TIDMJLT
RNS Number : 1874F
Jardine Lloyd Thompson Group PLC
26 July 2016
26 July 2016
Jardine Lloyd Thompson Group plc
INTERIM RESULTS
FOR THE SIX MONTHSED 30 JUNE 2016 (UNAUDITED)
Jardine Lloyd Thompson Group plc ('JLT' or 'the Group')
announces its interim results for the six months ended 30 June
2016.
In the period, the Group delivered a good underlying financial
performance, reflecting the continued momentum of the business.
Financial Highlights
-- Revenue growth of 5% to GBP619.4m
-- Group organic revenue growth of 1%, or 4% excluding UK Employee Benefits
-- Reported profit before tax (PBT) down 46% to GBP55.2m,
reflecting US investment* and exceptional costs
-- Underlying PBT GBP89.2m, down 7%
- Underlying PBT, excluding US investment*, GBP106.4m down
2%
-- Positive impact of foreign exchange movements
-- Underlying profit margin down 140bp to 15.9%
- Underlying profit margin, excluding US investment*, 19.2%, 330
bp higher
-- Reported diluted EPS of 15.1p
-- Interim cash dividend of 11.6p, up 4.5%
* Net investment in JLT USA in the six month period to 30 June
2016 was GBP17.2m (2015: GBP12.6m)
BUSINESS HIGHLIGHTS
-- Specialty businesses and JLT Re deliver organic revenue growth of 5% and 3% respectively
-- UK Employee Benefits restructuring on track
-- US Specialty business making significant progress, revenues
doubled over corresponding period in 2015
Dominic Burke, Group Chief Executive, commented:
"During the first half of this year we have been encouraged by
the level of client wins, which have been as strong as at any time
since I became CEO. We are seeing significant financial benefit
from collaboration between our Specialty operations around the
world, which is helping sustain momentum and drive organic revenue
growth across the business. Economic and industry conditions remain
challenging; nevertheless we remain confident about the Group's
ability to deliver year-on-year financial progress."
Enquiries:
Jardine Lloyd Thompson Group plc
Dominic Burke Group Chief Executive 020 7528 4948
Charles Rozes Group Finance Director 020 7558 3380
Paul Dransfield Head of Investor Relations 020 7528 4933
Brunswick Group LLP
Tom Burns/Dania Saidam 020 7404 5959
A presentation to investors and analysts will take place at
9.00am today at The St Botolph Building, 138 Houndsditch, London,
EC3A 7AW. A live webcast of the presentation can be viewed on the
Group's website www.jlt.com.
INTERIM STATEMENT
JLT has delivered good underlying results in the first half of
2016, which reflect the sustained overall momentum of the business
set against the backdrop of a challenging environment. Total
revenues increased by 5%, or 2% at constant rates of exchange, to
GBP619.4m, with overall organic revenue growth of 1%.
6 months Total Revenue Trading Margin Underlying
to 30 June Trading Profit
------------------ ----------------------------------------- ---------------------- --------------------
GBPm 2016 Growth CRE Organic 2015 2016 CRE 2015 2016 CRE 2015
================== ====== ======= ====== ======== ====== ====== ====== ====== ===== ===== ======
Risk & Insurance
------------------ ------ ------- ------ -------- ------ ------ ------ ------ ----- ----- ------
Specialty
Businesses 354.1 8% 6% 5% 329.5 13% 12% 15% 45.7 42.5 51.1
------------------ ------ ------- ------ -------- ------ ------ ------ ------ ----- ----- ------
JLT Re 127.7 8% 3% 3% 117.9 38% 36% 34% 48.0 43.5 40.0
================== ====== ======= ====== ======== ====== ====== ====== ====== ===== ===== ======
481.8 8% 5% 4% 447.4 19% 18% 20% 93.7 86.0 91.1
================== ====== ======= ====== ======== ====== ====== ====== ====== ===== ===== ======
Employee
Benefits
------------------ ------ ------- ------ -------- ------ ------ ------ ------ ----- ----- ------
UK & Ireland 74.9 (12%) (12%) (15%) 85.0 - - 8% 0.2 0.2 7.1
------------------ ------ ------- ------ -------- ------ ------ ------ ------ ----- ----- ------
International
EB 62.7 6% 3% (1%) 59.2 28% 26% 26% 17.2 16.1 15.5
================== ====== ======= ====== ======== ====== ====== ====== ====== ===== ===== ======
137.6 (5%) (6%) (10%) 144.2 13% 12% 16% 17.4 16.3 22.6
================== ====== ======= ====== ======== ====== ====== ====== ====== ===== ===== ======
Group* 619.4 5% 2% 1% 591.6 15.9% 14.8% 17.3% 98.4 89.5 102.4
================== ====== ======= ====== ======== ====== ====== ====== ====== ===== ===== ======
Notes:
- Total revenue comprises fees, commissions and investment income.
- CRE: Constant rates of exchange are calculated by translating
2016 results at 2015 exchange rates.
- Organic growth is based on total revenue excluding the effect
of currency, acquisitions, disposals and investment income.
- Underlying results exclude exceptional items.
* Underlying trading profit figures include central costs.
The Group's Risk & Insurance businesses, which represent
over 75% of global turnover, grew revenues to GBP481.8 million, an
increase of 8%, with organic revenue growth of 4%.
The Specialty businesses increased revenues by 8%, with strong
organic revenue growth of 5%. The reduction in the Specialty
businesses' trading margin to 13% largely reflects the US Specialty
investment in the period. Excluding the net investment cost in the
US, the trading margin for the first half would have been 19%,
compared to 20% reported in the corresponding period in 2015.
JLT Re increased revenues by 8% to GBP127.7 million, a 3%
increase at constant rates of exchange, all of which was on an
organic basis. JLT Re's trading profit margin increased to 38%, up
from 34% for the same period in 2015.
Revenues within the combined Employee Benefits businesses
decreased by 5%, reflecting the performance of the UK and Ireland
Employee Benefits business, which saw revenues reduce by 12%.
6 months to 30 June
----------------------------------------------------- ------- ------
GBPm 2016 2015
===================================================== ======= ======
Underlying trading profit 98.4 102.4
----------------------------------------------------- ------- ------
Underlying share of associates 1.9 5.8
----------------------------------------------------- ------- ------
Net finance costs (11.1) (11.9)
===================================================== ======= ======
Underlying profit before taxation 89.2 96.3
----------------------------------------------------- ------- ------
Exceptional items (34.0) 5.2
===================================================== ======= ======
Profit before taxation 55.2 101.5
----------------------------------------------------- ------- ------
Underlying tax expense (25.6) (26.0)
----------------------------------------------------- ------- ------
Tax on exceptional items 6.6 2.3
----------------------------------------------------- ------- ------
Non-controlling interests (2.9) (3.9)
===================================================== ======= ======
Profit after taxation and non-controlling
interests 33.3 73.9
----------------------------------------------------- ------- ------
Underlying profit after taxation and non-controlling
interests 60.7 66.4
----------------------------------------------------- ------- ------
Diluted earnings per share 15.1p 33.6p
----------------------------------------------------- ------- ------
Underlying diluted earnings per share 27.6p 30.2p
----------------------------------------------------- ------- ------
Total dividend per share 11.6p 11.1p
===================================================== ======= ======
Underlying trading profit decreased by 4% to GBP98.4 million,
with underlying PBT reducing by 7% to GBP89.2 million.
Consequently, the trading profit margin for the first half reduced
from 17.3% to 15.9%.
The reduction in the Group's underlying trading profit results
from the on-going investment in building out the US Specialty
business and the specific challenges faced by the UK & Ireland
Employee Benefits business, which had a disproportionately large
impact on the first half.
Substantial progress has been made in the US Specialty build-out
plan and in reshaping the UK & Ireland Employee Benefits
business. It is expected that the benefits of the actions taken
with respect to the latter will flow through in the second half of
the year.
Significant progress and growth has been made in the Group's
Specialty and Reinsurance businesses, with continuing momentum in
new client wins, the benefit of which will not all be seen in the
first half.
Excluding the US net investment of GBP17.2 million in the
period, Group underlying trading profit margin would have been
19.2% (330 basis points higher).
The Group's reported PBT was GBP55.2 million and reported EPS
was 15.1p, both of which include the impact of exceptional costs of
GBP34.0 million during the period.
DIVIDS
The Board has declared an increased interim dividend of 11.6p
per share for the period ended 30 June 2016 (2015: 11.1p), which
will be paid on 3 October 2016 to shareholders on the register at 2
September 2016.
OPERATIONAL REVIEW
The Group operates two sets of businesses: Risk & Insurance
and Employee Benefits. The results of the businesses within each of
these areas are reported in more detail below:
RISK & INSURANCE
6 months to Total Revenue Trading Margin Underlying
30 June Trading Profit
---------------- ======================================== =================== =========================
GBPm 2016 Growth CRE Organic 2015 2016 CRE 2015 2016 CRE 2015
================ ====== ======= ===== ======== ====== ===== ===== ===== ======= ======= =======
JLT Specialty 145.3 5% 3% 3% 138.8 17% 15% 17% 24.3 22.1 24.1
---------------- ------ ------- ----- -------- ------ ----- ----- ----- ------- ------- -------
JLT Re 127.7 8% 3% 3% 117.9 38% 36% 34% 48.0 43.5 40.1
---------------- ------ ------- ----- -------- ------ ----- ----- ----- ------- ------- -------
JLT Australia
& New Zealand 61.9 1% - 1% 61.1 35% 35% 34% 21.6 21.4 20.6
---------------- ------ ------- ----- -------- ------ ----- ----- ----- ------- ------- -------
JLT Asia 44.6 11% 6% 6% 40.1 21% 21% 20% 9.5 8.8 8.0
---------------- ------ ------- ----- -------- ------ ----- ----- ----- ------- ------- -------
JLT Latin
America 27.6 (3%) 3% 3% 28.4 15% 11% 24% 4.0 3.2 6.7
---------------- ------ ------- ----- -------- ------ ----- ----- ----- ------- ------- -------
JLT Insurance
Services 24.3 (3%) (6%) (5%) 25.0 1% (1%) 6% 0.1 (0.1) 1.6
---------------- ------ ------- ----- -------- ------ ----- ----- ----- ------- ------- -------
JLT Europe,
Middle East
& Africa 20.3 43% 40% 24% 14.2 18% 18% 13% 3.7 3.4 1.9
---------------- ------ ------- ----- -------- ------ ----- ----- ----- ------- ------- -------
JLT USA 16.3 118% 103% 93% 7.5 - - - (17.2) (16.0) (12.6)
---------------- ------ ------- ----- -------- ------ ----- ----- ----- ------- ------- -------
JLT Canada 9.5 (9%) (9%) (9%) 10.5 (5%) (6%) 8% (0.5) (0.5) 0.9
---------------- ------ ------- ----- -------- ------ ----- ----- ----- ------- ------- -------
JLT Insurance
Management 4.3 12% 5% 5% 3.9 4% 5% (2%) 0.2 0.2 (0.1)
================ ====== ======= ===== ======== ====== ===== ===== ===== ======= ======= =======
481.8 8% 5% 4% 447.4 19% 18% 20% 93.7 86.0 91.1
================ ====== ======= ===== ======== ====== ===== ===== ===== ======= ======= =======
JLT Specialty generated revenues of GBP145.3 million in the
period, delivering revenue growth of 5%, or 3% on an organic basis.
Trading margins were unchanged but at constant rates of exchange
reduced to 15%, reflecting the anticipated greater weighting in
profits towards the second half, as previously indicated at the
time of the Group's preliminary results in March.
This represents a good performance in the context of the
continued fall in insurance pricing and challenging economic
conditions. Whilst insurance premium reductions are a positive for
clients, they also mask JLT's underlying performance. In the first
half of the year, significant new business was won across all of
the Specialty divisions, which will contribute to results in the
second half. Particularly good performances were achieved in
Construction, Aerospace and Credit, Political and Security.
The Energy division performed well and won significant new
business, although overall results were negatively impacted by a
combination of falling insurance rates and much reduced activity in
the oil and gas sector.
Furthermore, JLT Specialty's enlarged Fine Art & Specie
division has made an encouraging start, with notable new clients
won.
International Specialty Businesses
The Group's International Specialty businesses delivered
GBP208.8 million of revenue in the first half of this year,
representing one third of the Group's revenue, driven by strong
organic growth of 6%. Looking in more detail at the larger of these
businesses:
In Australia and New Zealand there were notable new business
wins across Specialty divisions. These included one of Australia's
largest agribusinesses and one of the world's leading legal firms.
This increasing Specialty focus has resulted in JLT Australia
acting for 13 of the ASX top 50 companies. This strong performance
was offset by the significant decline in insurance rates in the
region, which limited the organic revenue growth rate to 1%.
At constant rates of exchange, trading profit increased by 4%,
with the trading profit margin increasing by 100 basis points to
35%. This was achieved, in part, through the careful management of
costs.
Asia delivered a strong performance with a 6% increase in
revenues at constant rates of exchange, all of which was organic.
On a reported basis, revenues grew by 11% to GBP44.6 million. There
were new business wins including Airport Authority Hong Kong, in
connection with the construction of the third runway, and Singapore
Airlines, both accounts won through strong collaboration with JLT
Specialty in London. The benefits of both of these will largely be
seen in the second half.
In Latin America there was strong revenue growth of 3% at
constant rates of exchange, all of which was organic. However, the
impact of adverse exchange rate movements saw reported revenues
decrease by 3%.
The Group's Latin American operations continue to make
significant investments by the hiring of leading practitioners
across all their platforms to accelerate growth. The levels of
investment in the first half contributed to the reduction in
trading profit, but the benefit of new hires will be increasingly
seen during the second half of the year.
JLT's US Specialty business generated revenues of nearly US$23
million, or GBP16.3 million, double that achieved in the first half
of 2015. This demonstrates the increasing revenue momentum of this
business, with Financial Lines, Cyber, Errors & Omissions
(E&O), Real Estate and Natural Resources all winning
significant new business. Nearly 200 new clients were secured
during the period, and there is a healthy pipeline of activity,
supporting previous guidance that revenues are anticipated to
approach double those of 2015.
The progress to date has been significant. Based on the Group's
experience so far, it is now anticipated that the net investment
spend of the business through to 2018 will be $100 million, up from
the $80 million previously advised, and with the business then
moving into profit in 2019. This increased investment will enable
the business to capture the significant sector and regional
opportunities it now sees. The Group has increasing confidence in
the revenue-generating capabilities of this business.
JLT Re
JLT Re delivered a strong performance, with reported revenues
increasing by 8% to GBP127.7 million and organic revenue growth of
3%.
The performance of the business in the first half is pleasing in
the context of the continued decline in pricing across most lines
of reinsurance business and in most geographies, as abundant
capacity continued to dominate the market. The rate of decline has,
however, slowed, particularly in the United States. This was
evident during the 1 June property renewals, where risk-adjusted
pricing typically fell within the range of flat to down 5%,
compared with the double digit decreases witnessed in in recent
years. In addition, the casualty business during 2016 has also been
renewing at flat to 5% down. Outside the US, double digit declines
in property catastrophe, marine & energy and aviation business
were evident in both the EMEA and Asia regions.
JLT Re's trading profits increased by 20% to GBP48.0 million,
reflected in an improved trading margin of 38%, generated in part
by the expected savings flowing from the integration of the
businesses. This improvement was achieved despite a proportion of
the savings being used to recruit leading talent in order further
to strengthen the business's general Property & Casualty,
Specialty lines and analytics capabilities.
