TIDMJLT
RNS Number : 4399Y
Jardine Lloyd Thompson Group PLC
01 March 2012
1st March 2012
JARDINE LLOYD THOMPSON GROUP plc
PRELIMINARY RESULTS FOR THE YEAR ENDED 31st DECEMBER 2011
(UNAUDITED)
Jardine Lloyd Thompson Group plc ("JLT" or "the Group")
announces preliminary results for the year ended 31st December
2011.
Financial Summary
2011 2010 Change
GBPm GBPm
Total revenue* 818.8 746.3 10%
Underlying trading profit ** 147.0 129.9 13%
Trading margin 18.0% 17.4%
Underlying profit before tax ** 147.6 130.1 13%
Reported profit before tax 134.5 119.4 13%
Underlying earnings per share (diluted)** 45.3p 40.5p 12%
Reported earnings per share (diluted) 40.4p 41.7p (3%)
Dividend per share 24.0p 22.5p 7%
* Total revenue comprises fees and commissions and investment
income.
** Underlying results exclude exceptional and non-recurring
items.
Highlights
-- Strong organic growth of 7%
-- Total revenue growth of 10% to GBP818.8 million
-- Particularly strong revenue growth in high growth economies
with Asia +28% and Latin America +19%
-- Underlying profit before tax increase of 13% to GBP147.6
million
-- Group trading margin improves to 18% whilst still investing
for growth
-- Further investment for growth through selective acquisitions
and minority stakes
-- Increased shareholding of Jardine Matheson provides further
strategic support and enhances JLT's business and prospects
-- Business Transformation Programme now expected to deliver
GBP23 million of recurring annualised cost savings
-- Dividend increased to 24p per share
Dominic Burke, Chief Executive, commented:
"Our emphasis on being a client-first organisation continues to
serve us well, as demonstrated by our strong growth record. Our
strategy, built around growing our areas of specialty,
strengthening our international footprint and driving efficiency,
provides us with confidence that we will continue to make financial
progress in 2012."
Enquiries:
Jardine Lloyd Thompson
Dominic Burke, Chief Executive Group 020 7528 4948
Paul Dransfield, Corporate Communications 020 7528 4933
Rebecca Shelley
Dania Saidam Brunswick Group LLP 020 7404 5959
A presentation to investors and analysts will take place at
9.00am today at 6 Crutched Friars, London EC3N 2PH. A live webcast
of the presentation can be viewed on the Group's website
www.jltgroup.com.
___________________________________________________________________________________
FULL RELEASE FOLLOWS:
PRELIMINARY STATEMENT
JLT has again delivered a strong financial performance amidst
challenging economic conditions, which included lacklustre GDP
growth in mature markets and a soft insurance rating environment.
Driving this performance has been strong organic growth of 7%, the
increasing realisation of the benefits of our continued recruitment
of leading industry professionals, carefully selected acquisitions
and our increasing exposure to high growth economies.
The 2011 results are summarised in the table below:
GBPm Total Revenue Trading Margin Trading Profit
2011 Growth CRE Organic 2011 CRE 2010 2011 CRE 2010
------ ------- ---- -------- ------ ------ ------ ------- ------- -------
Risk & Insurance:
Retail 312.5 15% 11% 10% 22% 23% 24% 70.1 68.7 64.0
London
Market 329.9 8% 7% 7% 21% 21% 21% 70.2 67.6 65.7
------ ------- ---- -------- ------ ------ ------ ------- ------- -------
642.4 11% 9% 8% 22% 22% 22% 140.3 136.3 129.7
Employee
Benefits 137.0 5% 5% 5% 19% 19% 17% 26.0 26.0 21.7
Thistle
Insurance
Services 39.4 - - - 15% 15% 14% 5.8 5.8 5.5
Central
costs - - - - - - - (25.1) (25.1) (27.0)
------ ------- ---- -------- ------ ------ ------ ------- ------- -------
818.8 10% 8% 7% 18.0% 17.8% 17.4% 147.0 143.0 129.9
------ ------- ---- -------- ------ ------ ------ ------- ------- -------
Underlying trading profit 147.0 129.9
Associates' contribution after tax 5.1 3.7
Underlying net finance costs (4.5) (3.5)
------- --------
Underlying profit before taxation 147.6 130.1
Net exceptional costs (13.1) (10.7)
------- --------
Profit before taxation for the year 134.5 119.4
Underlying tax expense (41.6) (37.7)
Non-recurring tax credit and tax on net exceptional
items 2.4 13.2
Non-controlling interests (6.6) (4.2)
------- --------
Profit after taxation and
non-controlling interests 88.7 90.7
------- --------
Underlying profit after taxation and
non-controlling interests 99.4 88.2
Diluted earnings per share 40.4p 41.7p
Underlying diluted earnings per share 45.3p 40.5p
Organic growth is based on total revenue excluding the effect of
currency, acquisitions, disposals and investment income. Total
revenue comprises fees and commissions and investment income.
CRE: Constant rates of exchange.
Total revenue increased by 10% to GBP818.8 million compared to
2010, or 8% at constant rates of exchange (CRE), including organic
growth of 7%. Total revenue and underlying trading profit includes
investment income on fiduciary funds of GBP6.8 million (2010:
GBP5.6 million).
Underlying trading profit increased by 13% to GBP147.0 million,
or 10% at CRE. The underlying trading margin increased from 17.4%
to 18.0%, notwithstanding continued investment for growth
throughout the Group.
The contribution to profit after tax from associates was GBP5.1
million compared to GBP3.7 million in 2010, which included our
share of Siaci Saint Honore in France, in which JLT now has a 26%
stake.
Underlying profit before tax was GBP147.6 million, 13% ahead of
2010. Reported profit before tax was GBP134.5 million compared to
GBP119.4 million in the prior year, an increase of 13%. This is
after charging net exceptional costs of GBP13.1 million, comprising
Business Transformation Programme costs of GBP8.9 million, advisory
costs of GBP1.9 million associated with the Jardine Matheson
partial offer, costs associated with the restructuring of our
Italian operations of GBP1.7 million and acquisition integration
costs of GBP0.6 million.
The tax charge was GBP39.2 million, or GBP41.6 million on an
underlying basis. The 2010 comparative included a non-recurring tax
credit of GBP13.2 million, relating largely to a re-assessment of
the Group's tax position following the resolution with tax
authorities of several long outstanding tax matters. The underlying
effective tax rate for 2011 was 28%.
Profit after tax and non-controlling interests was GBP88.7
million (2010: GBP90.7 million which included the benefit of the
non-recurring tax credit). Diluted earnings per share were 40.4p
per share (on a reported basis for the year).
Underlying profit after tax and non-controlling interests
increased by 13% to GBP99.4 million and underlying diluted earnings
per share increased by 12% to 45.3p per share.
Dividends
Subject to shareholder approval, the final dividend will be
increased by 1.1p per share to 14.8p per share for the year to 31st
December 2011 and will be paid on 1st May 2012 to shareholders on
the register at 10th April 2012. This brings the total dividend for
the year to 24p per share, compared to 22.5p for the prior year, an
increase of 7%.
OPERATIONAL REVIEW
Risk & Insurance
Combined revenue in Risk & Insurance increased by 11% to
GBP642.4 million or 9% at CRE, with strong organic growth of 8%.
Underlying trading profit increased by 8% to GBP140.3 million for
the year, with an unchanged trading margin of 22%.
Retail
Within the Risk & Insurance Group, Retail revenue increased
by 15% to GBP312.5 million, or 11% at CRE, and included 10% organic
growth. Underlying trading profit increased by 10% to GBP70.1
million for the year, representing an underlying trading margin of
22%, or 23% at CRE, compared to 24% for the prior year.
Total Revenue Trading Profit Trading Margin
GBPm 2011 Growth CRE Organic 2011 CRE 2010 2011 CRE 2010
------ ------- ----- -------- ------ ------ ----- ----- ----- -----
Australasia 125.6 16% 6% 5% 34.9 31.8 29.9 28% 28% 28%
Asia 81.9 28% 29% 29% 17.3 18.8 13.7 21% 23% 21%
Latin America 48.8 19% 19% 19% 14.9 15.1 11.7 31% 31% 28%
Canada 30.0 (1%) (2%) (2%) 3.9 3.9 4.9 13% 13% 16%
Europe 20.9 (4%) (7%) (17%) (0.6) (0.6) 3.5 (3%) (3%) 16%
Other 5.3 8% 11% 12% (0.3) (0.3) 0.3 (5%) (5%) 6%
------ ------- ----- -------- ------ ------ ----- ----- ----- -----
312.5 15% 11% 10% 70.1 68.7 64.0 22% 23% 24%
------ ------- ----- -------- ------ ------ ----- ----- ----- -----
The Group's retail businesses achieved a good overall
performance, although individual results were mixed with strong
performances in Asia, Latin America and Australasia. Our Canadian
and some of our European businesses had a more difficult year and
this impacted the overall retail trading margin.
Australasia delivered increased revenues, up 16% which was
principally due to the effect of the strengthening Australian
dollar. At constant rates of exchange, the increase was 6%. Organic
growth was 5%, with a number of significant new business wins
contributing to this result.
Asia once again had strong revenue growth, delivering an
increase of 28% for the year and maintained its trading margin of
21% (23% at CRE). The Group made further investments in the region
in senior hires and won major new corporate accounts notably in the
Telecommunications and Energy sectors. There has been a rapid
expansion of our employee benefits capabilities in the region and
these are now a significant contributor to our profit in Asia.
Our operations in Latin America performed well with organic
revenue growth of 19%. The trading margin increased from 28% to
31%. The acquisition of Orbital in Chile continued the Group's
expansion in the region. Our operations in Latin America and Asia
once again benefited from the Group's areas of specialisation such
as Natural Resources, Construction, Telecommunications and Aviation
being important drivers of economic growth in these regions.
Canada had a more difficult trading environment with a
disappointing performance resulting in a 1% fall in revenue and a
lower trading margin. The anticipated improvement in trading in the
second half did not occur and the leadership of this business was
changed at the beginning of 2012.
In Europe, the results were mixed with Ireland and the Nordic
region delivering strong performances. The acquisition in late
December 2011 of FBD Insurance Brokers, a specialist broker in the
Irish agri-food sector provides a potential new area of
specialisation for the Group.
