TIDMJLT
RNS Number : 2139M
Jardine Lloyd Thompson Group PLC
27 July 2017
27 JULY 2017
Jardine Lloyd Thompson Group plc
INTERIM RESULTS
FOR THE SIX MONTHSED 30 JUNE 2017 (UNAUDITED)
Jardine Lloyd Thompson Group plc (JLT or the 'Group') announces
its interim results for the six months ended 30 June 2017.
FINANCIAL HIGHLIGHTS
-- Total revenue growth of 11% to GBP689.9m
-- Organic revenue growth of 3%, reflecting strong retention and new client wins
-- 3% in Specialty businesses
-- 2% in JLT Re
-- 9% in UK Employee Benefits
-- Positive impact of foreign exchange movements, helping offset continued rating weakness
-- Underlying* profit before tax (PBT) of GBP100.1m, up 12%
-- Underlying PBT, excluding the US investment**, up GBP7.1m to GBP113.5m
-- Reported PBT up 80% to GBP99.2m, driven by reduced exceptional charges
-- Underlying trading margin maintained at 15.9%
-- Underlying trading margin, excluding the US investment, at 18.9%
-- Reported diluted earnings per share (EPS) up 104% from 15.6p to 31.8p
-- Underlying diluted EPS up 12% from 28.4p to 31.9p
-- Interim cash dividend of 12.2p, up 5.2%
* Underlying results exclude exceptional items of GBP0.9m
** Net investment in US Specialty in the six month period to 30
June 2017 was GBP13.4m (2016: GBP17.2m)
BUSINESS HIGHLIGHTS
-- Further progress made with the US Specialty build-out, as
revenues more than doubled, driven by strong organic growth and the
contribution from Construction Risk Partners, acquired in January
2017
-- UK EB business now trading strongly following the restructure in 2016
Dominic Burke, Group Chief Executive, commented:
"JLT delivered a good financial performance in the first half of
2017. We have entered the second half with many of our businesses
showing increasing momentum and we remain confident that we will
deliver full year organic revenue growth more in line with
historical rates, generating sustained 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 7528 4375
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 made good progress in the first half of 2017, despite the
continuing challenging trading and economic conditions. Total
revenues increased by 11%, or 3% at constant rates of exchange
(CRE), to GBP689.9 million. The Group achieved organic revenue
growth of 3%, compared with 1% for the same period in 2016,
reflecting strong business retention and new client wins.
6 months Total Revenue Underlying Trading Margin
to 30 June Trading Profit
GBPm 2017 Growth CRE Organic 2016 2017 CRE 2016 2017 CRE 2016
------------------ ----- ------ ----- --------- ------- ------ ----- ---- -------- ----- -----
Risk & Insurance 540.8 12% 3% 3% 481.8 108.7 101.1 93.7 20% 20% 19%
Employee
Benefits 149.1 8% 2% 2% 137.6 17.9 16.2 17.4 12% 12% 13%
------------------ ----- ------ ----- --------- ------- ------ ----- ---- -------- ----- -----
Group* 689.9 11% 3% 3% 619.4 110.0 100.9 98.4 15.9% 15.8% 15.9%
------------------ ----- ------ ----- --------- ------- ------ ----- ---- -------- ----- -----
Notes:
- Total revenue comprises fees, commissions and investment income.
- CRE: Constant rates of exchange are calculated by translating
2017 results at 2016 exchange rates.
- Organic revenue 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 Risk & Insurance businesses, which represented nearly
78% of global turnover, grew revenues to GBP540.8 million, an
increase of 12%, or 3% at CRE. The trading margin in Risk &
Insurance was 20%, an improvement over the prior year, both on a
reported and a CRE basis.
Revenues within the Employee Benefits businesses increased by
8%, or 2% at CRE, to GBP149.1 million. The trading margin reduced
slightly year-on-year from 13% to 12%.