Asia Pacific delivered a good performance, achieving strong
levels of organic growth, as it benefited from the increasing
importance of Singapore as a reinsurance hub, coupled with
increasing volumes of treaty business in China. This region
continues to be a focus for investment for the Group.
In North America, two new divisions - JLT Re Structured
Solutions and JLT Re Mortgage Solutions - were created to meet
clients' evolving demands. During the first half, the Capital
Markets division successfully continued to bring alternative
capacity to clients through the issuance of a number of privately
placed Catastrophe Bonds.
While traditionally the trading margin of this business falls
back in the second half of the year, it remains the Group's
expectation that a 20% trading profit margin will be achieved for
the year, in line with the previous guidance given, and
representing an improvement on the previous year.
Employee Benefits
6 months to Total Revenue Trading Margin Underlying
30 June Trading Profit
================ ========================================= =================== ====================
GBPm 2016 Growth CRE Organic 2015 2016 CRE 2015 2016 CRE 2015
================ ====== ======= ====== ======== ====== ===== ==== ====== ===== ===== ======
UK & Ireland 74.9 (12%) (12%) (15%) 85.0 - - 8% 0.2 0.2 7.1
---------------- ------ ------- ------ -------- ------ ----- ---- ------ ----- ----- ------
Asia 41.2 3% (4%) (3%) 40.1 36% 35% 35% 15.0 13.7 14.0
---------------- ------ ------- ------ -------- ------ ----- ---- ------ ----- ----- ------
Australia
& New Zealand 11.7 40% 39% 4% 8.4 12% 12% 5% 1.4 1.4 0.5
---------------- ------ ------- ------ -------- ------ ----- ---- ------ ----- ----- ------
Latin America 8.3 (9%) 3% 3% 9.1 9% 10% 19% 0.7 0.9 1.7
---------------- ------ ------- ------ -------- ------ ----- ---- ------ ----- ----- ------
Europe, Middle
East & Africa 0.8 (11%) 5% 5% 0.9 1% 1% (68%) - - (0.6)
---------------- ------ ------- ------ -------- ------ ----- ---- ------ ----- ----- ------
Canada 0.7 (6%) (6%) (5%) 0.7 11% 11% (16%) 0.1 0.1 (0.1)
================ ====== ======= ====== ======== ====== ===== ==== ====== ===== ===== ======
137.6 (5%) (6%) (10%) 144.2 13% 12% 16% 17.4 16.3 22.6
================ ====== ======= ====== ======== ====== ===== ==== ====== ===== ===== ======
UK & IRELAND Employee Benefits
Reported revenues for the Group's UK and Ireland Employee
Benefits business for the period were GBP74.9 million, compared to
GBP85.0 million in the first half of 2015. This is in part due to
the ending of commission-related revenues following the Retail
Distribution Review (RDR), resulting in a total of GBP5 million
earned in the previous year as expected not being repeated in 2016.
The muted demand from pension scheme trustees and corporate
sponsors for any more than obligatory services continued, driven in
large part by government actions, further impacted first half
revenues and profits.
Decisive action has now been completed to better align costs
with revenues, mainly through a restructuring programme. The
completed actions include the introduction of a flatter, more
client-centric structure, which has resulted in headcount reducing
by over 300 employees. In line with previous guidance, the Group is
confident that the restructuring programme will deliver annualised
savings of GBP14 million in 2017. For 2016, the programme will
deliver the targeted in year benefit of GBP9 million. Approximately
GBP2 million has been recognised already in the first half and
therefore the remaining GBP7 million is expected to be realised in
the second half of the year.
The focus of 2016 is very much about transitioning this business
so that satisfactory margins are restored. Excellent progress has
been made and it remains the expectation that the reshaped business
will move to an approximate 15% trading profit margin by the end of
2017.
In April's Q1 IMS, the Group indicated that it expected that the
business would substantially deliver this year's profits in the
second half of the year and this expectation remains unchanged.
For the medium term, the emphasis of the business continues to
be on strengthening its platforms and technology and its client
propositions so as to be better positioned to respond to the
continuing changes in the long term retirement and savings
market.
Following the actions which have been taken, revenues in the UK
and Ireland Employee Benefits business are now believed to have
stabilised and it is expected that it will deliver positive revenue
growth in future years. This is a solid business and a leader in
pension scheme administration, consulting and technology which has
strong prospects for the future.
INTERNATIONal Employee Benefits
JLT's international Employee Benefits businesses delivered
combined revenues of GBP62.7 million, representing an increase of
6%, or 3% at constant rates of exchange.
The Asia business faced challenging conditions in the region,
impacting the rate of growth during the period, where revenue
reduced by 4% at constant rates of exchange. The Group remains
strongly positive about the prospects for this business, which has
high levels of new business opportunities.
In Australia and New Zealand there was good progress, with
revenue growth of 40%, of which organic growth was 4%. Growth was
supported by the successful execution of the strategy of focussing
on the return-to-work sector, with the first full contributions
from our 2015 acquisitions of Recovre and Alpha, both of which have
more than met the business's expectations. During the first half,
new capabilities in this sector were added with the acquisition of
Workwise. Notable new business wins included two of Australia's
largest Workers' Compensation accounts.
The business has a market-leading capability across Australia to
help workers return to work and to mitigate the cost of workers'
compensation claims. This adds to the value JLT creates for
corporates and insurers and also generates opportunities to extend
its capabilities into new geographies, such as Hong Kong and New
Zealand.
In Latin America, organic revenue growth of 3% was delivered,
with revenues on a reported basis reducing by 9% due to foreign
exchange movements. The reduction in the trading profit during the
period was largely driven by the significant investments being made
in the business as it continues to build-out its employee benefits
capabilities across the whole region.
Associates
The Group's income from its Associates has reduced by GBP3.9
million to GBP1.9 million, following the disposal of its stake in
Siaci Saint Honoré in May 2015. It remains the expectation that
Associate earnings will be approximately GBP2 million for the full
year in 2016.
OPERATING COSTS
During the first half of 2016, the Group's underlying operating
expenses (excluding exceptional items) increased by GBP31.8
million, or 6%, to GBP521 million. The foreign exchange impact
included therein was GBP5.2 million.
The continued investment in the US Specialty business added
GBP11.1 million, and acquisitions made in the second half of 2015
and the first half of 2016 contributed GBP5.2 million to the growth
in operating costs. These acquisitions included Eikos in South
Africa, and Recovre and Workwise in Australia.
The Group continued to invest in the business, principally the
Fine Arts and Specie team in JLT Specialty, across Latin America
and in Northern Europe. Combined these added a further 1% to the
cost base.
BALANCE SHEET
The net assets of the Group decreased to GBP313 million, from
GBP331 million at the 2015 financial year end. The key movements
were:
-- An increase in goodwill of GBP33 million, following the
acquisition of Workwise in Australia and the
impact of GBP28 million on re-translation of foreign currency denominated goodwill;
-- An increase in the pension liability of GBP60 million, net of
deferred tax, following the reduction in bond yields;
-- Net current assets increased by GBP110 million, principally
due to the change in working capital of GBP68 million (excluding
acquired working capital) and a net increase in own funds of GBP47
million; and
-- Net debt, defined as own funds, less total borrowings net of
transaction costs, increased to GBP544 million following a net cash
outflow of GBP68 million and the retranslation of the $500 million
of private placement loan notes. These loan notes are fully hedged
on the balance sheet. Any movement in these notes and their
corresponding hedges is included in the change in the
mark-to-market valuation of derivatives.
As at 30 June 2016 the Group had long-term credit facilities
totalling GBP980 million. This comprised the private placement loan
note programme totalling $500 million and GBP75 million, with a
maturity profile extending to 2029; and the committed revolving
credit facilities (RCF) totalling GBP500 million, which are
provided by the Group's relationship banks and mature in 2021. The
RCF includes the April renewal, for a five-year term, of an earlier
GBP50 million facility, which is now incorporated within the core
RCF.
Utilisation of the RCF stood at GBP248 million, compared to
GBP164 million at December 2015. This leaves unutilised headroom of
GBP252 million, a level consistent with prior years.
The Net Debt to EBITDA covenant ratio was 2:1, comfortably
within the Group's debt covenants.
CASH FLOW
The Group monitors operational rather than statutory cash flows.
Operational cash flows monitor the movement in net debt and exclude
movements in fiduciary funds.
The net cash outflow in the period of GBP68 million remained
consistent with prior period averages, adjusting 2015 for the net
inflow of GBP80 million from the Group's disposal of its interest
in Siaci Saint Honore.
FOREIGN EXCHANGE
Foreign exchange movements benefited profits by GBP8.7m. Of
this, approximately GBP4 million related to transactional exchange,
which, if rates were to remain at current levels, would not be
expected to recur.
The translation of the Group's international businesses into the
consolidated Group income statement is carried out at average
exchange rates over the period. Therefore if rates were to remain
at current levels, only a part year impact would be seen in
2016.
Following the EU Referendum exchange rate movements have been
significant and remain unpredictable.
The Group actively manages transactional exposures through its
hedging programme.
In addition, foreign currency denominated assets and liabilities
on the balance sheets of the Group's subsidiaries are converted at
the closing rate and are exposed to movements in spot exchange
rates between reporting periods. External borrowings in foreign
currency are fully hedged with currency swaps to manage volatility
in both net assets and profitability.
Exceptional items
Net exceptional items in the first half were broadly in line
with expectations and totalled GBP34.0 million.
This included restructuring costs of GBP10.2 million which
relate to the UK & Ireland Employee Benefits business. This
programme remains on track and the expectation remains that this
will deliver benefits in 2016 of GBP9 million, and GBP14 million on
an annualised basis in 2017. For the full year 2016, a total charge
of approximately GBP12 million is anticipated in relation to the
restructuring.
As announced on 8 April 2016, the Group reached a settlement and
concluded litigation and made a charge of GBP22 million as an
exceptional item in the second quarter of the year.
During the period there was also a loss of GBP1.4 million on the
disposal of a business in Indonesia.
PHASING OF PROFITS IN 2016
The underlying business continued to perform very well, even
setting aside the favourable effects coming from foreign exchange.
A shift in the phasing of profits to the second half is still
anticipated, albeit at a more moderate rate than previously
indicated at the time of the Group's preliminary results in
March.
OUTLOOK
JLT is seeing significant financial benefit from collaboration
between its Specialty operations around the world, which is helping
sustain momentum and drive organic revenue growth across the
business. Economic and industry conditions remain challenging;
nevertheless the Group remains confident about its ability to
deliver year-on-year financial progress.
CONSOLIDATED INCOME STATEMENT
Unaudited Interim Results for the six months ended 30 June
2016
6 months 6 months
------------------------------------ ----- --------- ---------
ended ended
30 June 30 June
------------------------------------ ----- --------- ---------
2016 2015
------------------------------------ ----- --------- ---------
Notes GBP'000 GBP'000
==================================== ===== ========= =========
Fees and commissions 2 617,590 590,052
------------------------------------ ----- --------- ---------
Investment income 2 1,803 1,558
==================================== ===== ========= =========
Total revenue 2 619,393 591,610
------------------------------------ ----- --------- ---------
Salaries and associated expenses (388,892) (363,386)
------------------------------------ ----- --------- ---------
Premises (33,793) (30,828)
------------------------------------ ----- --------- ---------
Other operating costs (115,007) (74,330)
------------------------------------ ----- --------- ---------
Depreciation, amortisation and
impairment charges 3 (17,273) (15,452)
==================================== ===== ========= =========
Operating profit 1,2,3 64,428 107,614
==================================== ===== ========= =========
Analysed as:
------------------------------------ ----- --------- ---------
Operating profit before exceptional
items 1,2 98,405 102,400
------------------------------------ ----- --------- ---------
Acquisition and integration costs 3 (414) (6,834)
------------------------------------ ----- --------- ---------
Restructuring costs 3 (10,151) (6,664)
------------------------------------ ----- --------- ---------
Net loss on disposal of businesses 3 (1,363) (607)
------------------------------------ ----- --------- ---------
Litigation costs 3 (22,000) -
------------------------------------ ----- --------- ---------
Net gain on sale of associate 3 - 18,542
------------------------------------ ----- --------- ---------
Other exceptional items 3 (49) 777
==================================== ===== ========= =========
Operating profit 1,2,3 64,428 107,614
==================================== ===== ========= =========
Finance costs (12,156) (12,568)
------------------------------------ ----- --------- ---------
Finance income 1,017 703
------------------------------------ ----- ========= =========
Finance costs - net (11,139) (11,865)
------------------------------------ ----- --------- ---------
Share of results of associates 1,948 5,720
==================================== ===== ========= =========
Profit before taxation 1,2 55,237 101,469
------------------------------------ ----- --------- ---------
Income tax expense 4 (19,048) (23,730)
==================================== ===== ========= =========
Profit for the period 36,189 77,739
==================================== ===== ========= =========
Profit attributable to:
------------------------------------ ----- --------- ---------
Owners of the parent 2 33,328 73,890
------------------------------------ ----- --------- ---------
Non-controlling interests 2,861 3,849
==================================== ===== ========= =========
36,189 77,739
==================================== ===== ========= =========
Earnings per share attributable
to the owners of the parent
------------------------------------ ----- --------- ---------
during the period (expressed
in pence per share)
------------------------------------ ----- --------- ---------
Basic earnings per share 15.1p 33.7p
------------------------------------ ----- --------- ---------
Diluted earnings per share 15.1p 33.6p
------------------------------------ ----- --------- ---------
The notes on pages 13 to 38 form an integral part
of these condensed consolidated interim financial
statements.
-----------------------------------------------------------------
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
6 months 6 months
------------------------------------------ ----- -------- --------
ended ended
30 June 30 June
------------------------------------------ ----- -------- --------
2016 2015
------------------------------------------ ----- -------- --------
Notes GBP'000 GBP'000
========================================== ===== ======== ========
Profit for the period 36,189 77,739
========================================== ===== ======== ========
Other comprehensive (expense)/income
------------------------------------------ ----- -------- --------
Items that will not be reclassified
to profit or loss
------------------------------------------ ----- ======== ========
Remeasurement of post employment
benefit obligations 20 (66,372) 23,389
------------------------------------------ ----- -------- --------
Taxation thereon 11,293 (3,562)
------------------------------------------ ----- ======== ========
Total items that will not be reclassified
to profit or loss (55,079) 19,827
------------------------------------------ ----- -------- --------
Items that may be reclassified
subsequently to profit or loss
------------------------------------------ ----- -------- --------
Fair value (losses)/gains net of
tax:
------------------------------------------ ----- ======== ========
- available-for-sale (10) 72
------------------------------------------ ----- -------- --------
- available-for-sale reclassified
to the income statement (146) -
------------------------------------------ ----- -------- --------
- cash flow hedges (18,043) 4,616
------------------------------------------ ----- -------- --------
Currency translation differences 62,767 (22,165)
------------------------------------------ ----- ======== ========
Total items that may be reclassified
subsequently to profit or loss 44,568 (17,477)
========================================== ===== ======== ========
Other comprehensive (expense)/income
net of tax (10,511) 2,350
========================================== ===== ======== ========
Total comprehensive income for
the period 25,678 80,089
========================================== ===== ======== ========
Attributable to:
------------------------------------------ ----- -------- --------
Owners of the parent 20,091 77,285
------------------------------------------ ----- -------- --------
Non-controlling interests 5,587 2,804
========================================== ===== ======== ========
25,678 80,089
========================================== ===== ======== ========
The notes on pages 13 to 38 form an integral part of
these condensed consolidated interim financial statements.