In Southern Europe the performance of our Italian business was
unsatisfactory and action was taken to restructure and merge that
business with an independent specialty broker, Marine &
Aviation SpA. More recently, we merged our Spanish business with
March-Unipsa, the largest independent insurance broker in Spain
(which is subject to regulatory approval). In both countries, we
have a 25% stake in the combined businesses.
London Market
Revenue in our London Market operations increased to GBP329.9
million up 8%, or 7% at CRE, with notable organic growth of 7% in
what was a very competitive marketplace throughout 2011.
The trading profit margin was unchanged at 21%, despite our
ongoing investment in the recruitment of leading industry
professionals.
Total Revenue Trading Profit Trading Margin
GBPm 2011 Growth CRE Organic 2011 CRE 2010 2011 CRE 2010
------ ------- ---- -------- ----- ----- ------ ------ ---- ------
JLT Specialty 205.7 11% 10% 9% 42.6 40.8 38.4 21% 20% 21%
Lloyd &
Partners 72.3 3% 2% 2% 16.3 15.8 16.9 23% 22% 24%
JLT Re 51.9 5% 4% 3% 11.3 11.0 10.4 22% 21% 21%
------ ------- ---- -------- ----- ----- ------ ------ ---- ------
329.9 8% 7% 7% 70.2 67.6 65.7 21% 21% 21%
------ ------- ---- -------- ----- ----- ------ ------ ---- ------
JLT Specialty achieved significant new business wins in
Aviation, Energy, Construction, Marine, Credit & Political
Risks and Real Estate and its revenue grew to GBP205.7 million, an
increase of 11%, or 10% at CRE, with 9% organic growth. The
recently expanded Financial Risks specialty is developing in line
with our expectations.
Lloyd & Partners, the Group's specialist wholesale broker,
had a good second half and delivered a 3% increase in revenue at
GBP72.3 million with 2% organic growth. As a large part of Lloyd
& Partners' business is derived from the US market, which was
extremely competitive in 2011, this was an encouraging result.
During 2011, JLT Reinsurance Brokers, the Group's reinsurance
broking business, achieved revenues of GBP51.9 million and organic
growth of 3%. The trading margin also improved to 22% from 21%
despite ongoing investment. This included the opening of new
offices in three countries to expand the Group's global reinsurance
capabilities, the addition of treaty reinsurance skills in
Singapore and a move into the Life Reinsurance sector in
Switzerland.
UK & Ireland Employee Benefits
Total Revenue Trading Profit Trading Margin
GBPm 2011 Growth CRE Organic 2011 CRE 2010 2011 CRE 2010
------ ------- ---- -------- ----- ----- ----- ------ ---- -----
Employee
Benefits 137.0 5% 5% 5% 26.0 26.0 21.7 19% 19% 17%
------ ------- ---- -------- ----- ----- ----- ------ ---- -----
The UK & Ireland Employee Benefits business had a strong
year with revenue growth of 5% and an improved trading margin of
19%, up from 17%, reflecting the strength and success of the
diversification of this business in recent years.
The business is evolving as the marketplace changes with its
defined contribution pension, benefits and wealth management
businesses expanding with a focus on technology solutions.
As previously indicated, from 2012 we will additionally report
our Employee Benefits revenue and trading profit on an
international basis.
Thistle Insurance Services
Total Revenue Trading Profit Trading Margin
GBPm 2011 Growth CRE Organic 2011 CRE 2010 2011 CRE 2010
----- ------- ---- -------- ------ ---- ----- ------ ---- -----
Thistle Insurance
Services 39.4 - - - 5.8 5.8 5.5 15% 15% 14%
----- ------- ---- -------- ------ ---- ----- ------ ---- -----
The lack of consumer confidence in the UK and Thistle's exit
from a significant but unprofitable book of business in 2010 has
contributed to a flat revenue performance in 2011. The trading
margin has continued to improve to 15% and underlying organic
revenue (excluding the exited book of business) grew by 4%.
Thistle is still in the investment phase of its development. We
remain committed to the business model which is being successfully
adapted in both Australia and Canada and there are plans to extend
this into Asia and Latin America.
Business Transformation PROGRAMME
We started a three year Business Transformation Programme in
July 2009 and this remains on track to complete by June 2012. It is
estimated that the programme will deliver recurring annual savings
of GBP23 million for total one-off costs of GBP27 million. Whilst
the programme has reduced our cost base and enabled us to reinvest
for growth, just as importantly it has provided improved quality
and service to clients.
As this non-recurring expenditure has been significant, the
programme costs are being treated as exceptional. The additional
one-off costs in 2012 are forecast to be GBP4 million, generating a
recurring benefit of GBP5 million.
CaSH FLOW AND BALANCE SHEET
Net debt at 31st December 2011 was GBP100 million. The Group has
committed unsecured long term debt facilities equivalent to GBP352
million, with maturities between 2015 and 2022. Gross borrowings as
at 31st December 2011 were GBP190 million, leaving unutilised
committed headroom of approximately GBP162 million.
Net pension liabilities increased by GBP48 million to GBP121
million. This is mainly due to a reduction in the interest rate
assumptions used to measure accounting liabilities. Otherwise the
key assumptions remain broadly consistent.
Foreign Exchange
The Group's major currency transaction exposure arises in the
London Market businesses which currently earn annual US dollar
denominated revenue of approximately US$265 million. Consequently,
the Group's results are sensitive to changes in the Sterling/US
dollar exchange rate. The Group continues to operate a prudent US
dollar hedging programme to smooth out the volatility caused by
exchange rate movements. As a guide, each one cent movement in the
achieved rate currently translates into a change of approximately
GBP1 million in revenue and a corresponding impact on trading
profit equal to approximately 65% of the revenue change. Based on
current hedging levels in 2012, it would take a movement of seven
cents in the spot rate to create a one cent movement in the
achieved rate.
In 2011, the Group achieved an average rate after hedging of
US$1.52 compared to an average market rate of US$1.60.
As at 28th February 2012, some 86% of anticipated dollar
revenues for 2012 are hedged at an average rate of US$1.54. For
2013, some 85% of dollar revenues are hedged at an average rate of
US$1.54 and 70% hedged for 2014 at an average rate of US$1.56. We
have now also commenced our rolling hedging for 2015, with 20%
hedged at an average rate of US$1.53.
OUTLOOK
Our emphasis on being a client-first organisation continues to
serve us well, as demonstrated by our strong growth record. Our
strategy, built around growing our areas of specialty,
strengthening our international footprint and driving efficiency,
provides us with confidence that we will continue to make financial
progress in 2012.
Results follow
Jardine Lloyd Thompson Group plc
Consolidated Income Statement
For the year ended 31st December 2011
Notes 2011 2010
GBP'000 GBP'000
---------- ----------
Fees and commissions 3 812,004 740,679
Investment income 6,760 5,601
Salaries and associated expenses (489,700) (441,797)
Premises (42,394) (40,125)
Other operating costs (133,319) (128,801)
Depreciation, amortisation and impairment
charges 4 (19,410) (17,365)
---------- ----------
Operating profit 3,4 133,941 118,192
---------- ----------
Analysed as:
Operating profit before exceptional
items 147,034 129,859
Business transformation programme 4 (8,936) (7,282)
Partial offer costs 4 (1,918) -
Other non-recurring items 4 (2,239) (4,385)
---------- ----------
Operating Profit 3,4 133,941 118,192
---------- ----------
Finance costs 5 (7,377) (6,427)
Finance income 5 2,816 3,832
---------- ----------
Finance costs - net 5 (4,561) (2,595)
Share of results of associates after
tax and non-controlling interests 5,099 3,772
Profit before taxation 3 134,479 119,369
Income tax expense 6 (39,210) (24,554)
---------- ----------
Profit for the year 95,269 94,815
---------- ----------
Profit attributable to:
Owners of the parent 88,746 90,664
Non-controlling interests 6,523 4,151
---------- ----------
95,269 94,815
---------- ----------
Earnings per share attributable to the
equity holders of the Company during
the year (expressed in pence per share) 8
Basic earnings per share 40.7 41.8
Diluted earnings per share 40.4 41.7
Jardine Lloyd Thompson Group plc
Consolidated Statement of Comprehensive Income
For the year ended 31st December 2011
2011 2010
GBP'000 GBP'000
--------- ---------
Profit for the year 95,269 94,815
--------- ---------
Other comprehensive income
--------- ---------
Actuarial (losses)/gains recognised in post retirement
benefit schemes (54,605) 12,960
Taxation thereon 11,116 (3,816)
--------- ---------
(43,489) 9,144
Fair value losses net of tax
- available-for-sale (52) (114)
- cashflow and fair value hedges (2,724) (10,661)
Currency translation differences (7,896) 8,191
--------- ---------
Other comprehensive income net of tax (54,161) 6,560
Total comprehensive income for the year 41,108 101,375
--------- ---------
Attributable to:
Owners of the parent 34,585 97,224
Non-controlling interests 6,523 4,151
--------- ---------
41,108 101,375
--------- ---------
Jardine Lloyd Thompson Group plc
Consolidated Group Balance Sheet
As at 31st December 2011
2011 2010
Notes GBP'000 GBP'000
---------- ----------
NET OPERATING ASSETS
Non-current assets
Goodwill 259,910 243,783
Intangible assets 51,470 38,281
Property, plant and equipment 25,628 28,860
Investment in associates 72,385 60,794
Available-for-sale financial assets 9 2,535 1,908
Derivative financial instruments 10 8,945 3,770
Employee benefit trusts 491 510
Deferred tax assets 54,520 41,130
475,884 419,036
---------- ----------
Current assets
Trade and other receivables 11 288,711 271,435
Derivative financial instruments 10 2,986 4,510
Available-for-sale financial assets 9 158 38,260
Cash and cash equivalents 12 573,616 524,865
---------- ----------
865,471 839,070
---------- ----------
Current liabilities
Borrowings (1,842) (2,725)
Trade and other payables 13 (689,781) (687,270)
Derivative financial instruments 10 (5,759) (4,282)
Current tax liabilities (7,053) (10,538)
Provisions for liabilities and charges 15 (9,001) (13,099)
---------- ----------
(713,436) (717,914)
---------- ----------
Net current assets 152,035 121,156
---------- ----------
Non-current liabilities
Borrowings (188,340) (142,660)
Derivative financial instruments 10 (7,814) (8,244)
Deferred tax liabilities (8,080) (8,100)
Retirement benefit obligations 14 (120,999) (72,835)
Provisions for liabilities and charges 15 (4,252) (4,935)
---------- ----------
(329,485) (236,774)
---------- ----------
