks another major step in delivering Charles Taylor's growth strategy. I am looking forward to welcoming the team from Inworx to the Charles Taylor family.

"Technology is transforming the way that insurance is underwritten and transacted globally. The acquisition of Inworx is one of the largest we have undertaken as a Group. It demonstrates our commitment to growing our insurance technology capability, both as an enabler for the industry and to deliver the Group's services. These support every stage of the insurance lifecycle and every aspect of the insurance operating model."

Jason Sahota, Chief Executive Officer, Charles Taylor InsureTech said:

"This important acquisition demonstrates our commitment to grow Charles Taylor InsureTech as a market leading provider for the global insurance industry. This acquisition brings capabilities that expand our underlying platforms and positions to become a leading provider in Latin America. We will continue to build out both in Latin America and bring Inworx's solutions to other markets.

"In two years, we have demonstrated a track record of growth by winning major insurance technology contracts and I am excited to welcome Inworx to the Charles Taylor InsureTech family. Together we will continue on this fantastic journey to drive change and bring real benefits to the insurance sector by using the latest technology."

Leonardo Mato, Chief Executive Officer, Inworx, said:

"Inworx is already a provider of choice to many of the world's leading insurance brokers in Latin America and has established relationships across the regional insurance market. Becoming part of Charles Taylor InsureTech gives us the perfect platform to internationalise our portfolio and provide solutions to brokers and insurance providers on a global basis."

Potential further developments

The Group is in discussions with another insurance services business, which may or may not lead to an offer by a member of the Group to acquire this business. This acquisition would expand the Group's service proposition and client base, building on the acquisition of Inworx and recent organic growth. It is currently expected that, if consummated, the proposed transaction will be classified as a class two transaction for the purposes of the UK Listing Rules.

LEI: 2138009V1NHVCXIQ6V62

Classification: 2.2 Inside information disclosed under article 17 of the Market Abuse Regulation

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Notes to editors

Charles Taylor plc (www.ctplc.com) supports and enables the insurance market to meet the continually evolving challenges it faces. We provide technical services to make the business of insurance work fundamentally better. We have been providing insurance-related technical services and solutions since 1884 and today we employ around 2,100 permanent and contract staff in 107 locations spread across 29 countries in the UK, the Americas, Asia Pacific, Europe the Middle East and Africa.

We are unique in our market in that our services support every stage of the insurance lifecycle and every aspect of the insurance operating model. We develop and operate insurance vehicles on behalf of our clients, manage claims programmes and adjust losses. We handle legacy and run-off portfolios, provide a variety of specialist operational support services and offer solutions and support to drive insurance technology transformation.

Charles Taylor's breadth of services, technical skills and resources and global presence means the Group can manage and resolve virtually any insurance-related matter, wherever and whenever it occurs.

Important Notice

This announcement contains inside information within the meaning of article 7 of the EU Market Abuse Regulation (EU) No. 596/2014.

This announcement has been issued by and is the sole responsibility of the Company. The information contained in this announcement is for background purposes only and does not purport to be full or complete. The information in this announcement is subject to change without notice. Subject to the UK Listing Rules, the UK Disclosure Guidance and Transparency Rules and the Market Abuse Regulation (EU) No. 596/2014, the issue of this announcement shall not, under any circumstances, create any implication that there has been no change in the affairs of Charles Taylor or Inworx since the date of this announcement or that the information in this announcement is correct as at any time subsequent to the date of this announcement.

Certain information contained in this announcement, including any information as to Charles Taylor's or Inworx's strategy, plans or future financial or operating performance constitutes "forward-looking statements". These forward-looking statements can be identified by the use of terminology such as, "aims", "anticipates", "assumes", "believes", "budgets", "could", "contemplates", "continues", "estimates", "expects", "intends", "may", "plans", "predicts", "projects", "schedules", "seeks", "shall", "should", "targets", "would", "will" or, in each case, their negative or other variations or comparable terminology. Forward-looking statements appear in a number of places throughout this announcement and include, but are not limited to, express or implied statements relating to Charles Taylor's business strategy and outlook; Charles Taylor's and Inworx's future results of operations; Charles Taylor 's and Inworx's future financial and market positions; expectations as to future growth; general economic trends and other trends in the industry in which Charles Taylor and Inworx operate; the impact of regulations on Charles Taylor and its operations; and the competitive environment in which Charles Taylor and Inworx operate.

By their nature, forward-looking statements are based upon a number of estimates and assumptions that, whilst considered reasonable by the directors of the Company and the Company, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those indicated, expressed or implied in such forward looking statements. Forward-looking statements are not guarantees of future performance. Any forward-looking statements in this announcement reflect the directors of the Company's and the Company's current view with respect to future events and are subject to certain risks relating to future events and other risks, uncertainties and assumptions. The forward-looking statements contained in this announcement speak only as at the date of this announcement. The directors of the Company and the Company disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this announcement to reflect any change in their expectations or any change in events, conditions or circumstances on which such statements are based unless required to do so by applicable law, the UK Prospectus Rules, the UK Listing Rules, the UK Disclosure Guidance and Transparency Rules of the Financial Conduct Authority and the Market Abuse Regulation (EU) No. 596/2014 . You are cautioned against placing undue reliance on any forward-looking statement in this announcement.