---------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET
Unaudited Interim Results as at 30 June 2016
As at As at As at
---------------------------------- ----- ----------- ----------- -----------
30 June 30 June 31 Dec
---------------------------------- ----- ----------- ----------- -----------
2016 2015 2015
---------------------------------- ----- ----------- ----------- -----------
Notes GBP'000 GBP'000 GBP'000
================================== ===== =========== =========== ===========
NET OPERATING ASSETS
---------------------------------- ----- ----------- ----------- -----------
Non-current assets
---------------------------------- ----- ----------- ----------- -----------
Goodwill 7 529,124 481,231 496,166
---------------------------------- ----- ----------- ----------- -----------
Other intangible assets 101,937 99,996 104,323
---------------------------------- ----- ----------- ----------- -----------
Property, plant and equipment 64,441 60,505 63,167
---------------------------------- ----- ----------- ----------- -----------
Investments in associates 46,981 39,820 41,180
---------------------------------- ----- ----------- ----------- -----------
Available-for-sale financial
assets 8,13 16,821 13,384 15,466
---------------------------------- ----- ----------- ----------- -----------
Derivative financial instruments 9,13 95,080 16,324 33,684
---------------------------------- ----- ----------- ----------- -----------
Retirement benefit surpluses 20 - 559 366
---------------------------------- ----- ----------- ----------- -----------
Deferred tax assets 82,368 55,747 51,023
================================== ===== =========== =========== ===========
936,752 767,566 805,375
================================== ===== =========== =========== ===========
Current assets
---------------------------------- ----- ----------- ----------- -----------
Trade and other receivables 10 568,051 538,269 528,595
---------------------------------- ----- ----------- ----------- -----------
Derivative financial instruments 9,13 6,632 5,446 1,544
---------------------------------- ----- ----------- ----------- -----------
Available-for-sale financial
assets 8,13 99,598 172 19
---------------------------------- ----- ----------- ----------- -----------
Cash and cash equivalents 11,13 929,215 938,248 901,087
================================== ===== =========== =========== ===========
1,603,496 1,482,135 1,431,245
================================== ===== =========== =========== ===========
Current liabilities
---------------------------------- ----- ----------- ----------- -----------
Borrowings 13,14 (22,748) (24,639) (22,338)
---------------------------------- ----- ----------- ----------- -----------
Trade and other payables 12 (1,148,506) (1,093,938) (1,086,278)
---------------------------------- ----- ----------- ----------- -----------
Derivative financial instruments 9,13 (18,194) (1,384) (6,115)
---------------------------------- ----- ----------- ----------- -----------
Current tax liabilities (4,142) (8,304) (8,749)
---------------------------------- ----- ----------- ----------- -----------
Provisions for liabilities
and charges 15 (10,829) (5,501) (18,594)
================================== ===== =========== =========== ===========
(1,204,419) (1,133,766) (1,142,074)
================================== ===== =========== =========== ===========
Net current assets 399,077 348,369 289,171
================================== ===== =========== =========== ===========
Non-current liabilities
---------------------------------- ----- ----------- ----------- -----------
Borrowings 13,14 (731,367) (581,704) (581,244)
---------------------------------- ----- ----------- ----------- -----------
Derivative financial instruments 9,13 (55,026) (33,156) (33,726)
---------------------------------- ----- ----------- ----------- -----------
Deferred tax liabilities (34,452) (18,908) (16,978)
---------------------------------- ----- ----------- ----------- -----------
Retirement benefit obligations 20 (201,474) (158,523) (130,753)
---------------------------------- ----- ----------- ----------- -----------
Provisions for liabilities
and charges 15 (837) (1,348) (1,043)
================================== ===== =========== =========== ===========
(1,023,156) (793,639) (763,744)
================================== ===== =========== =========== ===========
312,673 322,296 330,802
================================== ===== =========== =========== ===========
TOTAL EQUITY
---------------------------------- ----- ----------- ----------- -----------
Capital and reserves attributable
to the owners of the parent
---------------------------------- ----- ----------- ----------- -----------
Ordinary shares 11,008 11,008 11,008
---------------------------------- ----- ----------- ----------- -----------
Share premium 16 104,077 104,063 104,074
---------------------------------- ----- ----------- ----------- -----------
Fair value and hedging
reserves 16 (31,026) 4,454 (12,827)
---------------------------------- ----- ----------- ----------- -----------
Exchange reserves 16 42,761 (26,153) (17,280)
---------------------------------- ----- ----------- ----------- -----------
Retained earnings 166,464 211,865 227,362
================================== ===== =========== =========== ===========
Shareholders' equity 293,284 305,237 312,337
---------------------------------- ----- ----------- ----------- -----------
Non-controlling interests 19,389 17,059 18,465
================================== ===== =========== =========== ===========
312,673 322,296 330,802
================================== ===== =========== =========== ===========
The notes on pages 13 to 38 form an integral part
of these condensed consolidated interim financial
statements.
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
Unaudited Interim Results for the six months ended 30 June
2016
Non-
--------------------------- ----- -------- -------- -------- ------------- ----------- --------
Ordinary Other Retained Shareholders' controlling Total
--------------------------- ----- -------- -------- -------- ------------- ----------- --------
shares reserves earnings equity interests equity
--------------------------- ----- -------- -------- -------- ------------- ----------- --------
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=========================== ===== ======== ======== ======== ============= =========== ========
Balance at 1 January
2016 11,008 73,967 227,362 312,337 18,465 330,802
--------------------------- ----- -------- -------- -------- ------------- ----------- --------
Profit for the
period - - 33,328 33,328 2,861 36,189
--------------------------- ----- -------- -------- -------- ------------- ----------- --------
Other comprehensive
income/(expense)
for the period - 41,842 (55,079) (13,237) 2,726 (10,511)
=========================== ===== ======== ======== ======== ============= =========== ========
Total comprehensive
income/(expense)
for the period - 41,842 (21,751) 20,091 5,587 25,678
--------------------------- ----- -------- -------- -------- ------------- ----------- --------
Dividends 6 - - (42,550) (42,550) (4,514) (47,064)
--------------------------- ----- -------- -------- -------- ------------- ----------- --------
Amounts in respect
of share based
payments:
--------------------------- ----- -------- -------- -------- ------------- ----------- --------
- reversal of
amortisation net
of tax - - 13,402 13,402 - 13,402
--------------------------- ----- -------- -------- -------- ------------- ----------- --------
- shares acquired - - (8,085) (8,085) - (8,085)
--------------------------- ----- -------- -------- -------- ------------- ----------- --------
Acquisitions - - - - (149) (149)
--------------------------- ----- -------- -------- -------- ------------- ----------- --------
Disposals - - - - - -
--------------------------- ----- -------- -------- -------- ------------- ----------- --------
Change in non-controlling
interests - - (1,914) (1,914) - (1,914)
--------------------------- ----- -------- -------- -------- ------------- ----------- --------
Issue of share
capital - 3 - 3 - 3
=========================== ===== ======== ======== ======== ============= =========== ========
Balance at 30 June
2016 11,008 115,812 166,464 293,284 19,389 312,673
=========================== ===== ======== ======== ======== ============= =========== ========
Non-
--------------------------- ----- -------- -------- -------- ------------- ----------- --------
Ordinary Other Retained Shareholders' controlling Total
--------------------------- ----- -------- -------- -------- ------------- ----------- --------
shares reserves earnings equity interests equity
--------------------------- ----- -------- -------- -------- ------------- ----------- --------
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=========================== ===== ======== ======== ======== ============= =========== ========
Balance at 1 January
2015 11,006 98,674 178,932 288,612 17,940 306,552
=========================== ===== ======== ======== ======== ============= =========== ========
Profit for the
period - - 73,890 73,890 3,849 77,739
--------------------------- ----- -------- -------- -------- ------------- ----------- --------
Other comprehensive
(expense)/income
for the period - (16,432) 19,827 3,395 (1,045) 2,350
=========================== ===== ======== ======== ======== ============= =========== ========
Total comprehensive
(expense)/income
for the period - (16,432) 93,717 77,285 2,804 80,089
--------------------------- ----- -------- -------- -------- ------------- ----------- --------
Dividends 6 - - (40,262) (40,262) (3,922) (44,184)
--------------------------- ----- -------- -------- -------- ------------- ----------- --------
Amounts in respect
of share based
payments:
--------------------------- ----- -------- -------- -------- ------------- ----------- --------
- reversal of amortisation
net of tax - - 12,779 12,779 - 12,779
--------------------------- ----- -------- -------- -------- ------------- ----------- --------
- shares acquired - - (17,004) (17,004) - (17,004)
--------------------------- ----- -------- -------- -------- ------------- ----------- --------
Acquisitions - - - - 42 42
--------------------------- ----- -------- -------- -------- ------------- ----------- --------
Disposals - - - - 195 195
--------------------------- ----- -------- -------- -------- ------------- ----------- --------
Change in non-controlling
interests - - (16,297) (16,297) - (16,297)
--------------------------- ----- -------- -------- -------- ------------- ----------- --------
Issue of share
capital 2 122 - 124 - 124
=========================== ===== ======== ======== ======== ============= =========== ========
Balance at 30 June
2015 11,008 82,364 211,865 305,237 17,059 322,296
=========================== ===== ======== ======== ======== ============= =========== ========
The notes on pages 13 to 38 form an integral part of
these condensed consolidated interim financial statements.
------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Interim Results for the six months ended 30 June
2016
6 months 6 months
--------------------------------------------- ----- -------- --------
ended ended
30 June 30 June
--------------------------------------------- ----- -------- --------
2016 2015
--------------------------------------------- ----- -------- --------
Notes GBP'000 GBP'000
============================================= ===== ======== ========
Cash flows from operating activities
--------------------------------------------- ----- -------- --------
Cash generated from operations 17 29,305 59,148
--------------------------------------------- ----- -------- --------
Interest paid (8,530) (8,461)
--------------------------------------------- ----- -------- --------
Interest received 2,628 2,019
--------------------------------------------- ----- -------- --------
Taxation paid (17,576) (15,823)
--------------------------------------------- ----- -------- --------
Increase in net insurance broking
payables 82,422 62,653
============================================= ===== ======== ========
88,249 99,536
--------------------------------------------- ----- -------- --------
Dividend received from associates 895 806
============================================= ===== ======== ========
Net cash generated from operating
activities 89,144 100,342
============================================= ===== ======== ========
Cash flows from investing activities
--------------------------------------------- ----- -------- --------
Purchase of property, plant and
equipment (4,153) (6,310)
--------------------------------------------- ----- -------- --------
Purchase of other intangible assets (13,166) (27,320)
--------------------------------------------- ----- -------- --------
Proceeds from disposal of property,
plant and equipment 367 801
--------------------------------------------- ----- -------- --------
Acquisition of businesses, net
of cash acquired 18 (4,631) (13,048)
--------------------------------------------- ----- -------- --------
Acquisition of associates - (309)
--------------------------------------------- ----- -------- --------
Proceeds from disposal of businesses,
net of cash disposed 19 914 (13)
--------------------------------------------- ----- -------- --------
Proceeds from disposal of associates - 80,235
--------------------------------------------- ----- -------- --------
Proceeds from disposal of available-for-sale
other investments 259 245
============================================= ===== ======== ========
Net cash (used)/generated in investing
activities (20,410) 34,281
============================================= ===== ======== ========
Cash flows from financing activities
--------------------------------------------- ----- -------- --------
Dividends paid to owners of the
parent (41,653) (39,382)
--------------------------------------------- ----- -------- --------
Purchase of available-for-sale
financial assets 8 (99,701) (5,423)
--------------------------------------------- ----- -------- --------
Proceeds from disposal of available-for-sale
financial assets 19 5,199
--------------------------------------------- ----- -------- --------
Purchase of shares (8,085) (17,004)
--------------------------------------------- ----- -------- --------
Proceeds from issuance of ordinary
shares 3 124
--------------------------------------------- ----- -------- --------
Proceeds from borrowings 87,360 49,936
--------------------------------------------- ----- -------- --------
Repayments of borrowings (63) (50,061)
--------------------------------------------- ----- -------- --------
Dividends paid to non-controlling
interests (4,514) (3,922)
============================================= ===== ======== ========
Net cash used from financing activities (66,634) (60,533)
============================================= ===== ======== ========
Net increase in cash and cash
equivalents 2,100 74,090
--------------------------------------------- ----- -------- --------
Cash and cash equivalents at beginning
of period 901,087 871,246
--------------------------------------------- ----- -------- --------
Exchange gains/(losses) on cash
and cash equivalents 26,028 (7,088)
============================================= ===== ======== ========
Cash and cash equivalents at end
of period 929,215 938,248
============================================= ===== ======== ========
The notes on pages 13 to 38 form an integral part of
these condensed consolidated interim financial statements.
------------------------------------------------------------------------
BASIS OF ACCOUNTING
The Group's condensed consolidated interim financial statements
for the six months ended 30 June 2016 have been prepared in
accordance with the Disclosure and Transparency Rules of the
Financial Conduct Authority and with IAS 34, 'Interim financial
reporting' as adopted by the European Union.
The Group has considerable financial resources and a
geographically diversified business and as a consequence, the
Directors believe that the Group is well placed to manage its
business risks in the context of the current economic outlook.
Accordingly, the Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence
for the foreseeable future. They therefore continue to adopt the
going concern basis in preparing these interim results.
These financial statements should be read in conjunction with
the consolidated statutory accounts of the Group for the year ended
31 December 2015, which have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the European Union.
This condensed consolidated interim financial information does
not comprise statutory accounts within the meaning of section 434
of the Companies Act 2006. Statutory accounts for the year ended 31
December 2015 were approved by the Board of Directors on 1 March
2016 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 consolidated interim financial statements have
been reviewed, not audited.
The accounting policies are consistent with those of the annual
financial statements for the year ended 31 December 2015.
Taxes on income in the interim periods are accrued using the tax
rate that would be applicable to expected total annual
earnings.
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
In preparing these condensed consolidated interim financial
statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the
consolidated financial statements for the year ended 31 December
2015.
Full details of the audited accounts and accounting policies for
the year ended 31 December 2015 are available at www.jlt.com
NOTES TO THE UNAUDITED INTERIM RESULTS
For the six months ended 30 June 2016
1. ALTERNATIVE INCOME STATEMENT
The format of the consolidated income statement on page 8
conforms to the requirements of IFRS. The alternative income
statement set out below, which is provided by way of additional
information, has been prepared on a basis that conforms more
closely to the approach adopted by the Group in assessing its
performance. The statement provides a reconciliation between the
underlying results used by the Group to assess performance and the
IFRS income statement.