298,434 303,418
---------- ----------
TOTAL EQUITY
Capital and reserves attributable to
the Company's equity holders
Ordinary shares 10,960 10,890
Share premium 16 99,670 93,577
Fair value and hedging reserves 16 (5,661) (2,885)
Exchange reserves 16 30,131 38,027
Retained earnings 151,007 155,368
Shareholders' equity 286,107 294,977
Non-controlling interests 12,327 8,441
---------- ----------
298,434 303,418
---------- ----------
Jardine Lloyd Thompson Group plc
Consolidated Statement of Changes in Equity
For year ended 31st December 2011
For the year ended 31st Ordinary Other Retained Shareholders' Non-controlling Total
December 2011
shares reserves earnings equity interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- --------- -------------- ---------------- ---------
Balance at 1st January
2011 10,890 128,719 155,368 294,977 8,441 303,418
Profit for the year - - 88,746 88,746 6,523 95,269
--------- --------- --------- -------------- ---------------- ---------
Other comprehensive income
Actuarial losses recognised
in post retirement benefit
schemes - - (43,489) (43,489) - (43,489)
Fair value losses net
of tax
- available-for-sale - (52) - (52) - (52)
- cashflow and fair value
hedges - (2,724) - (2,724) - (2,724)
Currency translation
differences - (7,896) - (7,896) (106) (8,002)
--------- --------- --------- -------------- ---------------- ---------
Total other comprehensive
income - (10,672) (43,489) (54,161) (106) (54,267)
--------- --------- --------- -------------- ---------------- ---------
Total comprehensive income
for the year - (10,672) 45,257 34,585 6,417 41,002
Dividends paid - - (50,000) (50,000) (3,635) (53,635)
Amounts in respect of
share based payments
- reversal of amortisation
in respect of
share based payments - - 16,848 16,848 - 16,848
- shares acquired by
the Employee Benefit
Trust - - (14,799) (14,799) - (14,799)
Acquisitions - - - - (257) (257)
Disposals - - - - 1,361 1,361
Change in non-controlling
interests - - (1,667) (1,667) - (1,667)
Issue of share capital 70 6,093 - 6,163 - 6,163
--------- --------- --------- -------------- ---------------- ---------
Balance at 31st December
2011 10,960 124,140 151,007 286,107 12,327 298,434
--------- --------- --------- -------------- ---------------- ---------
For the year ended 31st Ordinary Other Retained Shareholders' Non-controlling Total
December 2010
shares reserves earnings equity interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- --------- -------------- ---------------- ---------
Balance at 1st January
2010 10,776 122,366 99,532 232,674 6,760 239,434
Profit for the year - - 90,664 90,664 4,151 94,815
--------- --------- --------- -------------- ---------------- ---------
Other comprehensive income
Actuarial gains recognised
in post retirement benefit
schemes - - 9,144 9,144 - 9,144
Fair value losses net
of tax
- available-for-sale - (114) - (114) - (114)
- cashflow hedges - (10,661) - (10,661) - (10,661)
Currency translation differences - 8,191 - 8,191 642 8,833
--------- --------- --------- -------------- ---------------- ---------
Total other comprehensive
income - (2,584) 9,144 6,560 642 7,202
--------- --------- --------- -------------- ---------------- ---------
Total comprehensive income
for the year - (2,584) 99,808 97,224 4,793 102,017
Dividends paid - - (46,280) (46,280) (2,191) (48,471)
Amounts in respect of
share based payments
- reversal of amortisation
in respect of
share based payments - - 17,297 17,297 - 17,297
- shares acquired by the
Employee Benefit
Trust - - (13,708) (13,708) - (13,708)
Acquisitions - - - - (1,405) (1,405)
Disposals - - - - 484 484
Change in non-controlling
interests - - (1,281) (1,281) - (1,281)
Issue of share capital 114 8,937 - 9,051 - 9,051
--------- --------- --------- -------------- ---------------- ---------
Balance at 31st December
2010 10,890 128,719 155,368 294,977 8,441 303,418
--------- --------- --------- -------------- ---------------- ---------
Jardine Lloyd Thompson Group plc
Consolidated Statement of Cash Flows
For the year ended 31st December 2011
2011 2010
Notes GBP'000 GBP'000
--------- ---------
Cash flows from operating activities
Cash generated from operations 17 142,570 96,507
Interest paid (6,968) (3,844)
Interest received 8,158 9,719
Taxation paid (42,024) (25,656)
(Decrease)/increase in net insurance
broking creditors (10,818) 34,506
--------- ---------
90,918 111,232
Dividend received from associates 876 -
--------- ---------
Net cash generated from operating activities 91,794 111,232
--------- ---------
Cash flows from investing activities
Purchase of property, plant and equipment (8,980) (9,205)
Purchase of intangible fixed assets (27,298) (23,834)
Proceeds from sale of property, plant
and equipment 1,125 880
Proceeds from sale of intangible fixed
assets 345 343
Acquisition of businesses, net of cash
acquired 18 (14,815) (12,866)
Acquisition of associate undertakings (4,540) (15,592)
Proceeds from disposal of business,
net of cash disposed 19 (2,278) 1,783
Proceeds from disposal of associate 513 -
undertakings
Purchase of available-for-sale other
investments - (214)
Proceeds from disposal of available-for-sale
other investments 9 96
Net cash used in investing activities (55,919) (58,609)
--------- ---------
Cash flows from financing activities
Dividends paid to company's shareholders (49,855) (45,824)
Net cash flows from investments and
deposits 37,967 42,911
Purchase of investments by Employee
Benefit Trust (14,799) (13,708)
Proceeds from issuance of ordinary shares 6,163 9,051
Net increase in borrowing 40,639 43,464
Dividends paid to non-controlling interests (3,635) (2,191)
--------- ---------
Net cash generated from financing activities 16,480 33,703
--------- ---------
Net increase in cash and cash equivalents 52,355 86,326
Cash and cash equivalents at beginning
of period 524,865 437,218
Exchange (losses)/gains on cash and
cash equivalents (3,604) 1,321
--------- ---------
Cash and cash equivalents at end of
the year 12 573,616 524,865
--------- ---------
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
1. Basis of preparation
The Group's consolidated financial statements have been prepared
under the historical cost convention as modified by the revaluation
of available-for-sale investments and derivative financial
instruments and using accounting policies and presentation which
comply with International Financial Reporting Standards (IFRS).
The Group's accounting policies are set out in the 2010 Annual
Report & Financial Statements.
2. Alternative income statement
The format of the consolidated income statement on page 9
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.
Year to 31st December 2011
Underlying Exceptional
profit items Total
GBP'000 GBP'000 GBP'000
----------- ------------ ----------
Fees and commissions 812,004 - 812,004
Investment income 6,760 - 6,760
Salaries and associated expenses (482,641) (7,059) (489,700)
Premises (41,740) (654) (42,394)
Other operating costs (127,939) (5,380) (133,319)
Depreciation, amortisation
and impairment (19,410) - (19,410)
----------- ------------ ----------
Trading profit 147,034 (13,093) 133,941
Finance costs - net (4,561) - (4,561)
Share of results of associates
after tax and non-controlling
interests 5,099 - 5,099
----------- ------------ ----------
Profit before taxation 147,572 (13,093) 134,479
----------- ------------ ----------
Year to 31st December 2010
Underlying Exceptional
profit items Total
GBP'000 GBP'000 GBP'000
----------- ------------ ----------
Fees and commissions 740,679 - 740,679
Investment income 5,601 - 5,601
Salaries and associated expenses (435,028) (6,769) (441,797)
Premises (39,661) (464) (40,125)
Other operating costs (124,367) (4,434) (128,801)
Depreciation, amortisation
and impairment (17,365) - (17,365)
----------- ------------ ----------
Trading profit 129,859 (11,667) 118,192
Finance costs - net (3,531) 936 (2,595)
Share of results of associates
after tax and non-controlling
interests 3,772 - 3,772
----------- ------------ ----------
Profit before taxation 130,100 (10,731) 119,369
----------- ------------ ----------
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
3. 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 five main
segments: London Market, Retail, Employee Benefits, Thistle
Insurance Services and Head Office & Other operations. These
segments are consistent with the internal reporting structure of
the Group.
The London Market segment comprises JLT's specialist, wholesale
and reinsurance broking activities. The Retail segment comprises
the Group international insurance broking and risk services
activities. The Employee Benefits segment consists of pension
administration, outsourcing and employee benefits consultancy. The
Thistle Insurance Services segment provides solutions to
Affinities, SME and retail markets via its own business units as
well as third party brokers, mainly through open-market placements,
delegated authorities and Managed General Underwriting (MGU)
arrangements. The Head Office & Other segment consists mainly
of holding companies, the central administration function, the
Group's captive insurance companies and the Group's principal
investments in associates.
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 change in respect of non-controlling interests is
excluded from the segmental allocation.
Segment assets include:
- non current assets excluding investments in associates and
deferred tax assets
- trade and other receivables
- fiduciary funds
Interest bearing assets (e.g. cash & cash equivalents and
investments & deposits) relating to the Group's own funds are
excluded from segmental assets.
Segment liabilities include:
- trade and other payables
- provisions for liabilities and charges
Interest bearing liabilities (e.g. borrowings) and income &
deferred tax liabilities are excluded from segment liabilities.
Items excluded from segmental allocation are referred to as
"unallocated".
Investments in associates
On 31st December 2011 the Group acquired 25 per cent of the
Marine and Aviation Group which operates mainly in Italy. Following
a restructuring in July 2011, the Group increased its stake in the
holding company of Siaci Saint Honore, which operates principally
in France, from 20 to 26 per cent. In 2010, the Group acquired 20
per cent of the Austrian company GrECo which operates mainly in
Austria and Eastern Europe. The investment and the Group's share of
Siaci Saint Honore's, GrECo's and Marine and Aviation's net profits
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 Malta
and ICAP-JLT.
Capital expenditure comprises additions to property, plant and
equipment and intangible assets.
Comparatives for 2010 have been restated to reflect the transfer
of businesses between the Employee Benefits and Thistle Insurance
Services segments.