Underlying Exceptional
--------------------------------- ---------- ----------- ---------
profit items Total
--------------------------------- ---------- ----------- ---------
6 months ended 30 June 2016 GBP'000 GBP'000 GBP'000
================================= ========== =========== =========
Fees and commissions 617,590 - 617,590
--------------------------------- ---------- ----------- ---------
Investment income 1,803 - 1,803
--------------------------------- ---------- ----------- ---------
Salaries and associated expenses (381,053) (7,839) (388,892)
--------------------------------- ---------- ----------- ---------
Premises (31,947) (1,846) (33,793)
--------------------------------- ---------- ----------- ---------
Other operating costs (90,715) (24,292) (115,007)
--------------------------------- ---------- ----------- ---------
Depreciation, amortisation and
impairment charges (17,273) - (17,273)
================================= ========== =========== =========
Trading profit 98,405 (33,977) 64,428
--------------------------------- ---------- ----------- ---------
Finance costs - net (11,139) - (11,139)
--------------------------------- ---------- ----------- ---------
Share of results of associates 1,948 - 1,948
================================= ========== =========== =========
Profit before taxation 89,214 (33,977) 55,237
================================= ========== =========== =========
Underlying Exceptional
--------------------------------- ---------- ----------- ---------
profit items Total
--------------------------------- ---------- ----------- ---------
6 months ended 30 June 2015 GBP'000 GBP'000 GBP'000
================================= ========== =========== =========
Fees and commissions 590,052 - 590,052
--------------------------------- ---------- ----------- ---------
Investment income 1,558 - 1,558
--------------------------------- ---------- ----------- ---------
Salaries and associated expenses (354,600) (8,786) (363,386)
--------------------------------- ---------- ----------- ---------
Premises (29,722) (1,106) (30,828)
--------------------------------- ---------- ----------- ---------
Other operating costs (89,436) 15,106 (74,330)
--------------------------------- ---------- ----------- ---------
Depreciation, amortisation and
impairment charges (15,452) - (15,452)
================================= ========== =========== =========
Trading profit 102,400 5,214 107,614
--------------------------------- ---------- ----------- ---------
Finance costs - net (11,865) - (11,865)
--------------------------------- ---------- ----------- ---------
Share of results of associates 5,720 - 5,720
================================= ========== =========== =========
Profit before taxation 96,255 5,214 101,469
================================= ========== =========== =========
2. SEGMENT INFORMATION
Management has determined its operating segments based on the
analysis used to make strategic decisions.
Business segment analysis
The Group is organised on a worldwide basis into three main
segments: Risk & Insurance, Employee Benefits and Head Office
& Other operations. These segments are consistent with the
internal reporting structure of the Group.
The Risk & Insurance segment comprises JLT's global
specialist, wholesale, reinsurance broking, personal lines and SME
activities. The Employee Benefits segment consists of pension
administration, outsourcing and employee benefits consultancy,
healthcare and wealth management activities. Certain Risk &
Insurance and Employee Benefits operating segments have been
disclosed within the reporting segments given their individual
size. The Head Office & Other segment consists mainly of
holding companies, central administration functions, the Group's
captive insurance companies and the Group's investments in
associates.
JLT USA now qualifies as a reportable operating segment, as a
result the comparatives have been restated.
The JLT Asia Risk & Insurance and Employee Benefit segments
are disclosed as reportable segments even though they do not
qualify as reportable segments by IFRS 8.
Segment results
Management assesses the performance of the operating segments
based upon a measure of underlying trading profit. Segment results
include the net income or expense derived from the trading
activities of the segment together with the investment income
earned on fiduciary funds. Interest income on the Group's own funds
and finance costs are excluded since the trading activities of the
Group's primary segments are not of a financial nature. Income tax
expense and the charge in respect of non-controlling interests are
excluded from the segmental allocation.
Segment assets and liabilities
Assets and liabilities are not allocated to individual segments
and are therefore all reported within Head Office & Other.
Investments in associates
The Group owns the following stakes in its principal associates:
20% of GrECo, which operates mainly in Austria and Eastern Europe;
25% of MAG-JLT, which operates mainly in Italy and 25% of
March-JLT, which operates in Spain. The investment and the Group's
share of the net profit of these associates are included in the
Head Office & Other segment, together with the investment and
results of the Group's other associates, Sterling Re Intermediaro
de Reaseguro SA de CV, JLT Insurance Management Malta, JLT Energy
(France) SAS and JLT Independent Insurance Brokers Private Ltd.
In the prior year, the Group disposed of its 26% stake in
Milestone, the holding company of Siaci Saint Honoré.
Other segment items
Capital expenditure comprises additions to property, plant and
equipment and other intangible assets.
Business cyclicality
From an overall perspective, given the inherent nature and
geographic spread of the Group's operations, whilst there may be an
element of period on period phasing of revenue and profits, the
business is not considered to be significantly cyclical between
each half year period.
2. SEGMENT INFORMATION continued
Employee
Risk & Insurance Benefits
---------------- =========================================================== ============================ ----------- -----------
JLT Other UK HO(3)
6 months JLT JLT Aus(1) JLT JLT R & & Other &
ended Specialty Re & NZ Asia USA I(2) Ireland Asia EB Other Total
30 June 2016 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'00
================ ========== ======== ======= ======== ======== ======== ======== ======== ======== =========== ===========
Fees and
commissions 144,513 127,434 61,450 44,539 16,278 85,851 74,851 41,165 21,509 - 617,590
---------------- ---------- -------- ------- -------- -------- -------- -------- -------- -------- ----------- -----------
Investment
income 751 219 507 63 - 238 1 8 16 - 1,803
================ ========== ======== ======= ======== ======== ======== ======== ======== ======== =========== ===========
Total revenue 145,264 127,653 61,957 44,602 16,278 86,089 74,852 41,173 21,525 - 619,393
================ ========== ======== ======= ======== ======== ======== ======== ======== ======== =========== ===========
Underlying
trading profit 24,296 47,989 21,621 9,463 (17,215) 7,553 182 14,997 2,260 (12,741) 98,405
================ ========== ======== ======= ======== ======== ======== ======== ======== ======== =========== ===========
Operating
profit 24,296 47,989 21,621 9,463 (17,215) 7,552 (10,349) 13,732 2,080 (34,741) 64,428
---------------- ---------- -------- ------- -------- -------- -------- -------- -------- -------- ----------- -----------
Finance costs
- net - - - - - - - - - (11,139) (11,139)
---------------- ---------- -------- ------- -------- -------- -------- -------- -------- -------- ----------- -----------
Share of
results of
associates - - - - - - - - - 1,948 1,948
================ ========== ======== ======= ======== ======== ======== ======== ======== ======== =========== ===========
Profit before
taxation 24,296 47,989 21,621 9,463 (17,215) 7,552 (10,349) 13,732 2,080 (43,932) 55,237
---------------- ---------- -------- ------- -------- -------- -------- -------- -------- -------- ----------- -----------
Income tax
expense - - - - - - - - - (19,048) (19,048)
---------------- ---------- -------- ------- -------- -------- -------- -------- -------- -------- ----------- -----------
Non-controlling
interests - - - - - - - - - (2,861) (2,861)
================ ========== ======== ======= ======== ======== ======== ======== ======== ======== =========== ===========
Net profit
attributable
to the owners
of the parent 24,296 47,989 21,621 9,463 (17,215) 7,552 (10,349) 13,732 2,080 (65,841) 33,328
================ ========== ======== ======= ======== ======== ======== ======== ======== ======== =========== ===========
Segment assets 2,493,267 2,493,267
---------------- ---------- -------- ------- -------- -------- -------- -------- -------- -------- ----------- -----------
Investments
in associates 46,981 46,981
================ ========== ======== ======= ======== ======== ======== ======== ======== ======== =========== ===========
Total assets 2,540,248 2,540,248
================ ========== ======== ======= ======== ======== ======== ======== ======== ======== =========== ===========
Segment
liabilities (2,227,575) (2,227,575)
================ ========== ======== ======= ======== ======== ======== ======== ======== ======== =========== ===========
Total
liabilities (2,227,575) (2,227,575)
================ ========== ======== ======= ======== ======== ======== ======== ======== ======== =========== ===========
Other segment
items:
---------------- ---------- -------- ------- -------- -------- -------- -------- -------- -------- ----------- -----------
Capital
expenditure 1,608 3,333 324 359 1,784 2,077 4,404 64 204 3,162 17,319
---------------- ---------- -------- ------- -------- -------- -------- -------- -------- -------- ----------- -----------
Depreciation,
amortisation
and impairment
charges (4,418) (1,395) (1,072) (1,431) (1,571) (2,224) (3,970) (482) (442) (7,130) (24,135)
---------------- ---------- -------- ------- -------- -------- -------- -------- -------- -------- ----------- -----------
Employee
Risk & Insurance Benefits
---------------- =========================================================== ============================ ----------- -----------
JLT Other UK HO(3)
6 months JLT JLT Aus(1) JLT JLT R & & Other &
ended Specialty Re & NZ Asia USA I(2) Ireland Asia EB Other Total
30 June 2015 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================ ========== ======== ======= ======== ======== ======== ======== ======== ======== =========== ===========
Fees and
commissions 138,378 117,743 60,493 39,979 7,464 81,781 85,058 40,055 19,101 - 590,052
---------------- ---------- -------- ------- -------- -------- -------- -------- -------- -------- ----------- -----------
Investment
income 445 159 649 89 - 195 1 7 13 - 1,558
================ ========== ======== ======= ======== ======== ======== ======== ======== ======== =========== ===========
Total revenue 138,823 117,902 61,142 40,068 7,464 81,976 85,059 40,062 19,114 - 591,610
================ ========== ======== ======= ======== ======== ======== ======== ======== ======== =========== ===========
Underlying
trading profit 24,087 40,061 20,622 8,020 (12,643) 10,971 7,095 14,048 1,480 (11,341) 102,400
---------------- ---------- -------- ------- -------- -------- -------- -------- -------- -------- ----------- -----------
Operating
profit 17,387 36,849 20,622 8,217 (12,909) 10,114 4,929 14,046 858 7,501 107,614
---------------- ---------- -------- ------- -------- -------- -------- -------- -------- -------- ----------- -----------
Finance costs
- net - - - - - - - - - (11,865) (11,865)
---------------- ---------- -------- ------- -------- -------- -------- -------- -------- -------- ----------- -----------
Share of
results of
associates - - - - - - - - - 5,720 5,720
================ ========== ======== ======= ======== ======== ======== ======== ======== ======== =========== ===========
Profit before
taxation 17,387 36,849 20,622 8,217 (12,909) 10,114 4,929 14,046 858 1,356 101,469
---------------- ---------- -------- ------- -------- -------- -------- -------- -------- -------- ----------- -----------
Income tax
expense - - - - - - - - - (23,730) (23,730)
---------------- ---------- -------- ------- -------- -------- -------- -------- -------- -------- ----------- -----------
Non-controlling
interests - - - - - - - - - (3,849) (3,849)
================ ========== ======== ======= ======== ======== ======== ======== ======== ======== =========== ===========
Net profit
attributable
to the owners
of the parent 17,387 36,849 20,622 8,217 (12,909) 10,114 4,929 14,046 858 (26,223) 73,890
================ ========== ======== ======= ======== ======== ======== ======== ======== ======== =========== ===========
Segment assets 2,209,881 2,209,881
---------------- ---------- -------- ------- -------- -------- -------- -------- -------- -------- ----------- -----------
Investments
in associates 39,820 39,820
================ ========== ======== ======= ======== ======== ======== ======== ======== ======== =========== ===========
Total assets 2,249,701 2,249,701
================ ========== ======== ======= ======== ======== ======== ======== ======== ======== =========== ===========
Segment
liabilities (1,927,405) (1,927,405)
================ ========== ======== ======= ======== ======== ======== ======== ======== ======== =========== ===========
Total
liabilities (1,927,405) (1,927,405)
================ ========== ======== ======= ======== ======== ======== ======== ======== ======== =========== ===========
Other segment
items:
---------------- ---------- -------- ------- -------- -------- -------- -------- -------- -------- ----------- -----------
Capital
expenditure 7,599 2,928 1,096 1,981 5,638 1,938 4,385 728 224 7,113 33,630
---------------- ---------- -------- ------- -------- -------- -------- -------- -------- -------- ----------- -----------
Depreciation,
amortisation
and impairment
charges (3,852) (762) (1,356) (1,395) (1,277) (2,293) (3,423) (360) (362) (5,849) (20,929)
---------------- ---------- -------- ------- -------- -------- -------- -------- -------- -------- ----------- -----------
(1) Aus = Australia
(2) R & I = Risk & Insurance
(3) HO = Head Office
3. OPERATING PROFIT
The following items have been charged/(credited)
in arriving at operating profit:
------------------------------------------------- -------- --------
6 months 6 months
------------------------------------------------- -------- --------
ended ended
30 Jun 30 Jun
------------------------------------------------- -------- --------
2016 2015
------------------------------------------------- -------- --------
GBP'000 GBP'000
================================================= ======== ========
Foreign exchange (gains)/losses:
------------------------------------------------- -------- --------
- fees and commissions (101) 948
------------------------------------------------- -------- --------
- other operating costs (3,717) (85)
================================================= ======== ========
(3,818) 863
------------------------------------------------- -------- --------
Amortisation of other intangible assets:
------------------------------------------------- -------- --------
- software costs 10,199 8,653
------------------------------------------------- -------- --------
- other intangible assets 972 904
------------------------------------------------- -------- --------
Depreciation on property, plant and
equipment 6,102 5,895
================================================= ======== ========
Total depreciation and amortisation
charges 17,273 15,452
================================================= ======== ========
Amortisation of other intangible assets:
------------------------------------------------- -------- --------
- employment contract payments (included
in salaries and associated expenses) 6,862 5,477
================================================= ======== ========
Gains on disposal of property, plant
and equipment (56) (64)
================================================= ======== ========
Fair value losses - derivatives financial
instruments 90 44
------------------------------------------------- -------- --------
(Gains)/losses on sale - available-for-sale
financial assets (129) 64
================================================= ======== ========
(39) 108
================================================= ======== ========
Exceptional items:
------------------------------------------------- -------- --------
Acquisition and integration costs of
which:
------------------------------------------------- -------- --------
- included in salaries and associated
exenses 165 2,707
------------------------------------------------- -------- --------
- included in premises costs 69 1,015
------------------------------------------------- -------- --------
- included in other operating costs 180 3,112
================================================= ======== ========
414 6,834
------------------------------------------------- -------- --------
Restructuring costs of which:
------------------------------------------------- -------- --------
- included in salaries and associated
exenses 7,674 6,570
------------------------------------------------- -------- --------
- included in premises costs 1,777 91
------------------------------------------------- -------- --------
- included in other operating costs 700 3
================================================= ======== ========
10,151 6,664
------------------------------------------------- -------- --------
Cost associated with a regulatory review 147 -
------------------------------------------------- -------- --------
Net loss on disposal of businesses 1,363 607
------------------------------------------------- -------- --------
Release of contingent consideration (98) (286)
------------------------------------------------- -------- --------
Pension curtailment gain - (491)
------------------------------------------------- -------- --------
Net gain on sale of associate - (18,542)
================================================= ======== ========
Total exceptional items 33,977 (5,214)
================================================= ======== ========
4. INCOME TAX EXPENSE
6 months 6 months
-------------------------------------- -------- --------
ended ended
30 June 30 June
-------------------------------------- -------- --------
2016 2015
-------------------------------------- -------- --------
GBP'000 GBP'000
====================================== ======== ========
Current tax expense
-------------------------------------- -------- --------
Current period 17,774 15,196
-------------------------------------- -------- --------
Adjustments in respect of prior years (5,297) 1,032
====================================== ======== ========
12,477 16,228
-------------------------------------- -------- --------
Deferred tax expense
-------------------------------------- -------- --------
Origination and reversal of temporary
differences 2,289 5,586
-------------------------------------- -------- --------
Adjustments in respect of prior years 4,282 1,916
====================================== ======== ========
6,571 7,502
====================================== ======== ========
Total income tax expense 19,048 23,730
====================================== ======== ========
The total income tax expense in the income statement of
GBP19,048,000 (2015: GBP23,730,000) includes a tax credit on
exceptional items of GBP6,560,000 (2015: GBP2,270,000). There were
no non-recurring tax credits in the period.