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
3. Segment information cont'd
Year to 31st December Thistle Head
2011 London Employee Insurance Office
Market Retail Benefits Services & Other Unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------- ---------- ---------- ----------- ---------- ------------ ------------
Fees and commissions 327,839 307,932 136,935 39,268 30 - 812,004
Investment income 2,089 4,574 - 97 - - 6,760
---------- ---------- ---------- ----------- ---------- ------------ ------------
Total revenue 329,928 312,506 136,935 39,365 30 - 818,764
Underlying trading
profit 70,214 70,061 26,007 5,773 (25,021) - 147,034
---------- ---------- ---------- ----------- ---------- ------------ ------------
Operating profit 66,962 65,938 23,451 5,268 (27,678) - 133,941
Finance costs -
net - - - - - (4,561) (4,561)
Share of results
of associates after
tax and non-controlling
interests - - - - 5,099 - 5,099
---------- ---------- ---------- ----------- ---------- ------------ ------------
Profit before taxation 66,962 65,938 23,451 5,268 (22,579) (4,561) 134,479
Income tax expense - - - - - (39,210) (39,210)
Non-controlling
interests - - - - - (6,523) (6,523)
---------- ---------- ---------- ----------- ---------- ------------ ------------
Net profit 66,962 65,938 23,451 5,268 (22,579) (50,294) 88,746
---------- ---------- ---------- ----------- ---------- ------------ ------------
Segment assets 546,541 377,506 95,525 90,262 11,843 - 1,121,677
Investment in associates - - - - 72,385 - 72,385
Unallocated assets - - - - - 147,293 147,293
Total assets 546,541 377,506 95,525 90,262 84,228 147,293 1,341,355
---------- ---------- ---------- ----------- ---------- ------------ ------------
Segment liabilities (404,222) (207,688) (24,460) (28,413) (169,911) - (834,694)
Unallocated liabilities - - - - - (208,227) (208,227)
Total liabilities (404,222) (207,688) (24,460) (28,413) (169,911) (208,227) (1,042,921)
---------- ---------- ---------- ----------- ---------- ------------ ------------
Other segment items
Capital expenditure 11,087 8,698 2,612 2,520 11,361 - 36,278
Depreciation, amortisation
and impairment (7,527) (7,300) (3,129) (1,099) (8,265) - (27,320)
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
3. Segment information cont'd
Year to 31st December Thistle Head
2010 London Employee Insurance Office
Market Retail Benefits Services & Other Unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------- ---------- ---------- ----------- ---------- ------------ ----------
Fees and commissions 304,163 267,000 130,116 39,397 3 - 740,679
Investment income 1,562 3,872 - 165 2 - 5,601
---------- ---------- ---------- ----------- ---------- ------------ ----------
Total revenue 305,725 270,872 130,116 39,562 5 - 746,280
Underlying trading
profit 65,704 63,964 21,759 5,469 (27,037) - 129,859
---------- ---------- ---------- ----------- ---------- ------------ ----------
Operating profit 62,170 61,470 15,290 4,683 (25,421) - 118,192
Finance costs -
net - - - - - (2,595) (2,595)
Share of results
of associates after
tax and non-controlling
interests - - - - 3,772 - 3,772
---------- ---------- ---------- ----------- ---------- ------------ ----------
Profit before taxation 62,170 61,470 15,290 4,683 (21,649) (2,595) 119,369
Income tax expense - - - - - (24,554) (24,554)
Non-controlling
interests - - - - - (4,151) (4,151)
---------- ---------- ---------- ----------- ---------- ------------ ----------
Net profit 62,170 61,470 15,290 4,683 (21,649) (31,300) 90,664
---------- ---------- ---------- ----------- ---------- ------------ ----------
Segment assets 578,753 308,606 98,258 76,834 24,340 - 1,086,791
Investment in associates - - - - 60,794 - 60,794
Unallocated assets - - - - - 110,521 110,521
Total assets 578,753 308,606 98,258 76,834 85,134 110,521 1,258,106
---------- ---------- ---------- ----------- ---------- ------------ ----------
Segment liabilities (415,736) (190,422) (36,524) (24,663) (120,617) - (787,962)
Unallocated liabilities - - - - - (166,726) (166,726)
Total liabilities (415,736) (190,422) (36,524) (24,663) (120,617) (166,726) (954,688)
---------- ---------- ---------- ----------- ---------- ------------ ----------
Other segment items
Capital expenditure 7,837 6,214 1,291 2,093 15,604 - 33,039
Depreciation, amortisation
and impairment (4,220) (5,779) (3,511) (1,120) (7,062) - (21,692)
Geographical segment analysis
Although the Group's four business segments are managed on a
worldwide basis, they operate in five principal geographical areas
of the world.
The United Kingdom is the home country of the parent company
Jardine Lloyd Thompson Group plc.
The London Market segment operates in the United Kingdom, its
home country. In the Americas, the London Market segment operates
in Bermuda, Cayman Islands and the United States. In Europe, it
operates in France, Spain, Switzerland and Russia. In Asia, it
operates in Singapore.
The Retail segment operates in the Americas, in Bermuda, Brazil,
Canada, Colombia, Mexico, Peru and Chile. In Europe, it operates in
the Republic of Ireland, Italy, Spain, Poland, Sweden, Finland,
Norway and Guernsey. The Australasian segment includes operations
in Australia and New Zealand. The Asian segment includes operations
in Singapore, Hong Kong, Taiwan, Indonesia, Japan, Thailand, Korea,
Philippines, Malaysia, China and Vietnam. In Africa, it operates in
South Africa.
The Employee benefits segment operates in the United Kingdom,
its home country and the Republic of Ireland.
The Thistle Insurance Services segment operates in the United
Kingdom, its home country.
The Head Office & Other activities segment is mainly based
in the United Kingdom with minor operations in the United States,
Europe and Asia. The Group's captive operations are included in the
United Kingdom segment.
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
3. Segment information cont'd
Fees and commissions are disclosed by (1) the country in which
the office is located and (2) the country in which the customer is
located.
Segment non current assets, segment assets and segment
liabilities are disclosed based on the country in which they are
located or occur.
Year to 31st December
2011
Fees and Fees and Segment
commissions commissions non-current Segment Segment
(1) (2) assets assets liabilities
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------ ------------ ------------ ---------- ------------
UK 476,420 278,444 209,856 731,277 (581,580)
Americas 107,457 197,838 68,426 154,310 (88,526)
Australasia 121,702 133,052 28,172 111,765 (77,515)
Asia 83,201 99,296 15,452 79,444 (59,882)
Europe 22,899 79,924 14,708 43,247 (26,873)
Rest of the World 325 23,450 885 1,634 (318)
------------ ------------ ------------ ---------- ------------
812,004 812,004 337,499 1,121,677 (834,694)
------------ ------------ ------------ ---------- ------------
Investment in associates 72,385 -
Unallocated assets/(liabilities) 147,293 (208,227)
---------- ------------
Total assets/(liabilities) 1,341,355 (1,042,921)
---------- ------------
Year to 31st December Fees and Fees and Segment
2010
commissions commissions non-current Segment Segment
(1) (2) assets assets liabilities
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------ ------------ ------------ ---------- ------------
UK 442,323 272,186 197,539 726,035 (562,647)
Americas 103,571 185,878 62,104 142,907 (81,113)
Australasia 105,340 116,343 28,978 107,471 (74,381)
Asia 65,694 78,661 14,678 66,215 (44,961)
Europe 23,751 69,989 8,135 44,163 (24,860)
Rest of the World - 17,622 - - -
------------ ------------ ------------ ---------- ------------
740,679 740,679 311,434 1,086,791 (787,962)
------------ ------------ ------------ ---------- ------------
Investment in associates 60,794 -
Unallocated assets/(liabilities) 110,521 (166,726)
---------- ----------
Total assets/(liabilities) 1,258,106 (954,688)
---------- ----------
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
4. Operating profit
The following items have been (credited)/charged 2011 2010
in arriving at operating
profit: GBP'000 GBP'000
------------------- -------------
Foreign exchange (gains)/losses
- fees and commissions (6,829) 57
- other operating costs (441) 892
------------------- -------------
(7,270) 949
------------------- -------------
Amortisation of intangible assets:
- software costs 7,610 6,829
- other intangible assets 609 530
Depreciation on property, plant and equipment:
- owned assets 10,969 9,742
- leased assets under finance leases 222 264
------------------- -------------
Total depreciation, amortisation and impairment
charges 19,410 17,365
------------------- -------------
Amortisation of intangible assets:
- employment contract payments (included in salaries
and associated expenses) 7,910 4,327
Gains on disposal of property, plant and equipment (147) (26)
Operating lease rentals payable:
- minimum lease payments
- land and buildings 23,811 21,901
- furniture, equipment and motor vehicles 386 861
- computer equipment and software 19 63
-sub-lease receipts
- land and buildings (1,769) (1,837)
Available-for-sale financial assets
- fair value (gains)/losses (92) 128
- gain on sale (10) -
Exceptional items:
Acquisition integration costs of which:
------- --------
- included in salaries and associated expenses - 3,769
- included in premises costs - 311
- included in other operating costs 568 1,487
------- --------
568 5,567
Business transformation programme:
------- --------
- included in salaries and associated expenses 7,059 3,000
- included in premises costs 654 153
- included in other operating costs 1,223 4,129
------- --------
8,936 7,282
Partial offer costs 1,918 -
Net loss on Italy restructuring 1,671 -
Loss on Mexico restructuring - 618
Profit on sale of JLT Poland and JLT Malta - (184)
Gain on deferred consideration - (1,616)
Total exceptional items included within operating
profit 13,093 11,667
Interest receivable from HMRC - included within
finance income - (936)
------- --------
Total exceptional items 13,093 10,731
------- --------
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
5. Finance income and costs
2011 2010
GBP'000 GBP'000
--------- ---------
Interest receivable - own funds 1,174 2,896
Investment income from fixed asset investments 2 -
Interest receivable from HMRC - 936
Interest expense:
- bank and other borrowings (6,974) (4,423)
- finance leases (53) (85)
- interest in respect of liability discounting (350) (629)
Pension financing:
--------- ---------
- expected return on post employment scheme assets 30,893 28,740
- interest on post employment scheme liabilities (29,345) (29,902)
--------- ---------
Net pension financing income/(expense) 1,548 (1,162)
Fair value gains/(losses) on financial instruments
- forward contracts: fair value hedges 92 (128)
--------- ---------
Finance costs - net (4,561) (2,595)
--------- ---------
Finance costs (7,377) (6,427)
Finance income 2,816 3,832
--------- ---------
Finance costs - net (4,561) (2,595)
--------- ---------
6. Income tax expense
2011 2010
GBP'000 GBP'000
--------------- --------
Current tax expense
Current year 41,611 33,305
Under/(over) provided in prior years 337 (6,025)
--------------- --------
41,948 27,280
--------------- --------
Deferred tax expense
Origination and reversal of temporary differences (1,775) 1,821
Reduction in tax rate 697 535
Benefit of tax losses recognised (1,056) -
Adjustments in respect of prior years (604) (5,082)
--------------- --------
(2,738) (2,726)
--------------- --------
Total income tax expense 39,210 24,554
--------------- --------
There were no non-recurring tax credits in the year. In 2010
there were non-recurring tax credits of GBP5,180,000 relating to
the release of tax provisions, and GBP5,113,000 relating to the
release of a deferred tax liability in respect of overseas earnings
no longer expected to be repatriated in the foreseeable future.
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
6. Income tax expense cont'd
The UK Government has announced various measures in relation to
UK corporation tax including a 2% reduction in the headline rate of
corporation tax from April 2011, and 1% in the three subsequent
years to reduce the UK tax rate from 28% to 23%. As at 31st
December 2011 the 2% rate reduction to 26% is already in force and
only the first subsequent 1% rate reduction has been substantively
enacted. Therefore the impact of the two remaining annual 1%
reductions have not been incorporated in the income tax charge for
the year ended 31st December 2011. The impact of a 1% rate
reduction in the deferred tax balances as at 31st December 2011
would result in the following changes:
1% rate change
GBP'000
---------------
Impact on Income Statement 367
Impact on Reserves 809
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:
2011 2010
GBP'000 GBP'000
-------- ---------
Profit before taxation 134,479 119,369
-------- ---------
Tax calculated at UK Corporation Tax rate of
26.5% (2010: 28%) 35,637 33,423
Non-deductible expenses * 4,771 2,323
Tax losses not previously recognised (347) (1,170)
Adjustments to tax charge in respect of prior
years (267) (11,107)
Benefit of tax losses recognised (1,056) -
Effect of UK and non-UK tax rate differences 1,090 1,824
Effect of reduction in UK tax rate 734 317
Tax on associates (1,352) (1,056)
-------- ---------
Total income tax expense 39,210 24,554
-------- ---------
* The non-deductible expenses relate principally to non-deductible entertainment expenses.
7. Dividends
2011 2010
GBP'000 GBP'000
--------- ----------
Final dividend in respect of 2010 of 13.7 p
per share (2009: 12.5p) 30,743 27,690
Less: adjustment* (866) (592)
--------- ----------
29,877 27,098
Interim dividend in respect of 2011 of 9.2p
per share (2010: 8.8p) 20,123 19,182
--------- ----------
50,000 46,280
--------- ----------
* Adjustment relating to dividend equivalents accrued in respect
of various performance related share awards and long-term incentive
plans not currently anticipated to fully vest.
A final dividend in respect of 2011 of 14.8p per share (2010:
13.7p) amounting to a total of GBP32,274,000 (2010: GBP29,685,000)
is proposed by the Board. The dividend proposed will not be
accounted for until it has been approved at the Annual General
Meeting on 26th April 2012.
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
8. Earnings per share
Basic earnings per share are calculated by dividing the profit
attributable to the owners of the parent by the weighted average
number of ordinary shares in issue during the year, excluding
unallocated shares held by the Trustees of the Employee Share
Ownership Plan Trust.
Diluted earnings per share are calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares.
Additional 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.
2011 2010
No. of shares No. of shares
-------------- --------------
Weighted average number of ordinary shares
in issue 218,127,384 216,663,347
Effect of outstanding share options 1,291,994 960,089
-------------- --------------
Adjusted weighted average number of ordinary
shares for diluted earnings per share 219,419,378 217,623,436
-------------- --------------
2011 2010
Basic Diluted Basic
pence pence pence Diluted
per per per pence
GBP'000 share share GBP'000 share per share
------------------------------- --------- ------ -------- --------- ------ ----------
Earnings reconciliation
Underlying profit after
taxation and non-controlling
interests 99,447 45.6 45.3 88,219 40.7 40.5
Exceptional items and
non-recurring items before
tax (13,093) (10,731)
Taxation thereon 2,392 2,883
Non-recurring tax credit - 10,293
--------- ---------
(10,701) (4.9) (4.9) 2,445 1.1 1.2
Profit attributable to
the owners of the parent 88,746 40.7 40.4 90,664 41.8 41.7
--------- ------ -------- --------- ------ ----------
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
9. Available-for-sale financial assets
Available for sale financial assets are categorised according to
their nature into one of two categories:
1) Investments and deposits, which consist mainly of Bonds,
Commercial Paper and Fixed Deposits - these investments are held at
fair value and are classified between current and non-current
assets according to maturity date.
2) Other investments, which 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 1st January 2011 1,908 38,260 40,168
Exchange differences 21 (84) (63)
Additions - 159 159
Disposals/maturities - (38,126) (38,126)
Revaluation deficit (included within
equity) 16 (50) (34)
Provision release 589 - 589
At 31st December 2011 2,534 159 2,693
------------ ------------ ---------
Analysis of available for sale
financial assets
Current - 158 158
Non-current 2,534 1 2,535
------ ---- ------
At 31st December 2011 2,534 159 2,693
------ ---- ------
Available for sale investments & deposits
Fiduciary -
Own funds 159
----
At 31st December 2011 159
----
Other Investments
investments & deposits Total
GBP'000 GBP'000 GBP'000
------------ ------------ ---------
At 1st January 2010 1,590 80,015 81,605
Exchange differences 114 1,379 1,493
Additions 214 31,568 31,782
Disposals/maturities (8) (74,479) (74,487)
Revaluation deficit (included within
equity) (2) (223) (225)
At 31st December 2010 1,908 38,260 40,168
------------ ------------ ---------
Analysis of available for sale
financial assets
Current - 38,260 38,260
Non-current 1,908 - 1,908
------ ------- -------
At 31st December 2010 1,908 38,260 40,168
------ ------- -------
Available for sale investments & deposits
Fiduciary 38,089
Own funds 171
-------
At 31st December 2010 38,260
-------
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
9. Available-for-sale financial assets cont'd
The credit quality of available for sale investments and
deposits can be assessed by reference to external credit ratings,
where available, or to historical information about counterparty
default rates:
2011 2010
GBP'000 GBP'000
-------- --------
AA 1 13,243
AA/A - 24,836
A 58 181
Other 100 -
-------- --------
Total 159 38,260
-------- --------
10. Derivative financial instruments
2011 2010
-------------------------------------- ------------------------------------
Assets Liabilities Assets Liabilities
GBP'000 GBP'000 GBP'000 GBP'000
------------------ ------------------ ------------------- ---------------
Interest rate swaps - fair value 6,012 - - -
hedges
Forward foreign exchange contracts
- cash flow hedges 5,919 (13,573) 8,280 (12,526)
------------------ ------------------ ------------------- ---------------
Total 11,931 (13,573) 8,280 (12,526)
------------------ ------------------ ------------------- ---------------
Current 2,986 (5,759) 4,510 (4,282)
Non-current 8,945 (7,814) 3,770 (8,244)
Total 11,931 (13,573) 8,280 (12,526)
------- --------- ------ ---------
The credit quality of counterparties with whom derivative
financial assets are held is assessed by reference to external
credit ratings, where available, and to other current and
historical information.
2011 2010
GBP'000 GBP'000
AA 560 3,498
AA/A 6,297 698
A 5,074 4,084
Total 11,931 8,280
Maturity analysis
The table below analyses the Group's derivative financial
instruments, which will be settled on a gross basis, into relevant
maturity groupings based upon the remaining period at the balance
sheet date to contractual maturity. The amounts disclosed are the
contractual undiscounted cash flows.
Less than 1 Greater than
year 1
year
At 31st December 2011 GBP'000 GBP'000
Forward foreign exchange contracts
Outflow (243,317) (430,813)
Inflow 241,270 430,291
At 31st December 2010 GBP'000 GBP'000
Forward foreign exchange contracts
Outflow (213,654) (432,279)
Inflow 211,582 432,017
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
10. Derivative financial instruments cont'd
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 establishes specific guidelines to manage currency risk,
liquidity risk and interest rate risk and the use of
counter-parties and financial instruments to manage these. The
treasury department is subject to regular internal audit.
The Group uses various derivative instruments including forward
foreign exchange contracts, interest rate swaps and from time to
time, foreign currency collars and options 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 main markets.
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 profit and loss
account.
The fair value of financial derivatives based upon market values
as at 31st December 2011 and designated as effective hedges was a
liability of GBP7.6 million and has been deferred in equity (2010:
liability of GBP4.2 million). Gains and losses arising on
derivative instruments outstanding as at 31st December 2011 will be
released to the income statement at various dates up to:
a) 48 months in respect of cash flow hedges on currency denominated UK earnings.
b) 11 years in respect of specific hedges on USD denominated
long term debt drawn under the group's USD 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 31st December 2011 the Group had
outstanding foreign exchange contracts, principally in USD,
amounting to a principal value of GBP671,561,000 (2010:
GBP643,599,000).
b) Interest Rate Swaps and Forward Rate Agreements
The Group uses interest rate hedges, principally interest rate
swaps, to mitigate the impact of changes in interest rates. The
notional principal amounts of outstanding cross currency interest
rate swaps as at 31st December 2011 was USD125,000,000 (2010:
USD125,000,000).
c) Price Risk
The group does not have a material exposure to commodity price
risk.
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
11. Trade and other receivables
2011 2010
GBP'000 GBP'000
----------
Trade receivables 211,480 198,043
Less: provision for impairment of trade receivables (10,516) (14,265)
----------
Trade receivables - net 200,964 183,778
Other receivables 73,728 68,364
Prepayments 14,019 19,293
----------
288,711 271,435
----------
12. Cash and cash equivalents
2011 2010
GBP'000 GBP'000
----------
Cash at bank and in hand 223,006 177,311
Short-term bank deposits 350,610 347,554
573,616 524,865
----------
Fiduciary funds 483,615 455,730
Own funds 90,001 69,135
573,616 524,865
--------
The effective interest rate in respect of short-term deposits
was 0.90% (2010: 0.80%). These deposits have an average maturity of
22 days (2010: 15 days).