The UK Government introduced a 1% reduction in the headline rate
of corporation tax from April 2015. This reduction reduced the UK
tax rate from 21% to 20%.
In July 2015 the UK Government announced further measures in
relation to the UK corporation tax rate, reducing the headline rate
of corporation tax to 19% from April 2017 and then to 18% from
April 2020. A further 1% reduction in the main rate of corporation
tax rate to 17% from 1 April 2020 was announced in Budget 2016. As
at 30 June 2016, the additional 1% rate reduction to 17% from April
2020 has not been enacted. The impact of the rate reduction to 18%
has been incorporated into the income tax charge for the 6 months
ended 30 June 2016, taking into consideration when timing
differences are expected to reverse.
The tax on the Group's profit before tax differs from the
theoretical amount that would arise using the tax rate of the home
country of the Company as follows:
6 months 6 months
------------------------------------------- -------- --------
ended ended
30 June 30 June
------------------------------------------- -------- --------
2016 2015
------------------------------------------- -------- --------
GBP'000 GBP'000
=========================================== ======== ========
Profit before taxation 55,237 101,469
=========================================== ======== ========
Tax calculated at UK Corporation Tax
rate of 20% (2015: 20.25%) 11,047 20,547
------------------------------------------- -------- --------
Non-deductible expenses* 1,861 (2,451)
------------------------------------------- -------- --------
Non recognition of tax losses/(Utilisation
of tax losses not recognised) 2,384 (347)
------------------------------------------- -------- --------
Adjustments in respect of prior years (1,015) 2,948
------------------------------------------- -------- --------
Effect of difference between UK and
non-UK tax rates 5,161 4,191
------------------------------------------- -------- --------
Tax on associates (390) (1,158)
=========================================== ======== ========
Total income tax expense 19,048 23,730
=========================================== ======== ========
* The non-deductible expenses relate principally to
non-deductible entertainment expenses (2015: non-deductible
entertainment expenses and the non-taxable gain on disposal of
Siaci).
5. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit
attributable to the owners of the parent by the weighted average
number of ordinary shares in issue during the period.
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares.
Additionally basic and diluted earnings per share are also
calculated based on underlying earnings attributable to the owners
of the parent.
A reconciliation of earnings is set out below.
As at As at
-------------------------------------- ----------- -----------
30 June 30 June
-------------------------------------- ----------- -----------
2016 2015
-------------------------------------- ----------- -----------
Number of Number
shares of shares
====================================== =========== ===========
Weighted average number of ordinary
shares in issue 220,013,812 219,435,453
-------------------------------------- ----------- -----------
Effect of outstanding share options 31,702 349,815
====================================== =========== ===========
Adjusted weighted average number of
ordinary shares for diluted earnings
per share 220,045,514 219,785,268
====================================== =========== ===========
6 months ended 6 months ended
30 June 2016 30 June 2015
------------------------------ ========================== ==========================
Basic Diluted Basic Diluted
pence pence pence pence
per per per per
GBP'000 share share GBP'000 share share
============================== ========= ====== ======= ========= ====== =======
Earnings reconciliation
------------------------------ --------- ------ ------- --------- ------ -------
Underlying profit after
taxation and non-controlling
interests* 60,745 27.6 27.6 66,406 30.3 30.2
------------------------------ ========= ------ ------- ========= ------ -------
Exceptional items before
tax (33,977) 5,214
------------------------------ --------- ------ ------- --------- ------ -------
Taxation thereon 6,560 2,270
------------------------------ ========= ------ ------- ========= ------ -------
(27,417) (12.5) (12.5) 7,484 3.4 3.4
============================== ========= ====== ======= ========= ====== =======
Profit attributable
to the owners of the
parent 33,328 15.1 15.1 73,890 33.7 33.6
============================== ========= ====== ======= ========= ====== =======
* Underlying excludes
exceptional items.
------------------------------ --------- ------ ------- --------- ------ -------
6. DIVIDS
6 months 6 months
------------------------------------- -------- --------
ended ended
30 June 30 June
------------------------------------- -------- --------
2016 2015
------------------------------------- -------- --------
GBP'000 GBP'000
===================================== ======== ========
Final dividend in respect of 2015 of
19.5p per share (2014: 18.3p) 42,550 40,262
===================================== ======== ========
An interim dividend in respect of 2016 of 11.6p per share (2015:
11.1p) amounting to a total of GBP25,637,000 (2015: GBP24,420,000)
is payable on 3 October 2016 to shareholders who are registered at
the close of business on 2 September 2016. The dividend proposed
will not be accounted for until it is paid. The ex-dividend date
will be 1 September 2016.
7. GOODWILL
Gross Impairment Net carrying
------------------------ ------- ---------- ------------
amount losses amount
------------------------ ------- ---------- ------------
GBP'000 GBP'000 GBP'000
======================== ======= ========== ============
At 30 June 2016
------------------------ ------- ---------- ------------
Opening net book amount 500,434 (4,268) 496,166
------------------------ ------- ---------- ------------
Exchange differences 28,339 (57) 28,282
------------------------ ------- ---------- ------------
Impairment - (370) (370)
------------------------ ------- ---------- ------------
Acquisitions 6,762 - 6,762
------------------------ ------- ---------- ------------
Disposals (1,716) - (1,716)
======================== ======= ========== ============
Closing net book amount 533,819 (4,695) 529,124
======================== ======= ========== ============
Gross Impairment Net carrying
------------------------ ------- ---------- ------------
amount losses amount
------------------------ ------- ---------- ------------
GBP'000 GBP'000 GBP'000
======================== ======= ========== ============
At 30 June 2015
------------------------ ------- ---------- ------------
Opening net book amount 480,176 (4,479) 475,697
------------------------ ------- ---------- ------------
Exchange differences (8,440) 221 (8,219)
------------------------ ------- ---------- ------------
Acquisitions 14,472 - 14,472
------------------------ ------- ---------- ------------
Disposals (719) - (719)
======================== ======= ========== ============
Closing net book amount 485,489 (4,258) 481,231
======================== ======= ========== ============
The impairment charge of GBP370,000 is included in net loss on
disposal of businesses of GBP1,363,000.
8. AVAILABLE-FOR-SALE FINANCIAL ASSETS
Available-for-sale financial assets are categorised into one of
two categories:
1) Investments and deposits consist mainly of fixed term
deposits, bonds and certificates of deposits. These investments are
held at fair value and are classified between current and
non-current assets according to the maturity date.
2) Other investments include securities and other investments
held for strategic purposes. These investments are held at fair
value unless a fair value cannot be accurately determined in which
case they are held at cost less any provision for impairment.
Other Investments
---------------------------------- ----------- ----------- -------
investments & deposits Total
---------------------------------- ----------- ----------- -------
GBP'000 GBP'000 GBP'000
================================== =========== =========== =======
At 1 January 2016 6,436 9,049 15,485
---------------------------------- ----------- ----------- -------
Exchange differences 513 1,130 1,643
---------------------------------- ----------- ----------- -------
Additions - 99,701 99,701
---------------------------------- ----------- ----------- -------
Disposals/maturities (311) (19) (330)
---------------------------------- ----------- ----------- -------
Revaluation gain (included within
equity) - (10) (10)
---------------------------------- ----------- ----------- -------
Amounts to be written off (70) - (70)
================================== =========== =========== =======
At 30 June 2016 6,568 109,851 116,419
================================== =========== =========== =======
Analysis of available-for-sale
financial assets
---------------------------------- ----------- ----------- -------
Current - 99,598 99,598
---------------------------------- ----------- ----------- -------
Non-current 6,568 10,253 16,821
================================== =========== =========== =======
At 30 June 2016 6,568 109,851 116,419
================================== =========== =========== =======
Analysis of available-for-sale
investments and deposits
---------------------------------- ----------- ----------- -------
Fiduciary funds 109,572
---------------------------------- ----------- ----------- -------
Own funds 279
================================== =========== =========== =======
At 30 June 2016 109,851
================================== =========== =========== =======
Other Investments
---------------------------------- ----------- ----------- -------
investments & deposits Total
---------------------------------- ----------- ----------- -------
GBP'000 GBP'000 GBP'000
================================== =========== =========== =======
At 1 January 2015 4,746 9,642 14,388
---------------------------------- ----------- ----------- -------
Exchange differences (48) (671) (719)
---------------------------------- ----------- ----------- -------
Additions - 5,423 5,423
---------------------------------- ----------- ----------- -------
Disposals/maturities (245) (5,263) (5,508)
---------------------------------- ----------- ----------- -------
Revaluation gain (included within
equity) - 37 37
---------------------------------- ----------- ----------- -------
Amounts to be written off (65) - (65)
================================== =========== =========== =======
At 30 June 2015 4,388 9,168 13,556
================================== =========== =========== =======
Analysis of available-for-sale
financial assets
---------------------------------- ----------- ----------- -------
Current - 172 172
---------------------------------- ----------- ----------- -------
Non-current 4,388 8,996 13,384
================================== =========== =========== =======
At 30 June 2015 4,388 9,168 13,556
================================== =========== =========== =======
Analysis of available-for-sale
investments and deposits
---------------------------------- ----------- ----------- -------
Fiduciary funds 8,845
---------------------------------- ----------- ----------- -------
Own funds 323
================================== =========== =========== =======
At 30 June 2015 9,168
================================== =========== =========== =======
9. DERIVATIVE FINANCIAL INSTRUMENTS
As at 30 June As at 30 June
2016 2015
----------------------------------- ==================== ====================
Assets Liabilities Assets Liabilities
----------------------------------- ------- ----------- ------- -----------
GBP'000 GBP'000 GBP'000 GBP'000
=================================== ======= =========== ======= ===========
Interest rate swaps - fair value
hedges 36,578 (203) 9,214 (10,746)
----------------------------------- ------- ----------- ------- -----------
Forward foreign exchange contracts
- cash flow hedges 65,134 (47,076) 12,556 (5,568)
----------------------------------- ------- ----------- ------- -----------
Redemption liabilities - option
contracts - (25,941) - (18,226)
=================================== ======= =========== ======= ===========
Total 101,712 (73,220) 21,770 (34,540)
=================================== ======= =========== ======= ===========
Current 6,632 (18,194) 5,446 (1,384)
----------------------------------- ------- ----------- ------- -----------
Non-current 95,080 (55,026) 16,324 (33,156)
=================================== ======= =========== ======= ===========
Total 101,712 (73,220) 21,770 (34,540)
=================================== ======= =========== ======= ===========
The Group's treasury policies are approved by the Board and are
implemented by a centralised treasury department. The treasury
department operates within a framework of policies and procedures
that establish specific guidelines to manage currency risk,
liquidity risk and interest rate risk and the use of counterparties
and financial instruments to manage these risks. The treasury
department is subject to periodic review by internal audit.
The Group uses various derivative instruments including forward
foreign exchange contracts and interest rate swaps to manage the
risks arising from variations in currency and interest rates.
Derivative instruments purchased are primarily denominated in the
currencies of the Group's cash flows.
Where forward foreign exchange contracts have been entered into
to manage currency risk, they are designated as hedges of currency
risk on specific future cash flows, and qualify as highly probable
transactions for which hedge accounting is applied. The Group
anticipates that hedge accounting requirements will continue to be
met on its foreign currency and interest rate hedging activities
and that no material ineffectiveness will arise which will result
in gains or losses being recognised through the income
statement.
The movement in fair value of financial derivatives based upon
market values as at 30 June 2016 and designated as effective cash
flow hedges was a net gain of GBP18.1 million and has been deferred
in equity (2015: net asset of GBP7.0 million). Gains and losses
arising on derivative instruments outstanding as at 30 June 2016
will be released to the income statement at various dates up
to:
a) 44 months in respect of cash flow hedges on currency
denominated UK earnings.
b) 13 years in respect of specific hedges on USD denominated
long-term debt drawn under the Group's USD private placement
programme.
c) 10 years in respect of interest rate hedges on sterling
denominated long-term debt drawn under the Group's private
placement programme.
No material amounts were transferred to the income statement
during the period in respect of the fair value of financial
derivatives.
Transactions maturing within 12 months of the balance sheet date
are classified in current maturities. Transactions maturing in a
period in excess of 12 months of the balance sheet date are
classified as non-current maturities.
a) Forward foreign exchange contracts
The Group's major currency transaction exposure arises in USD
and the Group continues to adopt a prudent approach in actively
managing this exposure. As at 30 June 2016 the Group had
outstanding foreign exchange contracts, principally in USD,
amounting to a principal value of GBP1,051,545,000 (2015:
GBP831,615,000).
b) Interest rate swaps
The Group uses interest rate swaps to mitigate the impact of
changes in interest rates. The notional principal amount of
outstanding cross currency interest rate swaps as at 30 June 2016
was USD500,000,000 and GBP75,000,000 (2015: USD500,000,000 and
GBP75,000,000). A net gain of GBP36.4 million (2015: net loss
GBP1.5 million) on these instruments was offset by a fair value
movement of GBP36.4 million (2015: GBP1.5 million) on the private
placement loans, both of which were recognised in the income
statement in the period.
c) Redemption liabilities
The redemption liabilities represent the valuation of the put
options on the future purchase of stakes from non-controlling
interests.
d) Price risk
The Group does not have a material exposure to commodity price
risk.
The maximum exposure to credit risk at the reporting date is the
fair value of the derivatives in the balance sheet.
10. TRADE AND OTHER RECEIVABLES
As at As at
---------------------------------------- -------- --------
30 June 30 June
---------------------------------------- -------- --------
2016 2015
---------------------------------------- -------- --------
GBP'000 GBP'000
======================================== ======== ========
Trade receivables 414,994 361,541
---------------------------------------- -------- --------
Less: provision for impairment of trade
receivables (19,699) (10,938)
======================================== ======== ========
Trade receivables - net 395,295 350,603
---------------------------------------- -------- --------
Other receivables 140,174 159,300
---------------------------------------- -------- --------
Prepayments 32,582 28,366
======================================== ======== ========
568,051 538,269
======================================== ======== ========
As at 30 June 2016, the Group had exposures to individual trade
counterparties within trade receivables. In accordance with Group
policy, Group operating companies continually monitor exposures
against credit limits and concentration of risk. No individual
trade counterparty credit exposure is considered significant in the
ordinary course of trading activity. Management does not expect any
significant losses from non-performance by trade counterparties
that have not been provided for.
11. CASH AND CASH EQUIVALENTS
As at As at
------------------------- ------- -------
30 June 30 June
------------------------- ------- -------
2016 2015
------------------------- ------- -------
GBP'000 GBP'000
========================= ======= =======
Cash at bank and in hand 550,648 482,529
------------------------- ------- -------
Short-term bank deposits 378,567 455,719
========================= ======= =======
929,215 938,248
========================= ======= =======
Fiduciary funds 719,420 796,400
------------------------- ------- -------
Own funds 209,795 141,848
========================= ======= =======
929,215 938,248
========================= ======= =======
Fiduciary funds represent client money held in the form of
premiums due to underwriters, claims paid by insurers and due to
policyholders, and funds held to defray commissions and other
income. Fiduciary funds are not available for general corporate
purposes.