13. Trade and other payables
2011 2010
GBP'000 GBP'000
----------
Insurance payables 483,615 493,819
Social security and other taxes 13,569 12,871
Other payables 100,766 99,343
Accruals and deferred income 82,217 73,039
Deferred consideration (see note 15) 9,614 8,198
689,781 687,270
----------
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
14. 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 Pension Scheme in the UK, the JLT
(USA) Employees' Retirement Plan, the Pension Plan for Employees of
Jardine Lloyd Thompson Canada Inc and the Jardine Lloyd Thompson
Ireland Limited Pension Fund.
The pension costs for the year are comprised as follows:
2011 2010
UK Overseas Total UK Overseas Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Defined benefit
schemes - 9 9 - - -
Defined contribution
schemes 14,359 11,871 26,230 14,080 10,317 24,397
14,359 11,880 26,239 14,080 10,317 24,397
The Jardine Lloyd Thompson Pension Scheme is based in the UK and
has two sections; one providing defined benefits and the other
providing benefits on a defined contribution basis. The assets of
the scheme are held in a trustee administered fund separate from
the Company.
With effect from 1st December 2006 the Scheme was amended to
eliminate future benefits accrual. Under the Scheme as amended, a
participant's normal retirement benefit will be determined based on
their service and compensation prior to 1st December 2006.
The latest valuation of the Jardine Lloyd Thompson Pension
Scheme was undertaken on a preliminary basis as at 1st April 2011.
It is anticipated that this, together with the revised funding
plan, will be finalised by the end of June 2012. This preliminary
valuation was updated to 31st December 2011 by a qualified actuary
employed by the Group.
The principal overseas schemes are:
a) The JLT (USA) Incentive Savings Plan which is a defined
contribution scheme. Employees may contribute up to 50% of their
salary subject to an IRS maximum each year - $16,500 in 2011 - and
the Group contributes at a rate of 100% of each 1% contributed by
the employee up to a maximum employee contribution of 4%, up to a
maximum of $ 9,800. Employees aged over 50 may make "catch-up"
contributions subject to an IRS maximum each year - $5,500 in
2011.
b) The JLT (USA) Employee Retirement Plan which is a defined
benefit scheme. The latest actuarial valuation was undertaken at
1st January 2011 by independent actuaries. With effect from 31st
July 2005 the Plan was amended to eliminate future benefit
accruals. Under the Plan as amended, a participant's normal
retirement benefit will be determined based on service and
compensation prior to 31st July 2005.
c) The Pension Plan for Employees of Jardine Lloyd Thompson
Canada Inc. The JLT Canada Pension Plan has two sections; one
providing defined benefits based primarily on the 2007 pensionable
salary and the other providing benefits on a defined contribution
basis. The JLT pension contribution for the defined contribution
plan ranges from 3% to 15% based on age and service. The last
formal valuation of the JLT Canada Pension Plan was undertaken as
of 31st December 2008 by a qualified third party actuary. The
defined benefits section was amended to eliminate future benefits
accrual with effect from 1st January 2009.
d) The Jardine Lloyd Thompson Ireland Limited Pension Fund is a
defined benefit pension scheme with assets held in a separately
administered fund. The contributions are agreed between the
Trustees and the Company based on advice by a qualified actuary.
The most recent triennial actuarial valuation for funding purposes
was carried out by a qualified independent actuary as at 1st June
2008. With effect from 30th November 2008 the scheme was closed to
new entrants and future service accrual. A funding proposal,
effective 30th April 2010, was accepted by the Pensions Board.
e) The Jardine Matheson Executive Staff Retirement Plan
(JMESRP), Jardine Matheson Resident Staff Retirement Plan (JMRSRP)
and Menu Plan section B and C of the Jardine Matheson Group
Retirement Plan (JMGRP). The JMRSRP and section C of the JMGRP
provided benefits based on final salary, which were solely funded
by the participating employer, while the JMESRP and section B of
the JMGRP provided benefits based on final salary, which were
funded by both the participating employer and the members.
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
14. Retirement benefit obligations cont'd
With effect from 31st December 2009, the participation in the
JMESRP, JMRSRP and JMGRP (collectively the plans) ceased and the
schemes were closed.
The accrued rights of the members in the plans were transferred
to the Hong Kong Mandatory Provident Fund (MPF) scheme on 1st
January 2010. The MPF scheme provides benefits on a defined
contribution basis. The scheme is funded by both the employer and
the members. The employer contribution under the MPF scheme ranges
from 5% to 15% of the member's monthly basic salary based on an age
factor. The MPF scheme is held and administered by a separate
trust, which is funded by both the participating employer and the
members.
The principal actuarial assumptions used were as follows:
Canadian Irish
31st December 2011 UK Scheme US Scheme Scheme Scheme
Rate of increase in salaries n/a n/a 4.00% n/a
Rate of increase of pensions in
payment (a) 2.95% n/a 3.50% 3.00%
Discount rate 4.85% 4.00% 4.50% 5.10%
Inflation rate 2.60%-3.05% 3.00% 2.50% 2.00%
Revaluation rate for deferred pensioners 1.70% n/a n/a 2.00%
Expected return on plan assets
(b) 6.57% 7.25% 7.00% 6.10%
Mortality - life expectancy at
age 65 for male member: (c)
Aged 65 at 31st December 23.7 19.6 19.6 21.4
Canadian Irish
31st December 2010 UK Scheme US Scheme Scheme Scheme
Rate of increase in salaries n/a n/a 4.00% n/a
Rate of increase of pensions in
payment (a) 3.35% n/a 3.50% 3.00%
Discount rate 5.45% 5.15% 5.50% 5.10%
Inflation rate 3.10%-3.45% 3.00% 2.50% 2.00%
Revaluation rate for deferred pensioners 2.60% n/a n/a 2.00%
Expected return on plan assets
(b) 6.51% 8.00% 7.00% 5.20%
Mortality - life expectancy at
age 65 for male member: (c)
Aged 65 at 31st December 23.6 18.9 19.5 21.4
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
14. Retirement benefit obligations cont'd
(a) In respect of the UK scheme, retail prices are limited to 5% per annum.
(b) The expected return on scheme assets assumption was
determined as the average of the expected returns on the intended
long term asset strategy or the actual assets held by the schemes
on 31st December of the previous year.
(c) Mortality assumptions for the UK scheme are based on 100%
PN*A00yobLC0.5%U for pensioners and 105% PN*A00yobLC0.5%U for
deferred pensioners.
Mortality assumptions for the US scheme are based on the RP-2000
Mortality Table projected to 2010 by Scale AA.
Mortality assumptions for the Canadian scheme are based on the
1994 Uninsured Pensioner Mortality Table projected generationally
using Scale AA for all members.
Mortality assumptions for the Irish scheme, in respect of both
active and deferred pensioners, assume that deaths after retirement
will be in accordance with standard mortality tables 62% PNML00 for
males and 70% PNFL00 for females. Pre retirement mortality has been
assumed as nil.
UK Scheme Overseas Schemes Total
2011 2010 2011 2010 2011 2010
Defined benefit obligation GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- --------
Present value of
funded obligations (523,846) (492,911) (66,407) (59,425) (590,253) (552,336)
Fair value of plan
assets 424,624 435,498 44,630 44,003 469,254 479,501
Net liability recognised
in the balance sheet (99,222) (57,413) (21,777) (15,422) (120,999) (72,835)
UK Scheme Overseas Schemes Total
2011 2010 2011 2010 2011 2010
Reconciliation of
defined benefit liability GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- --------
Opening defined benefit
liability (57,413) (71,626) (15,422) (16,267) (72,835) (87,893)
Exchange differences - - (117) (395) (117) (395)
Pension income/(expense) 1,657 (836) (118) (326) 1,539 (1,162)
Employer contributions 716 - 4,303 3,655 5,019 3,655
Total (loss)/gain
recognised in reserves (44,182) 15,049 (10,423) (2,089) (54,605) 12,960
Net liability recognised
in the balance sheet (99,222) (57,413) (21,777) (15,422) (120,999) (72,835)
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
14. Retirement benefit obligations cont'd
UK Scheme Overseas Schemes Total
2011 2010 2011 2010 2011 2010
Reconciliation of
defined benefit obligation GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening defined benefit
obligation (492,911) (480,701) (59,425) (54,379) (552,336) (535,080)
Exchange differences - - 274 (1,490) 274 (1,490)
Service cost - - (9) - (9) -
Interest cost (26,408) (26,920) (2,937) (2,982) (29,345) (29,902)
Loss on defined benefit
obligation (21,463) (2,362) (6,971) (3,133) (28,434) (5,495)
Actual benefit payments 16,936 17,072 2,661 2,559 19,597 19,631
Closing defined benefit
obligation (523,846) (492,911) (66,407) (59,425) (590,253) (552,336)
UK Scheme Overseas Schemes Total
2011 2010 2011 2010 2011 2010
Reconciliation of
fair value of assets GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening value of
assets 435,498 409,075 44,003 38,112 479,501 447,187
Exchange differences - - (391) 1,095 (391) 1,095
Expected return on
assets 28,065 26,084 2,828 2,656 30,893 28,740
Actuarial (loss)/gain (22,719) 17,411 (3,452) 1,044 (26,171) 18,455
Employer contributions 716 - 4,303 3,655 5,019 3,655
Actual benefit payments (16,936) (17,072) (2,661) (2,559) (19,597) (19,631)
Closing value of
assets 424,624 435,498 44,630 44,003 469,254 479,501
The analysis of the fair value of the scheme assets is as
follows:
UK Scheme Overseas schemes
Long-term Long-term
At 31st December rate of Value Value rate of Value Value
2011 return GBP'000 % return GBP'000 %
Equities 7.68% 180,252 43% 8.03% 28,646 64%
Bonds 5.45% 234,233 55% 5.05% 10,571 24%
Other assets - - - 3.50% 1,053 2%
Cash 5.45% 10,139 2% 2.37% 4,360 10%
-------- --------- ---------
Total market value 6.57% 424,624 100% 6.93% 44,630 100%
UK Scheme Overseas schemes
Long-term Long-term
At 31st December rate of Value rate of Value Value
2010 return Value GBP'000 % return GBP'000 %
Equities 8.01% 152,473 35% 8.57% 30,270 69%
Bonds 5.66% 268,307 61% 6.32% 9,820 22%
Other assets 8.01% 11,489 3% 4.00% 2,464 6%
Cash 5.66% 3,229 1% 2.30% 1,449 3%
Total market value 6.51% 435,498 100% 7.19% 44,003 100%
--------- -------- --------- ---------
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
14. Retirement benefit obligations cont'd
Other assets include hedge funds and property. The schemes do
not hold cash as a strategic investment and cash balances at 31st
December represent working balances.
The long-term rates of return on scheme assets at 31st December
2011 have been derived considering market conditions at 31st
December 2010.
UK Scheme Overseas Schemes Total
2011 2010 2011 2010 2011 2010
Reconciliation of
return on assets GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- --------- -------- --------
Expected return on
assets 28,065 26,084 2,828 2,656 30,893 28,740
Actuarial (loss)/gain (22,719) 17,411 (3,452) 1,044 (26,171) 18,455
Actual return on
assets 5,346 43,495 (624) 3,700 4,722 47,195
-------- --------- -------- --------
The amounts recognised in the consolidated income statement are
as follows:
UK Scheme Overseas Schemes Total
2011 2010 2011 2010 2011 2010
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- --------- -------- --------
Service cost - - (9) - (9) -
Total (included within
salaries and associated
expenses) - - (9) - (9) -
Interest cost (26,408) (26,920) (2,937) (2,982) (29,345) (29,902)
Expected return on
assets 28,065 26,084 2,828 2,656 30,893 28,740
Total (included within
finance costs) 1,657 (836) (109) (326) 1,548 (1,162)
Gain/(loss) before
taxation 1,657 (836) (118) (326) 1,539 (1,162)
The amounts included in the consolidated statement of recognised
income and expenses are as follows:
UK Scheme Overseas Schemes Total
2011 2010 2011 2010 2011 2010
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- -------- --------- ---------
Loss on defined benefit
obligation (21,463) (2,362) (6,971) (3,133) (28,434) (5,495)
Actuarial (loss)/gain (22,719) 17,411 (3,452) 1,044 (26,171) 18,455
Total actuarial (losses)/gains
recognised (44,182) 15,049 (10,423) (2,089) (54,605) 12,960
Cumulative actuarial
losses recognised (173,198) (129,016) (36,507) (26,084) (209,705) (155,100)
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
14. Retirement benefit obligations cont'd
The five year history of experience adjustments is as
follows:
UK Scheme
2011 2010 2009 2008 2007
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Defined benefit obligation
at end of year (523,846) (492,911) (480,701) (376,859) (442,751)
Fair value of plan assets 424,624 435,498 409,075 365,913 415,499
Deficit in the scheme (99,222) (57,413) (71,626) (10,946) (27,252)
Difference between the expected
and actual return on plan
assets
- amount (GBP'000) (22,719) 17,411 23,856 (59,326) (6,295)
* expressed as a percentage of the plan assets (5.35%) 4.00% 5.83% (16.21%) (1.52%)
Experience losses/(gains)
on plan liabilities
- amount (GBP'000) 903 1,902 (4,639) (6,450) (2,227)
* expressed as percentage of the present value of the
plan liabilities (0.17%) (0.39%) 0.97% 1.71% 0.50%
Overseas Schemes
2011 2010 2009 2008 2007
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- --------
Defined benefit obligation
at end of year (66,407) (59,425) (54,379) (67,006) (50,106)
Fair value of plan assets 44,630 44,003 38,112 48,661 49,966
Deficit in the scheme (21,777) (15,422) (16,267) (18,345) (140)
Difference between the expected
and actual return on plan
assets
- amount (GBP'000) (3,452) 1,044 2,918 (17,765) (58)
* expressed as a percentage of the plan assets (7.73%) 2.37% 7.66% (36.51%) (0.26%)
Experience losses/(gains)
on plan liabilities
- amount (GBP'000) 308 453 (3,060) 2,012 482
* expressed as a percentage of the present value of the
plan liabilities (0.46%) (0.76%) 5.63% (3.00%) (1.79%)
During 2007 the schemes in Canada, Ireland and Hong Kong were
recognised on the Group balance sheet for the first time. The 2007
amounts are expressed as percentages of the overseas schemes
excluding the additional overseas schemes recognised in 2007, to
allow comparability.
The expected employer contributions for the year ending 31st
December 2012 are as follows:
Defined benefit
GBP'000
UK Scheme 7,000
USA Scheme 2,731
Canadian Scheme 1,059
Irish Scheme 795
Total expected contributions 11,585
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
15. Provisions
Property
related Litigation
provisions provisions Other Total
GBP'000 GBP'000 GBP'000 GBP'000
At 1st January 2011 6,802 10,316 916 18,034
Exchange adjustment - (12) - (12)
Adjustment to gross
basis - (1,900) - (1,900)
Reclassification (to)/from
current assets/liabilities (11) - 15 4
Utilised in the year (1,266) (5,408) (663) (7,337)
Charged to the Income
statement 995 3,116 269 4,380
Interest charge 84 - - 84
At 31st December 2011 6,604 6,112 537 13,253
Property
related Litigation
provisions provisions Other Total
GBP'000 GBP'000 GBP'000 GBP'000
At 1st January 2010 7,474 20,418 380 28,272
Exchange adjustment 2 135 - 137
Adjustment to gross
basis - 1,900 - 1,900
Reclassification from
current assets/liabilities - - 756 756
Utilised in the year (980) (22,193) (220) (23,393)
Charged to the Income
statement 184 10,031 - 10,215
Interest charge 122 - - 122
Acquisitions - 25 - 25
At 31st December 2010 6,802 10,316 916 18,034
2011 2010
GBP'000 GBP'000
Analysis of total provisions:
Non-current - to be utilised in more than one year 4,252 4,935
Current - to be utilised within one year 9,001 13,099
13,253 18,034
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
15. Provisions cont'd
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. 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 USA and UK
and relate to a variety of lease commitments. The longest lease
terms for each country are to 2016 and 2017 respectively.
Litigation provisions
At any point in time the Group can be involved in a variety of
litigation 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.
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 31st December
2011, the Group's litigation provisions and other receivables
include an amount of GBP0.1million (2010: GBP1.9 million) to
reflect this gross basis. This presentation has had no effect on
the Consolidated Income Statement for the year ended 31st December
2011 (2010: nil).
Other
Other provisions include provisions for clawback of commission
which arises on certain types of Employee Benefit contracts.
Deferred consideration
Liabilities are credited in respect of additional consideration
payable following the initial completion of an acquisition.
The amounts in respect of deferred consideration have been
reclassified to trade and other payables. The prior year
comparatives have been restated to reflect this treatment.
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
16 Other reserves
Fair
value Total
&
Share hedging Exchange other
premium reserves reserves reserves
GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1st January 2011 93,577 (2,885) 38,027 128,719
Fair value losses net of
tax
- available-for-sale - (52) - (52)
- cashflow and fair value
hedges - (2,724) - (2,724)
Currency translation differences - - (7,896) (7,896)
Net losses recognised directly
in equity - (2,776) (7,896) (10,672)
Issue of share capital 6,093 - - 6,093
Balance at 31st December
2011 99,670 (5,661) 30,131 124,140
Fair
value Total
&
Share hedging Exchange other
premium reserves reserves reserves
GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1st January 2010 84,640 7,890 29,836 122,366
Fair value losses net of
tax
- available-for-sale - (114) - (114)
- cashflow hedges - (10,661) - (10,661)
Currency translation differences - - 8,191 8,191
Net (losses)/gains recognised
directly in equity - (10,775) 8,191 (2,584)
Issue of share capital 8,937 - - 8,937
Balance at 31st December
2010 93,577 (2,885) 38,027 128,719
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
17. Cash generated from operations
2011 2010
GBP'000 GBP'000
Profit before taxation 134,479 119,369
Investment income receivable (7,942) (9,433)
Interest payable on bank loans and finance leases 7,027 4,508
Fair value (gains)/losses on financial instruments (92) 128
Net pension financing (income)/expenses (1,548) 1,162
Unwinding of liability discounting 350 629
Depreciation 11,191 10,006
Amortisation of intangible assets 16,129 11,686
Amortisation of share based payments 14,598 12,579
Amortisation of employee benefit trust - 24
Share of results of associate undertakings (5,099) (3,772)
Non cash exceptional items 8,449 916
Profit on disposal of businesses (4,663) (1,800)
Gain on disposal of property, plant and equipment (147) (26)
Losses/(gains) on disposal of fixed asset investments 1 (86)
Gains on disposal of current asset investments (10) (2)
Increase in trade and other receivables (25,733) (35,453)
Increase in trade and other payables - excluding
insurance broking balances
balances 3,547 2,905
Decrease in provisions for liabilities and charges (2,957) (13,178)
Decrease in retirement benefit obligation (5,010) (3,655)
Net cash inflow from operations 142,570 96,507
18. Business combinations
Adjustments in respect of prior year acquisitions
During the year, the deferred consideration booked in respect of
acquisitions completed in previous years has been revised following
the final settlement of amounts due or the revision of estimates
based on performance conditions.
Change in Deferred
Deferred consideration estimated consideration
as at 31st Paid during deferred at 31st Dec
Dec 10 the year consideration 11
GBP'000 GBP'000 GBP'000 GBP'000
Revisions to deferred
consideration 277 (96) (181) -
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
18. Business combinations cont'd
2010 acquisitions
During the year, the process of finalising the provisional fair
values in respect of acquisitions carried out during 2010 has been
completed.