The effective interest rate in respect of short-term deposits
was 0.43% (2015: 0.40%). These deposits have an average maturity of
15 days (2015: 17 days).
12. TRADE AND OTHER PAYABLES
As at As at
-------------------------------------- --------- ---------
30 June 30 June
-------------------------------------- --------- ---------
2016 2015
-------------------------------------- --------- ---------
GBP'000 GBP'000
====================================== ========= =========
Insurance payables 828,992 805,245
-------------------------------------- --------- ---------
Social security and other taxes 20,663 20,327
-------------------------------------- --------- ---------
Other payables 148,870 132,169
-------------------------------------- --------- ---------
Accruals and deferred income 128,442 116,685
-------------------------------------- --------- ---------
Deferred and contingent consideration 21,539 19,512
====================================== ========= =========
1,148,506 1,093,938
====================================== ========= =========
All payables are considered current as the non-current portion
is not material.
13. FINANCIAL INSTRUMENTS BY CATEGORY
The accounting policies for financial instruments have been
applied to the line items below:
Derivatives
--------------------------------- ----------- ----------- ----------- -----------
Loans used Available-
and for
--------------------------------- ----------- ----------- ----------- -----------
At 30 June 2016 receivables hedging for-sale Total
--------------------------------- ----------- ----------- ----------- -----------
Assets per balance sheet GBP'000 GBP'000 GBP'000 GBP'000
================================= =========== =========== =========== ===========
Available-for-sale financial
assets - - 116,419 116,419
--------------------------------- ----------- ----------- ----------- -----------
Derivative financial instruments - 101,712 - 101,712
--------------------------------- ----------- ----------- ----------- -----------
Trade and other receivables
(a) 535,469 - - 535,469
--------------------------------- ----------- ----------- ----------- -----------
Cash and cash equivalents 929,215 - - 929,215
================================= =========== =========== =========== ===========
Total 1,464,684 101,712 116,419 1,682,815
================================= =========== =========== =========== ===========
Derivatives Other
--------------------------------- ----------- ----------- ----------- -----------
used financial
for
--------------------------------- ----------- ----------- ----------- -----------
hedging liabilities Total
--------------------------------- ----------- ----------- ----------- -----------
Liabilities per balance sheet GBP'000 GBP'000 GBP'000
================================= =========== =========== =========== ===========
Borrowings - (754,115) (754,115)
--------------------------------- ----------- ----------- ----------- -----------
Trade and other payables
(b) - (1,020,064) (1,020,064)
--------------------------------- ----------- ----------- ----------- -----------
Redemption liabilities -
option contracts (25,941) - (25,941)
--------------------------------- ----------- ----------- ----------- -----------
Derivative financial instruments (47,279) - (47,279)
================================= =========== =========== =========== ===========
Total (73,220) (1,774,179) (1,847,399)
================================= =========== =========== =========== ===========
Derivatives
--------------------------------- ----------- ----------- ----------- -----------
Loans used Available-
and for
--------------------------------- ----------- ----------- ----------- -----------
At 30 June 2015 receivables hedging for-sale Total
--------------------------------- ----------- ----------- ----------- -----------
Assets per balance sheet GBP'000 GBP'000 GBP'000 GBP'000
================================= =========== =========== =========== ===========
Available-for-sale financial
assets - - 13,556 13,556
--------------------------------- ----------- ----------- ----------- -----------
Derivative financial instruments - 21,770 - 21,770
--------------------------------- ----------- ----------- ----------- -----------
Trade and other receivables
(a) 509,903 - - 509,903
--------------------------------- ----------- ----------- ----------- -----------
Cash and cash equivalents 938,248 - - 938,248
================================= =========== =========== =========== ===========
Total 1,448,151 21,770 13,556 1,483,477
================================= =========== =========== =========== ===========
Derivatives Other
--------------------------------- ----------- ----------- ----------- -----------
used financial
for
--------------------------------- ----------- ----------- ----------- -----------
hedging liabilities Total
--------------------------------- ----------- ----------- ----------- -----------
Liabilities per balance sheet GBP'000 GBP'000 GBP'000
================================= =========== =========== =========== ===========
Borrowings - (606,343) (606,343)
--------------------------------- ----------- ----------- ----------- -----------
Trade and other payables
(b) - (977,253) (977,253)
--------------------------------- ----------- ----------- ----------- -----------
Redemption liabilities -
option contracts (18,226) - (18,226)
--------------------------------- ----------- ----------- ----------- -----------
Derivative financial instruments (16,314) - (16,314)
================================= =========== =========== =========== ===========
Total (34,540) (1,583,596) (1,618,136)
================================= =========== =========== =========== ===========
(a) Prepayments are excluded from the trade and other
receivables balance, as this analysis is required
only for financial instruments.
-------------------------------------------------------------------------------------
(b) Non-financial liabilities are excluded from the
trade and other payables balance, as this analysis
is required only for financial instruments.
-------------------------------------------------------------------------------------
13. FINANCIAL INSTRUMENTS BY CATEGORY CONTINUED
The following table presents the Group's financial assets and
liabilities that are measured at fair value at 30 June 2016.
Level Level Level Total
1 2 3
-------------------------------------- ------- -------- --------- --------
At 30 June 2016 GBP'000 GBP'000 GBP'000 GBP'000
====================================== ======= ======== ========= ========
Assets
-------------------------------------- ------- -------- --------- --------
Derivatives used for hedging - 101,712 - 101,712
-------------------------------------- ------- -------- --------- --------
Available-for-sale financial
assets
-------------------------------------- ------- -------- --------- --------
- equity securities 1 - 1,279 1,280
-------------------------------------- ------- -------- --------- --------
- debt investments - - 5,288 5,288
-------------------------------------- ------- -------- --------- --------
- fixed deposits 109,851 - - 109,851
====================================== ======= ======== ========= ========
Total 109,852 101,712 6,567 218,131
====================================== ======= ======== ========= ========
Liabilities
-------------------------------------- ------- -------- --------- --------
Deferred and contingent consideration - - (21,539) (21,539)
-------------------------------------- ------- -------- --------- --------
Redemption liabilities -
option contracts - - (25,941) (25,941)
-------------------------------------- ------- -------- --------- --------
Derivatives used for hedging - (47,279) - (47,279)
====================================== ======= ======== ========= ========
Total - (47,279) (47,480) (94,759)
====================================== ======= ======== ========= ========
Level Level Level Total
1 2 3
-------------------------------------- ------- -------- --------- --------
At 30 June 2015 GBP'000 GBP'000 GBP'000 GBP'000
====================================== ======= ======== ========= ========
Assets
-------------------------------------- ------- -------- --------- --------
Derivatives used for hedging - 21,770 - 21,770
-------------------------------------- ------- -------- --------- --------
Available-for-sale financial
assets
-------------------------------------- ------- -------- --------- --------
- equity securities 402 - 1,252 1,654
-------------------------------------- ------- -------- --------- --------
- debt investments - - 2,734 2,734
-------------------------------------- ------- -------- --------- --------
- mutual funds 172 - - 172
-------------------------------------- ------- -------- --------- --------
- fixed deposits 8,996 - - 8,996
====================================== ======= ======== ========= ========
Total 9,570 21,770 3,986 35,326
====================================== ======= ======== ========= ========
Liabilities
-------------------------------------- ------- -------- --------- --------
Deferred and contingent consideration - - (19,512) (19,512)
-------------------------------------- ------- -------- --------- --------
Redemption liabilities -
option contracts - - (18,226) (18,226)
-------------------------------------- ------- -------- --------- --------
Derivatives used for hedging - (16,314) - (16,314)
====================================== ======= ======== ========= ========
Total - (16,314) (37,738) (54,052)
====================================== ======= ======== ========= ========
Apart from where disclosed, there are no differences between the
fair value and the carrying value of financial assets and
liabilities.
Instruments included in level 1 are financial instruments traded
in active markets for which the fair value is based upon quoted
market prices at the balance sheet date. A market is regarded as
active if quoted prices are readily and regularly available from an
exchange, dealer, broker, industry group, pricing service, or
regulatory agency and those prices represent actual and regularly
occurring market transactions on an arm's length basis.
Instruments included in level 2 are financial instruments that
are not traded in an active market (for example, over-the-counter
derivatives) and for which the fair value is determined by using
internal and external models. These models maximise the use of
observable market data where it is available and rely as little as
possible on entity specific estimates. If all significant inputs
required to fair value an instrument are observable, the instrument
is included in level 2. Level 2 includes derivatives used for
hedging. The valuations of which are performed using a discounted
cash flow methodology incorporating observable market forward
foreign exchange and interest rates.
During the year there were no transfers between level 1 and
level 2. There were no changes in valuation techniques during the
year.
Instruments included in level 3 are financial instruments for
which one or more of the significant inputs is not based on
observable market data. In respect of deferred and contingent
consideration and redemption liabilities - option contracts,
unobservable inputs include management's assessment of the expected
future performance of relevant acquired businesses and are valued
using a discounted cash flow methodology.
13. FINANCIAL INSTRUMENTS BY CATEGORY CONTINUED
A reconciliation of the movements in level 3 is provided
below:
Assets Liabilites
---------------------------- ------- ----------
Level 3 Level 3
---------------------------- ------- ----------
GBP'000 GBP'000
============================ ======= ==========
At 1 January 2016 6,125 (40,388)
---------------------------- ------- ----------
Exchange differences 513 (4,468)
---------------------------- ------- ----------
Companies acquired - (4,917)
---------------------------- ------- ----------
Utilised in the year - 3,048
---------------------------- ------- ----------
Charged to income statement (71) (755)
============================ ======= ==========
At 30 June 2016 6,567 (47,480)
============================ ======= ==========
For the assets, GBP71,000 is charged to the income statement in
net finance costs.
For the liabilities, of the GBP755,000 charged to the income
statement, GBP853,000 is included in net finance costs and
GBP98,000 is credited in other operating costs.
14. borrowings
As at As at
-------------------------- ------- -------
30 June 30 June
-------------------------- ------- -------
2016 2015
-------------------------- ------- -------
GBP'000 GBP'000
========================== ======= =======
Current
-------------------------- ------- -------
Bank overdraft 22,055 24,027
-------------------------- ------- -------
Bank borrowings 449 410
-------------------------- ------- -------
Finance lease liabilities 244 202
========================== ======= =======
22,748 24,639
========================== ======= =======
Non-current
-------------------------- ------- -------
Unsecured loan notes 482,875 390,276
-------------------------- ------- -------
Bank borrowings 248,051 190,923
-------------------------- ------- -------
Finance lease liabilities 441 505
========================== ======= =======
731,367 581,704
========================== ======= =======
Total borrowings 754,115 606,343
========================== ======= =======
The borrowings include secured liabilities (leases) of
GBP685,000 (2015: GBP707,000).
15. PROVISIONS FOR LIABILITIES AND CHARGES
Property
-------------------------------- ---------- ---------- ------- --------
related Litigation
-------------------------------- ---------- ---------- ------- --------
provisions provisions Other Total
-------------------------------- ---------- ---------- ------- --------
GBP'000 GBP'000 GBP'000 GBP'000
================================ ========== ========== ======= ========
At 1 January 2016 1,300 18,223 114 19,637
-------------------------------- ---------- ---------- ------- --------
Exchange differences 47 143 - 190
-------------------------------- ---------- ---------- ------- --------
Utilised in the period (267) (10,573) - (10,840)
-------------------------------- ---------- ---------- ------- --------
Charged to the income statement 33 1,851 795 2,679
-------------------------------- ---------- ---------- ------- --------
Interest charge - - - -
================================ ========== ========== ======= ========
At 30 June 2016 1,113 9,644 909 11,666
================================ ========== ========== ======= ========
Property
-------------------------------- ---------- ---------- ------- --------
related Litigation
-------------------------------- ---------- ---------- ------- --------
provisions provisions Other Total
-------------------------------- ---------- ---------- ------- --------
GBP'000 GBP'000 GBP'000 GBP'000
================================ ========== ========== ======= ========
At 1 January 2015 4,881 5,570 362 10,813
-------------------------------- ---------- ---------- ------- --------
Exchange differences - (24) - (24)
-------------------------------- ---------- ---------- ------- --------
Utilised in the period (3,198) (548) (8) (3,754)
-------------------------------- ---------- ---------- ------- --------
(Credited)/charged to the
income statement (75) 127 (240) (188)
-------------------------------- ---------- ---------- ------- --------
Interest charge 2 - - 2
================================ ========== ========== ======= ========
At 30 June 2015 1,610 5,125 114 6,849
================================ ========== ========== ======= ========
As at As at
-------------------------------- ---------- ---------- ------- --------
30 June 30 June
-------------------------------- ---------- ---------- ------- --------
2016 2015
-------------------------------- ---------- ---------- ------- --------
GBP'000 GBP'000
================================ ========== ========== ======= ========
Analysis of total provisions:
-------------------------------- ---------- ---------- ------- --------
Current - to be utilised
within one year 10,829 5,501
-------------------------------- ---------- ---------- ------- --------
Non-current - to be utilised
in more than one year 837 1,348
================================ ========== ========== ======= ========
11,666 6,849
================================ ========== ========== ======= ========
Property related provisions
The Group recognises a provision for onerous contracts when the
expected benefits to be derived from a contract are less than the
unavoidable costs of meeting the obligations under the contract.
Provision is made for the future rental cost of vacant property and
expected dilapidation expenses. In calculating the provision
required, account is taken of the duration of the lease and any
recovery of cost achievable from subletting. Property provisions
occur principally in the US and UK and relate to a variety of lease
commitments. The longest lease term expires in 2025.
Litigation provisions
At any point in time the Group can be involved in a variety of
litigation and dispute issues. A provision is established in
respect of such issues when it is probable that the liability has
been incurred and the amount of the liability can be reasonably
estimated. The Group analyses its litigation exposures based on
available information, including external legal consultation where
appropriate, to assess its potential liability. Where appropriate
the Group also provides for the cost of defending or initiating
such matters. However, the final outcome could differ materially
from the amount provided.
Where a litigation provision has been made it is stated gross of
any third party recovery. All such recoveries are included as
"other receivables" within trade and other receivables. At 30 June
2016, in connection with certain litigation matters, the Group's
litigation provisions include an amount of GBP0.1 million (2015:
GBP0.1 million) to reflect this gross basis and the corresponding
insurance recovery has been included within trade and other
receivables. This presentation has had no effect on the
consolidated income statement for the six months ended 30 June 2016
(2015: nil).
Other
Other provisions include provisions for clawback of commission
which arises on certain types of Employee Benefits contracts.
16. OTHER RESERVES
----------------------------------------------------------------------------
Fair
value
---------------------------------- ------- ----------- -------- --------
Share and hedging Exchange
---------------------------------- ------- ----------- -------- --------
premium reserves reserves Total
---------------------------------- ------- ----------- -------- --------
GBP'000 GBP'000 GBP'000 GBP'000
================================== ======= =========== ======== ========
At 1 January 2016 104,074 (12,827) (17,280) 73,967
---------------------------------- ======= =========== ======== ========
Fair value gains net of tax
---------------------------------- ------- ----------- -------- --------
- available-for-sale - (10) - (10)
---------------------------------- ------- ----------- -------- --------
- available-for-sale reclassified
to the income statement - (146) - (146)
---------------------------------- ------- ----------- -------- --------
- cash flow hedges - (18,043) - (18,043)
---------------------------------- ------- ----------- -------- --------
Currency translation differences - - 60,041 60,041
---------------------------------- ======= =========== ======== ========
Net (losses)/gains recognised
directly in equity - (18,199) 60,041 41,842
---------------------------------- ------- ----------- -------- --------
Issue of share capital 3 - - 3
================================== ======= =========== ======== ========
At 30 June 2016 104,077 (31,026) 42,761 115,812
================================== ======= =========== ======== ========
Fair
value
---------------------------------- ------- ----------- -------- --------
Share and hedging Exchange
---------------------------------- ------- ----------- -------- --------
premium reserves reserves Total
---------------------------------- ------- ----------- -------- --------
GBP'000 GBP'000 GBP'000 GBP'000
================================== ======= =========== ======== ========
At 1 January 2015 103,941 (234) (5,033) 98,674
---------------------------------- ======= =========== ======== ========
Fair value gains net of tax
---------------------------------- ------- ----------- -------- --------
- available-for-sale - 72 - 72
---------------------------------- ------- ----------- -------- --------
- cash flow hedges - 4,616 - 4,616
---------------------------------- ------- ----------- -------- --------
Currency translation differences - - (21,120) (21,120)
---------------------------------- ======= =========== ======== ========
Net gains/(losses) recognised
directly in equity - 4,688 (21,120) (16,432)
---------------------------------- ------- ----------- -------- --------
Issue of share capital 122 - - 122
================================== ======= =========== ======== ========
At 30 June 2015 104,063 4,454 (26,153) 82,364
================================== ======= =========== ======== ========
17. CASH GENERATED FROM OPERATIONS
------------------------------------------------- -------- --------
6 months 6 months
------------------------------------------------- -------- --------
ended ended
30 June 30 June
------------------------------------------------- -------- --------
2016 2015
------------------------------------------------- -------- --------
GBP'000 GBP'000
================================================= ======== ========
Profit before taxation 55,237 101,469
------------------------------------------------- -------- --------
Investment and finance income (2,820) (2,261)
------------------------------------------------- -------- --------
Interest payable on bank loans and finance
leases 8,804 8,635
------------------------------------------------- -------- --------
Fair value losses on derivatives financial
instruments 90 44
------------------------------------------------- -------- --------
Net pension financing expenses 2,499 3,185
------------------------------------------------- -------- --------
Unwinding of liability discounting 853 748
------------------------------------------------- -------- --------
Depreciation 6,102 5,895
------------------------------------------------- -------- --------
Amortisation of other intangible assets 18,033 15,034
------------------------------------------------- -------- --------
Amortisation of share based payments 13,490 11,880
------------------------------------------------- -------- --------
Share of results of associates' undertakings (1,948) (5,720)
------------------------------------------------- -------- --------
Non-cash exceptional items 9,134 429
------------------------------------------------- -------- --------
Losses on disposal of businesses 1,363 607
------------------------------------------------- -------- --------
Gain on sale of associates - (19,142)
------------------------------------------------- -------- --------
Gains on disposal of property, plant
and equipment (56) (64)
------------------------------------------------- -------- --------
(Gains)/losses on disposal of available-for-sale
financial assets (129) 64
------------------------------------------------- -------- --------
Pension curtailment gain - (491)
------------------------------------------------- -------- --------
Increase in trade and other receivables (39,209) (41,886)
------------------------------------------------- -------- --------
Decrease in trade and other payables
- excluding insurance broking balances (29,159) (15,272)
------------------------------------------------- -------- --------
Decrease in provisions for liabilities
and charges (13,597) (3,942)
------------------------------------------------- -------- --------
Decrease in retirement benefit obligation 618 (64)
================================================= ======== ========
Net cash inflow from operations 29,305 59,148
================================================= ======== ========
18. BUSINESS COMBINATIONS
Adjustments in respect of prior period acquisitions
2015 acquisitions
During the period, the process of finalising the provisional
fair values in respect of acquisitions carried out during 2016 has
resulted in following changes.
Provisional
-------------------------------------- ---------- ----------- ----------
Revised fair value
-------------------------------------- ---------- ----------- ----------
fair value reported Change
at in
-------------------------------------- ---------- ----------- ----------
acquired 31 Dec fair value
2015
-------------------------------------- ---------- ----------- ----------
GBP'000 GBP'000 GBP'000
====================================== ========== =========== ==========
Close Brothers Asset Management 491 580 (89)
-------------------------------------- ---------- ----------- ----------
Pierre Leblanc & Associés
SAS 1,027 990 37
====================================== ========== =========== ==========
1,518 1,570 (52)
====================================== ========== =========== ==========
These changes in fair value affected
the following balance sheet classes:
-------------------------------------- ---------- ----------- ----------
Provisional
-------------------------------------- ---------- ----------- ----------
Revised fair value
-------------------------------------- ---------- ----------- ----------
fair value reported Change
at in
-------------------------------------- ---------- ----------- ----------
acquired 31 Dec fair value
2015
-------------------------------------- ---------- ----------- ----------
GBP'000 GBP'000 GBP'000
====================================== ========== =========== ==========
Property, plant and equipment 41 4 37
-------------------------------------- ---------- ----------- ----------
Other intangible assets 1,068 1,068 -
-------------------------------------- ---------- ----------- ----------
Trade and other receivables 713 713 -
-------------------------------------- ---------- ----------- ----------
Cash and cash equivalents
-------------------------------------- ---------- ----------- ----------
- own cash 511 511 -
-------------------------------------- ---------- ----------- ----------
- fiduciary cash 2,218 2,218 -
-------------------------------------- ---------- ----------- ----------
Insurance payables (2,218) (2,218) -
-------------------------------------- ---------- ----------- ----------
Trade and other payables (793) (704) (89)
-------------------------------------- ---------- ----------- ----------
Current taxation (22) (22) -
====================================== ========== =========== ==========
1,518 1,570 (52)
====================================== ========== =========== ==========
As at As at
------------------------------ ------- ------- -------
30 June 31 Dec
------------------------------ ------- ------- -------
2016 2015 Change
------------------------------ ------- ------- -------
Goodwill acquisition GBP'000 GBP'000 GBP'000
============================== ======= ======= =======
Purchase consideration
------------------------------ ------- ------- -------
- cash paid 6,030 6,030 -
------------------------------ ------- ------- -------
- contingent consideration 717 717 -
------------------------------ ------- ------- -------
- deferred consideration 248 248 -
============================== ======= ======= =======
Total purchase consideration 6,995 6,995 -
------------------------------ ------- ------- -------
Less fair value of net assets
acquired 1,518 1,570 (52)
============================== ======= ======= =======
Goodwill 5,477 5,425 52
============================== ======= ======= =======
As at As at
-------------------------------------- -------- -------- -------
30 June 31 Dec
-------------------------------------- -------- -------- -------
2016 2015 Change
-------------------------------------- -------- -------- -------
GBP'000 GBP'000 GBP'000
====================================== ======== ======== =======
Purchase consideration settled
in cash 6,030 6,030 -
-------------------------------------- -------- -------- -------
Cash and cash equivalents - own
cash in subsidiaries acquired (511) (511) -
====================================== ======== ======== =======
5,519 5,519 -
-------------------------------------- -------- -------- -------
Cash and cash equivalents - fiduciary
cash in subsidiaries acquired (2,218) (2,218) -
====================================== ======== ======== =======
Cash outflow on acquisition 3,301 3,301 -
====================================== ======== ======== =======
18. BUSINESS COMBINATIONS CONTINUED
Current period acquisitions
During the period the following new business acquisitions and
additional investments were completed:
Percentage
----------------------------- ------ ------------ ---------- -------
Acquisition voting Cost
rights
----------------------------- ------ ------------ ---------- -------
Notes date acquired GBP'000
============================= ====== ============ ========== =======
Broderick Piller Pty Ltd
(Workwise) i May 2016 100% 7,146
----------------------------- ------ ------------ ---------- -------
Acquisition of other new Jan -
businesses completed during June
the year ii 2016 various 917
----------------------------- ------ ------------ ---------- -------
Jan -
Additional investments in June
exisiting businesses ii 2016 various 2,063
============================= ====== ============ ========== =======
10,126
================================================= ========== =======
i) Acquisition of Broderick Piller Pty Ltd (Workwise)
On 10 May 2016, the Group completed the acquisition of of
Broderick Piller Pty Ltd, trading under the name 'Workwise
Occupational Health', a leading provider of workplace, health &
safety and rehabilitation services. The acquired business
contributed revenue of GBP419,000 and net profit, including
acquisition and integration costs incurred to date, of GBP92,000 to
the Group for the period since acquisition. If the acquisition had
taken place on 1 January 2016, we estimate the contribution to
Group revenue would have been GBP1,217,000 and net gain, including
acquisition and integration costs incurred to date, would have been
GBP396,000.
Goodwill acquisition GBP'000
======================================= =======
Purchase consideration
--------------------------------------- -------
- cash paid 3,521
--------------------------------------- -------
- contingent consideration 3,088
--------------------------------------- -------
- deferred consideration 537
======================================= =======
Total purchase consideration 7,146
--------------------------------------- -------
Less fair value of net assets acquired 1,353
======================================= =======
Goodwill 5,793
======================================= =======
The assets and liabilities arising from the acquisition were as
follows:
Acquiree's
------------------------------ ---------- ----------
carrying
------------------------------ ---------- ----------
amount Fair value
------------------------------ ---------- ----------
GBP'000 GBP'000
============================== ========== ==========
Property, plant and equipment 55 55
------------------------------ ---------- ----------
Other intangible assets 3 570
------------------------------ ---------- ----------
Trade and other receivables 260 260
------------------------------ ---------- ----------
Cash and cash equivalents
------------------------------ ---------- ----------
- own cash 468 468
============================== ========== ==========
786 1,353
============================== ========== ==========
GBP'000
=================================================== =======
Purchase consideration settled in cash 3,521
--------------------------------------------------- -------
Cash and cash equivalents - own cash in subsidiary
acquired (468)
=================================================== =======
Cash outflow on acquistions 3,053
=================================================== =======
As at 30 June 2016, the process of reviewing the fair values of
assets acquired had not been completed, consequently the fair
values stated above are provisional.
The contingent consideration of GBP3,088,000 is based upon the
expected profit before tax of the business for future period till
2020.
The deferred consideration of GBP537,000 may be adjusted
following determination of net current assets on completion balance
sheet.
None of the goodwill recognised is expected to be deductible for
income tax purposes.
18. BUSINESS COMBINATIONS CONTINUED
ii) Other acquisitions and additional investments
Goodwill acquisition GBP'000
========================================================== =======
Purchase consideration
---------------------------------------------------------- -------
- cash paid 1,578
---------------------------------------------------------- -------
- deferred consideration 1,061
---------------------------------------------------------- -------
- contingent consideration 231
---------------------------------------------------------- -------
- cancellation of loans 110
========================================================== =======
Total purchase consideration 2,980
---------------------------------------------------------- -------
Less fair value of net assets acquired 149
---------------------------------------------------------- -------
Less equity movement on transactions with non-controlling
interest 1,914
========================================================== =======
Goodwill 917
========================================================== =======
The assets and liabilities arising from the acquisition were as
follows:
Acquiree's
-------------------------- ---------- ----------
carrying
-------------------------- ---------- ----------
amount Fair value
-------------------------- ---------- ----------
GBP'000 GBP'000
========================== ========== ==========
Non-controlling interests 149 149
========================== ========== ==========
149 149
========================== ========== ==========
GBP'000
======================================= =======
Purchase consideration settled in cash 1,578
======================================= =======
Cash outflow on acquistions 1,578
======================================= =======
As at 30 June 2016, the process of reviewing the fair values of
assets acquired had not been completed, consequently the fair
values stated above are provisional.
The contingent consideration of GBP231,000 is based upon
expected client revenue.
None of the goodwill recognised is expected to be deductible for
income tax purposes.
18. BUSINESS COMBINATIONS CONTINUED
Group summary of the net assets acquired and goodwill
Workwise Others Total
--------------------------------------- -------- ------- -------
GBP'000 GBP'000 GBP'000
======================================= ======== ======= =======
Purchase consideration:
--------------------------------------- -------- ------- -------
- cash paid 3,521 1,578 5,099
--------------------------------------- -------- ------- -------
- contingent consideration 3,088 231 3,319
--------------------------------------- -------- ------- -------
- deferred consideration 537 1,061 1,598
--------------------------------------- -------- ------- -------
- cancellation of loans - 110 110
======================================= ======== ======= =======
Total purchase consideration 7,146 2,980 10,126
--------------------------------------- -------- ------- -------
Less fair value of net assets acquired 1,353 149 1,502
======================================= ======== ======= =======
Less equity movement on transactions
with non-controlling interests - 1,914 1,914
======================================= ======== ======= =======
Goodwill on acquisitions occurring
during the period 5,793 917 6,710
======================================= ======== ======= =======
Impact of revision to fair value adjustment
in relation to acquisitions completed in 2015 52
========================================================== =======
Net increase in goodwill 6,762
========================================================== =======
Impact of additional investments 1,914
========================================================== =======
Net decrease in equity 1,914
========================================================== =======
Group summary of cash flows
Workwise Others Total
---------------------------------- -------- ------- -------
GBP'000 GBP'000 GBP'000
================================== ======== ======= =======
Purchase consideration settled in
cash 3,521 1,578 5,099
---------------------------------- -------- ------- -------
Cash and cash equivalents - own
cash in subsidiary acquired (468) - (468)
================================== ======== ======= =======
Cash outflow on acquisitions in
the period 3,053 1,578 4,631
================================== ======== ======= =======
19. BUSINESS DISPOSALS
On 19 May 2016, the Group disposed of 100% of its shareholdings
in PT JLT Gesa for a consideration of GBP1,685,000, resulting in an
loss on disposal of GBP1,363,000 including additional costs on
disposal.
Net assets and proceeds of disposal
Total
----------------------------------------------- -------
GBP'000
=============================================== =======
Goodwill 1,716
----------------------------------------------- -------
Property, plant and equipment 145
----------------------------------------------- -------
Other intangible assets 207
----------------------------------------------- -------
Trade and other receivables 333
----------------------------------------------- -------
Cash and cash equivalents
----------------------------------------------- -------
- own cash 223
----------------------------------------------- -------
Trade and other payables (829)
----------------------------------------------- -------
Current taxation 84
=============================================== =======
Net assets at disposal 1,879
=============================================== =======
Exchange gains recycled from exchange reserves 325
----------------------------------------------- -------
Loss on disposal (519)
=============================================== =======
Proceeds on disposal 1,685
=============================================== =======
Deferred proceeds 548
----------------------------------------------- -------
Cash inflow on disposal during the period 1,137
=============================================== =======
Total consideration 1,685
=============================================== =======
Group summary of cash flows
Total
----------------------------------------------------- -------
GBP'000
===================================================== =======
Disposal consideration settled in cash 1,137
----------------------------------------------------- -------
Cash and cash equivalents - own cash in subsidiaries
disposed (223)
===================================================== =======
Cash inflow on disposal during the period 914
===================================================== =======
20. RETIREMENT BENEFIT OBLIGATIONS
The Group operates a number of pension schemes throughout the
world, the most significant of which are of the defined benefit
type and operate on a funded basis. The principal pension schemes
are the Jardine Lloyd Thompson UK Pension Scheme, the JLT (USA)
Incentive Savings Plan, the JLT (USA) Employee Retirement Plan, the
JLT (USA) Stable Value Plan, the Pension Plan for Employees of
Jardine Lloyd Thompson Canada Inc and the Jardine Lloyd Thompson
Ireland Limited Pension Fund.