Revised Provisional
fair
fair value value reported Change in
acquired at 31st Dec fair value
2010
GBP'000 GBP'000 GBP'000
---------------
Tripol AS 1,021 1,175 (154)
---------------
These changes in fair value affected
the following balance sheet classes: Provisional
Revised fair
fair value value reported Change in
acquired at 31st Dec fair value
2010
GBP'000 GBP'000 GBP'000
---------------
Property plant and equipment 1 - 1
Intangible assets 665 640 25
Trade and other receivables 1,091 1,054 37
Cash and cash equivalents
- own cash 292 269 23
Trade and other payables (903) (672) (231)
Current taxation (134) (123) (11)
Deferred taxation 9 7 2
1,021 1,175 (154)
Goodwill calculation
At 31st Dec At 31st Dec Change
2011 2010
GBP'000 GBP'000 GBP'000
Purchase consideration
- cash paid 2,616 2,616 -
- deferred consideration 1,141 1,141 -
Total purchase consideration 3,757 3,757 -
Less fair value of net assets acquired 1,021 1,175 (154)
Goodwill 2,736 2,582 154
At 31st Dec At 31st Dec Change
2011 2010
GBP'000 GBP'000 GBP'000
Purchase consideration settled in
cash 2,616 2,616 -
Cash and cash equivalents - own
cash in subsidiary acquired (292) (269) (23)
Cash inflow on acquisition 2,324 2,347 (23)
Current year acquisitions
During the year the following new business acquisitions and
additional investments were completed:
Percentage
voting rights Cost
Acquisition acquired GBP'000
date
Alta SA Oct 2011 50% 9,727
FBD Insurance Brokers Group Dec 2011 100% 7,075
Acquisition of new businesses completed Jan - Dec
during the period 2011 100% 1,446
Additional investments in existing Jan - Dec
business 2011 - 4,849
23,097
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
18. Business combinations cont'd
Acquisition of Alta SA
On 10th October 2011 the Group announced the acquisition of an
initial 50.1% of Alta SA, the holding company of Orbital Corredores
de Seguros, the 4th largest insurance broker in Chile, and Alta Re,
a reinsurance broker which commenced operations in April 2010. It
has been a member of the JLT International Network since 2010. The
acquired business contributed revenue of GBP2,098,000 and a net
profit of GBP763,000 to the Group for the period since acquisition.
If the acquisition had taken place on 1st January 2011 the
contribution to Group revenue and net profit would have been
GBP6,699,000 and GBP2,325,000 respectively.
Goodwill calculation
GBP'000
Purchase consideration
- cash paid 9,727
Total purchase consideration 9,727
Less fair value of net assets acquired 519
Goodwill 9,208
Acquiree's
carrying
amount Fair value
The assets and liabilities arising from the acquisition GBP'000 GBP'000
were as follows:
Property, plant and equipment 197 197
Intangible assets 37 37
Trade and other receivables 713 713
Cash and cash equivalents
- own cash 804 804
- fiduciary cash 570 570
Insurance payables (570) (570)
Trade and other payables (659) (659)
Current taxation (108) (108)
Deferred taxation 52 52
Non-controlling interests (517) (517)
519 519
GBP'000
--------------
Purchase consideration settled in cash 9,727
Cash and cash equivalents - own cash in subsidiary
acquired (804)
--------------
8,923
Cash and cash equivalents - fiduciary cash in
subsidiary acquired (570)
--------------
Cash outflow on acquisition 8,353
--------------
As at the 31st December 2011, the process of reviewing the fair
values of assets acquired had not been completed and consequently
the fair value stated above are provisional.
None of the goodwill recognised is expected to be deductible for
income tax purposes.
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
18. Business combinations cont'd
Acquisition of FBD Insurance Brokers Group
On 29th December 2011 the Group acquired the FBD Insurance
Brokers group of companies in Ireland, an agri-food specialty
broker. The acquired business contributed no revenue or net profit
to the Group to 31st December 2011. If the acquisition had taken
place on 1st January 2011 the contribution to the Group revenue and
net profit would have been GBP3,905,000 and GBP511,000
respectively
Goodwill calculation GBP'000
Purchase consideration
- cash paid 5,874
- deferred consideration 331
- contingent consideration 870
Total purchase consideration 7,075
Less fair value of net assets acquired 299
Goodwill 6,776
Acquiree's
carrying
amount Fair value
The assets and liabilities arising from the acquisition GBP'000 GBP'000
were as follows:
Property, plant and equipment 22 -
Trade and other receivables 275 275
Cash and cash equivalents
- own cash 924 924
- fiduciary cash 2,573 2,573
Insurance payables (2,573) (2,573)
Trade and other payables (936) (805)
Current taxation (100) (100)
Deferred taxation 5 5
190 299
GBP'000
--------------
Purchase consideration settled in cash 5,874
Cash and cash equivalents - own cash in subsidiary
acquired (924)
--------------
4,950
Cash and cash equivalents - fiduciary cash in
subsidiary acquired (2,573)
Cash outflow on acquisition 2,377
As at the 31st December 2011, the process of reviewing the fair
values of assets acquired had not been completed and consequently
the fair values stated above are provisional.
The deferred consideration of GBP331,000 is based on the
completion balance sheet as at the date of acquisition. The amount
recognised is based on the disclosed net assets and it will be
adjusted on completion if required.
The contingent consideration of GBP870,000 is based on the net
revenue for the financial year to 31st December 2012, which is
capped at GBP1,090,000. The amount recognised at the acquisition
date assumes net revenue will reach EUR4,950,000 in 2012.
None of the goodwill recognised is expected to be deductible for
the income tax purposes.
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
18. Business combinations cont'd
Other acquisitions and additional investments
Goodwill calculation GBP'000
Purchase consideration
- cash paid 4,108
- deferred consideration 1,687
- cancellation of loans 500
Total purchase consideration 6,295
Less fair value of net assets acquired 774
Less equity movement on transactions with non-controlling
interests 4,013
Goodwill 1,508
Acquiree's
carrying
amount Fair value
The assets and liabilities arising from the acquisition GBP'000 GBP'000
were as follows:
-----------
Non-controlling interests 774 774
GBP'000
Purchase consideration settled in cash 4,108
Cash outflow on acquisition 4,108
As at 31st December 2011, the process of reviewing the fair
values of assets acquired had not been completed, and consequently
the fair values stated above are provisional.
None of the goodwill recognised is expected to be deductible for
income tax purposes.
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
18. Business combinations cont'd
Group summary of the net assets acquired and goodwill
Alta FBD Other Total
GBP'000 GBP'000 GBP'000 GBP'000
Purchase consideration:
- cash paid 9,727 5,874 4,108 19,709
- deferred consideration - 331 1,687 2,018
- contingent consideration - 870 - 870
- cancellation of loans - - 500 500
Total purchase consideration 9,727 7,075 6,295 23,097
Less fair value of net assets on acquisitions
occurring during the period 519 299 774 1,592
Less equity movement on transactions
with non-controlling interest - - 4,013 4,013
Goodwill on acquisitions occurring during
the year 9,208 6,776 1,508 17,492
Impact of revisions to deferred consideration (181)
Impact of revisions to fair value adjustment
in relation to acquisitions completed
in 2010 154
Net increase in goodwill 17,465
Alta FBD Other Total
GBP'000 GBP'000 GBP'000 GBP'000
Purchase consideration settled in cash 9,727 5,874 4,108 19,709
Cash and cash equivalents
- own cash in subsidiary acquired (804) (924) - (1,728)
8,923 4,950 4,108 17,981
Cash and cash equivalents - fiduciary
cash in subsidiary acquired (570) (2,573) - (3,143)
Cash outflow on acquisitions during the
year 8,353 2,377 4,108 14,838
Impact on cash of revision to fair value adjustment in relation
to
acquisitions completed in 2010 (23)
Cash outflow in the year 14,815
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
19. Business disposals
On 31st December 2011 the Group disposed of 100% of its
shareholding in its Italian operations (Jardine Lloyd Thompson
S.P.A and Jardine Lloyd Thompson S.R.L.).
Net assets and proceeds of disposal Total
GBP'000
Property, plant and equipment 57
Intangible assets 114
Trade and other receivables 4,035
Cash and cash equivalents
- own cash 753
- fiduciary cash 2,529
Insurance payables (2,529)
Trade and other payables (2,830)
Term loan (755)
Current taxation 47
Net assets at disposal 1,421
Exchange gains recycled from exchange reserves (556)
Gain on disposal 4,663
5,528
Consideration in the form of investment in associates 5,528
Cash and cash equivalents - own cash in subsidiary sold (753)
Cash and cash equivalents - fiduciary cash in subsidiary
sold (2,529)
Cash outflow on disposal (3,282)
Other disposals
During the year the Group completed other disposals, none
of which were individually significant
Net assets and proceeds of disposal Total
GBP'000
Non-controlling interests 1,361
Equity movement on transactions with non-controlling interest 2,346
3,707
Deferred proceeds 2,703
Cash inflow on disposal during the year 1,004
Total consideration 3,707
Group summary of the received consideration
JLT Italy Other Total
GBP'000 GBP'000 GBP'000
Disposal consideration settled in cash - 1,004 1,004
Cash and cash equivalents
- own cash in subsidiary sold (753) - (753)
- fiduciary cash in subsidiary sold (2,529) - (2,529)
Cash (outflow)/inflow on disposal during
the year (3,282) 1,004 (2,278)
Jardine Lloyd Thompson Group plc
Notes to the Preliminary Results
For the year ended 31st December 2011
20. Principal risks As with all businesses, the Group is exposed
to a range of financial and operational risks, not wholly within
its control, which could have a material impact on the Group's
financial performance.
The principal risks to which the Group is exposed are discussed
on pages 26 to 29 of the Annual Report & Financial Statements
for 2010. The Annual Report & Financial Statements for 2011 will
contain an updated discussion on these risks and will be posted
to shareholders no later than 26th March 2012.
21. The financial information contained in this preliminary announcement
does not constitute statutory accounts within the meaning of
the Companies Act 2006. The results for the year ended 31st
December 2011 are unaudited and statutory accounts have not
yet been delivered to the Registrar of Companies .
22. Statutory accounts for the year ended 31st December 2011 will
be posted to shareholders no later than 26th March 2012 and
delivered to the Registrar of Companies following the Annual
General Meeting on 26th April 2012.
23. The shareholders entered in the Register of Members at 4.00pm
on 10th April 2012 will be entitled to the proposed final dividend
of 14.8 p per share which will, subject to approval at the Annual
General Meeting to be held on 26th April 2012, be payable on
1st May 2012
24. Copies of the preliminary press release (and statutory accounts
when available) may be obtained from the Company Secretary,
Jardine Lloyd Thompson Group plc, 6 Crutched Friars, London
EC3N 2PH.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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