The pension costs accrued for the period are comprised as
follows:
UK Scheme Overseas Schemes Total
------------------------ ================== ================== ==================
6 months 6 months 6 months 6 months 6 months 6 months
------------------------ -------- -------- -------- -------- -------- --------
ended ended ended ended ended ended
30 June 30 June 30 June 30 June 30 June 30 June
------------------------ -------- -------- -------- -------- -------- --------
2016 2015 2016 2015 2016 2015
------------------------ -------- -------- -------- -------- -------- --------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
======================== ======== ======== ======== ======== ======== ========
Defined benefit
schemes - - 463 1,311 463 1,311
------------------------ -------- -------- -------- -------- -------- --------
Defined contribution
schemes 10,664 11,020 9,453 7,985 20,117 19,005
======================== ======== ======== ======== ======== ======== ========
10,664 11,020 9,916 9,296 20,580 20,316
======================== ======== ======== ======== ======== ======== ========
The amounts recognised in the consolidated income
statement are as follows:
------------------------------------------------------------------------------------
UK Scheme Overseas Schemes Total
------------------------ ================== ================== ==================
6 months 6 months 6 months 6 months 6 months 6 months
------------------------ -------- -------- -------- -------- -------- --------
ended ended ended ended ended ended
30 June 30 June 30 June 30 June 30 June 30 June
------------------------ -------- -------- -------- -------- -------- --------
2016 2015 2016 2015 2016 2015
------------------------ -------- -------- -------- -------- -------- --------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
======================== ======== ======== ======== ======== ======== ========
Service cost - - (463) (1,311) (463) (1,311)
------------------------ -------- -------- -------- -------- -------- --------
Curtailment gain - - - 491 - 491
------------------------ -------- -------- -------- -------- -------- --------
Expenses (170) (79) (48) (39) (218) (118)
------------------------ ======== ======== ======== ======== ======== ========
Total (included
within salaries
and
associated expense) (170) (79) (511) (859) (681) (938)
------------------------ -------- -------- -------- -------- -------- --------
Interest cost (10,783) (11,168) (1,209) (1,311) (11,992) (12,479)
------------------------ -------- -------- -------- -------- -------- --------
Expected return
on assets 8,508 8,304 985 990 9,493 9,294
------------------------ ======== ======== ======== ======== ======== ========
Total (included
within finance costs) (2,275) (2,864) (224) (321) (2,499) (3,185)
======================== ======== ======== ======== ======== ======== ========
Expense before taxation (2,445) (2,943) (735) (1,180) (3,180) (4,123)
======================== ======== ======== ======== ======== ======== ========
The amounts disclosed in respect of both the UK and Overseas
defined benefit schemes ("the Schemes") have been projected from
previous valuations of the Schemes. They do not represent the
results of a full actuarial valuation. In respect of 30 June 2016
the Group has updated its assumption regarding the discount rate
applicable to the Schemes' liabilities in line with current market
information.
20. RETIREMENT BENEFIT OBLIGATIONS CONTINUED
The amounts included in the consolidated statement of
comprehensive income are as follows:
UK Scheme Overseas Schemes Total
-------------------------------------- =================== =================== =========
6 months ended 30 June GBP'000 % GBP'000 % GBP'000
2016
====================================== ========= ======== ======== ========= =========
Actual return less expected
return on Scheme assets 23,926 18 23,944
-------------------------------------- --------- -------- -------- --------- ---------
% of period end market
value of Scheme assets 5.1% -
-------------------------------------- --------- -------- -------- --------- ---------
Experience gains arising
on Scheme liabilities
(1) - 249 249
-------------------------------------- --------- -------- -------- --------- ---------
% of period end present
value of Scheme liabilities
(1) - 0.3%
-------------------------------------- --------- -------- -------- --------- ---------
Changes in assumptions
underlying the present
value of the Scheme liabilities (83,902) (6,663) (90,565)
-------------------------------------- --------- -------- -------- --------- ---------
% of period end present
value of Scheme liabilities (13.0%) (88.0%)
====================================== ========= ======== ======== ========= =========
Actuarial losses recognised
in reserves (2) (59,976) (6,396) (66,372)
====================================== ========= ======== ======== ========= =========
% of period end present
value of Scheme liabilities (9.3%) (8.5%)
====================================== ========= ======== ======== ========= =========
UK Scheme Overseas Schemes Total
--------------------------- ==================== ================== ====================
6 months 6 months 6 months 6 months 6 months 6 months
--------------------------- --------- --------- -------- -------- --------- ---------
ended ended ended ended ended ended
30 June 30 June 30 June 30 June 30 June 30 June
--------------------------- --------- --------- -------- -------- --------- ---------
2016 2015 2016 2015 2016 2015
--------------------------- --------- --------- -------- -------- --------- ---------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=========================== ========= ========= ======== ======== ========= =========
Defined benefit obligation
--------------------------- --------- --------- -------- -------- --------- ---------
Present value of
funded obligations (646,314) (614,462) (75,373) (59,114) (721,687) (673,576)
--------------------------- --------- --------- -------- -------- --------- ---------
Fair value of plan
assets 464,946 467,146 55,267 48,466 520,213 515,612
=========================== ========= ========= ======== ======== ========= =========
Net liability recognised
in the balance sheet (181,368) (147,316) (20,106) (10,648) (201,474) (157,964)
=========================== ========= ========= ======== ======== ========= =========
Total
--------------------------- --------- --------- -------- -------- ====================
6 months 6 months
--------------------------- --------- --------- -------- -------- --------- ---------
ended ended
30 June 30 June
--------------------------- --------- --------- -------- -------- --------- ---------
2016 2015
--------------------------- --------- --------- -------- -------- --------- ---------
GBP'000 GBP'000
=========================== ========= ========= ======== ======== ========= =========
Defined benefit obligation
--------------------------- --------- --------- -------- -------- --------- ---------
Retirement benefit
surpluses - 559
--------------------------- --------- --------- -------- -------- --------- ---------
Retirement benefit
obligations (201,474) (158,523)
=========================== ========= ========= ======== ======== ========= =========
Net liability recognised
in the balance sheet (201,474) (157,964)
=========================== ========= ========= ======== ======== ========= =========
UK Scheme Overseas Schemes Total
--------------------------- ==================== ================== ====================
6 months 6 months 6 months 6 months 6 months 6 months
--------------------------- --------- --------- -------- -------- --------- ---------
ended ended ended ended ended ended
30 June 30 June 30 June 30 June 30 June 30 June
--------------------------- --------- --------- -------- -------- --------- ---------
2016 2015 2016 2015 2016 2015
--------------------------- --------- --------- -------- -------- --------- ---------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=========================== ========= ========= ======== ======== ========= =========
Reconciliation of
defined benefit liability
--------------------------- --------- --------- -------- -------- --------- ---------
Opening defined benefit
liability (118,947) (162,620) (11,440) (16,415) (130,387) (179,035)
--------------------------- --------- --------- -------- -------- --------- ---------
Exchange differences - - (1,598) 312 (1,598) 312
--------------------------- --------- --------- -------- -------- --------- ---------
Pension expense (2,445) (2,943) (735) (1,180) (3,180) (4,123)
--------------------------- --------- --------- -------- -------- --------- ---------
Employer contributions - 580 63 913 63 1,493
--------------------------- --------- --------- -------- -------- --------- ---------
Total (loss)/gain
recognised in reserves
(2) (59,976) 17,667 (6,396) 5,722 (66,372) 23,389
=========================== ========= ========= ======== ======== ========= =========
Net liability recognised
in the balance sheet (181,368) (147,316) (20,106) (10,648) (201,474) (157,964)
=========================== ========= ========= ======== ======== ========= =========
(1) Calculation is only done as part of the year-end valuation
of the schemes
(2) Amounts recognised in reserves have been taken through the
statement of comprehensive income
21. RELATED PARTY TRANSACTIONS
The Group has taken advantage of the exemption available under
IAS 24, "Related Party Disclosures", not to disclose details of
transactions with its subsidiary undertakings. For the period, the
Group's related parties are the same as those disclosed on page 152
of the Group's Annual Report for 2015. The basis of the
remuneration of the Directors and key management remains consistent
with that reported in the Group's Annual Report for 2015.
22. PRINCIPAL RISKS
As a global company, JLT faces a range of risks, each of which
has the potential to impact on the achievement of our strategic
business objectives, as well as providing opportunity in the right
circumstances.
The Group takes a holistic approach to risk management and the
control environment with the responsibility and accountability
shared across all the Group companies, and the ultimate
responsibility resting with the Board.
The outcome of the EU referendurm on 23 June 2016 will introduce
uncertainity in future periods. Whilst there has been much
speculation in the press about the scenarios the country now faces,
the Group will continue to serve its clients best interests. The
Group will continue to monitor events closely working with its
insurance partners and clients, as the outcome starts to become
more certain.
The principal risks to which the Group will be exposed in the
second half of the financial year are substantially the same as
those discussed on pages 41 and 42 of the Group's Annual Report for
2015. These are summarised below:
PRINCIPAL RISKS NATURE OF RISK
======================= ====================================================
STRATEGIC RISKS
----------------------- ----------------------------------------------------
Economic Instability JLT's business is more tied to economic
activity and growth rather than (re)insurance
market rates, since greater levels
of corporate activity generally drive
greater demand for the Group's services.
There is a risk that economic instability
reduces client demand.
----------------------- ----------------------------------------------------
Strategic Risks There are risks to the company's strategic
plan arising from changes in external
environment, markets and customer behaviour,
as well as risks arising from acquisitions
and strategic change initiatives.
======================= ====================================================
OPERATIONAL RISKS
----------------------- ----------------------------------------------------
Loss of Key Staff The Group's principal asset is its
people; there is a risk that the organisation
may not be able to attract and retain
market leading talent.
----------------------- ----------------------------------------------------
Business Interruption The Group operates from over 100 offices
in 40 territories across the world,
each with a unique local environment.
There is a risk of a business interruption
due to a large, unexpected incident.
----------------------- ----------------------------------------------------
Loss of IT Environment The Group is reliant on the ability
to process its transactions on behalf
of its clients. Risks arise from non-performance
of an IT supplier, malicious act and/or
cyber crime.
----------------------- ----------------------------------------------------
Information Security Intermediaries and pension administrators
retain confidential data in the normal
course of business. Risks relate to
loss of customer records or breach
of confidentiality due to inadequate
security.
----------------------- ----------------------------------------------------
Errors and Omissions Intermediaries run a risk of incurring
a loss if the operating procedures
in place across the Group in relation
to market security, placement and claims
are not complied with or alleged negligence/breach
of contract in the provision of services/advice
becomes apparent.
----------------------- ----------------------------------------------------
Litigation Litigation risk can arise from a number
of different sources such as:
- M&A litigation (e.g. breach of Sale
& Purchase Agreement).
- Breach of Employment Law.
- Tortious liability arising from the
recruitment of individuals where appropriate
recruitment controls are not adhered
to.
----------------------- ----------------------------------------------------
Regulatory Breach Risks arise from non-compliance with
/ Financial Crime or misinterpretation of local and international
regulations and failure to meet regulatory
standards both in the present, and
retrospectively, in relation to past
business activities.
======================= ====================================================
FINANCIAL RISKS
----------------------- ----------------------------------------------------
Capital Risk Risks arising from an inability to
and Liquidity maintain an effective and efficient
capital structure and ensure an optimal
cost of capital, or meet the short
term financial demands of the business.
----------------------- ----------------------------------------------------
Foreign Currency The Group has foreign exchange exposures
to:
- 'Translational' risk arising from
the need to convert currencies into
GBP for reporting purposes.
- 'Transactional' risk arising from
revenues and costs being denominated
in different currencies.
----------------------- ----------------------------------------------------
Counterparty There is a risk associated with a failure
Risk of a key counterparty resulting in
a loss of own cash, fiduciary funds,
investments and deposits, derivative
assets and/or trade receivables.
----------------------- ----------------------------------------------------
Defined Benefit Risk of adverse impact on the balance
Pension Scheme sheet and income statement as a consequence
of an increase in the Defined Benefit
Pension Scheme deficit.
======================= ====================================================
23. forward-looking statements
Certain statements in this interim report are forward-looking.
Although the Group believes that the expectations reflected in
these forward-looking statements are reasonable, it can give no
assurance that these expectations will prove to have been correct.
Because these statements involve risks and uncertainties, actual
results may differ materially from those expressed or implied by
these forward-looking statements.
The Group undertakes no obligation to update any forward-looking
statements whether as a result of new information, future events or
otherwise.
Statement of directors' responsibilities
The directors confirm that this consolidated interim financial
information has been prepared in accordance with IAS 34 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 JLT Group plc are listed in the Annual Report
of the Company for the year ended 31 December 2015, subject to the
following changes which have taken place since the publication of
that document: James Twining retired from the Board on 26 April
2016; Bruce Carnegie-Brown was appointed to the Board with effect
from 1 May 2016; and Rodney Leach died on 12 June 2016.
On behalf of the Board
Charles Rozes
Finance Director
26 July 2016
INDEPENDENT REVIEW REPORT TO JARDINE LLOYD THOMPSON GROUP
PLC
REPORT ON THE UNAUDITED CONSOLIDATED INTERIM RESULTS
Our conclusion
We have reviewed Jardine Lloyd Thompson Group plc's unaudited
consolidated interim financial statements (the "interim financial
statements") in the interim results of Jardine Lloyd Thompson Group
plc for the 6 months ended 30 June 2016. Based on our review,
nothing has come to our attention that causes us to believe that
the consolidated 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 and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
What we have reviewed
The consolidated interim financial statements, which are
prepared by Jardine Lloyd Thompson Group plc, comprise:
-- the consolidated balance sheet as at the 30 June 2016;
-- the consolidated income statement and statement of
comprehensive income for the period then ended;
-- the consolidated statement of cash flows for the period then ended;
-- the consolidated statement of changes in equity for the period then ended; and
-- the explanatory notes to the consolidated interim financial statements.
The consolidated interim financial statements included in the
interim results have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and the Disclosure and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
As disclosed in 'Basis of Accounting' on page 13 in 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 CONSOLIDATED INTERIM FINANCIAL
STATEMENTS AND THE REVIEW
Our responsibilities and those of the directors
The interim results, including the consolidated interim
financial statements, is the responsibility of, and has been
approved by, the directors. The directors are responsible for
preparing the interim results in accordance with the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
Our responsibility is to express a conclusion on the
consolidated interim financial statements in the interim results
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 and Transparency Rules of the
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 consolidated 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 interim
results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the consolidated interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
26 July 2016
London
Notes:
(a) The maintenance and integrity of the Jardine Lloyd Thompson
Group plc website is the responsibility of the directors; the work
carried out by the auditors does not involve consideration of these
matters and, accordingly, the auditors accept no responsibility for
any changes that may have occurred to the financial statements
since they were initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DGGDRRDDBGLU
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