6 months to 30 June
----------------------------------------------------- ------ --------
GBPm 2017 2016
----------------------------------------------------- ------ --------
Underlying trading profit 110.0 98.4
Underlying share of associates 2.1 1.9
Net finance costs (12.0) (11.1)
----------------------------------------------------- ------ --------
Underlying profit before taxation 100.1 89.2
Exceptional items (0.9) (34.0)
----------------------------------------------------- ------ --------
Profit before taxation 99.2 55.2
Underlying tax expense (29.0) (25.6)
Tax on exceptional items 0.3 6.6
Non-controlling interests (2.2) (2.9)
----------------------------------------------------- ------ --------
Profit after taxation and non-controlling
interests 68.3 33.3
Underlying profit after taxation and non-controlling
interests 68.6 60.7
----------------------------------------------------- ------ --------
Diluted earnings per share 31.8p 15.6p*
Underlying diluted earnings per share 31.9p 28.4p*
Interim dividend per share 12.2p 11.6p
----------------------------------------------------- ------ --------
* Restated following revision to the calculation
Group underlying trading profit increased by 12% to GBP110.0
million, or 3% at CRE. Underlying PBT increased by 12% to GBP100.1
million.
The trading margin was maintained at 15.9%, however excluding
the US net investment of GBP13.4 million in the period, the Group's
trading margin would have been 18.9%.
The Group's reported PBT was GBP99.2 million, compared with
GBP55.2 million for the same period in 2016, which included the
impact of significant exceptional costs. As a consequence, reported
EPS also increased substantially, from 15.6p to 31.8p.
DIVIDS
The Board has declared an increased interim dividend of 12.2p
per share for the period ended 30 June 2017 (2016: 11.6p), which
will be paid on 3 October 2017 to shareholders on the register at
25 August 2017.
OPERATIONAL REVIEW
The Group operates two principal trading divisions: Risk &
Insurance and Employee Benefits. The results of the larger
businesses within each of these areas are reported in more detail
below:
RISK & INSURANCE
6 months Total Revenue Underlying Trading Margin
to 30 June Trading Profit
---------------------- ------------------------------ ---------------------- -------------------- ------
GBPm 2017 Growth CRE Organic 2016 2017 CRE 2016 2017 CRE 2016
----------------------- ------ ------ ---- ------- ------ ------ ------ ------ ----- ----- ------
JLT Europe 177.6 0% (3%) 3% 178.5 31.6 30.2 27.0 18% 17% 15%
JLT Re 144.4 13% 5% 2% 127.7 51.6 49.4 48.0 36% 37% 38%
JLT Australia & New
Zealand 69.3 12% (3%) (4%) 61.9 23.8 20.7 21.6 34% 34% 35%
JLT Asia 51.7 16% 4% 4% 44.6 11.0 9.7 9.5 21% 21% 21%
JLT Latin America 34.5 25% 5% 3% 27.6 3.9 3.3 4.0 11% 11% 15%
JLT Middle East &
Africa 12.5 15% (2%) (2%) 10.9 1.8 1.2 1.3 14% 11% 12%
JLT USA 35.2 116% 92% 43% 16.3 (13.4) (11.9) (17.2) (38%) (38%) (106%)
JLT Canada 10.5 10% (3%) (3%) 9.5 (1.1) (1.0) (0.5) (10%) (11%) (5%)
JLT Insurance
Management 5.1 6% (5%) (5%) 4.8 (0.5) (0.5) (0) (9%) (9%) (1%)
------------------------ ----- ------ ---- ------- ------ ------ ------ ------ ----- ----- ------
540.8 12% 3% 3% 481.8 108.7 101.1 93.7 20% 20% 19%
------------------------ ----- ------ ---- ------- ------ ------ ------ ------ ----- ----- ------
JLT Europe
JLT Europe, consisting of what was formerly reported as JLT
Specialty and the Group's Northern European businesses, is now
managed as a single reporting unit.
The marginal reduction in JLT Europe's reported revenues was due
to the sale of the bulk of the Thistle business at the end of 2016,
which amounted to some GBP10 million of revenues in that period.
Excluding Thistle, JLT Europe's revenues rose by 5%, of which 3%
was organic.
Specialty classes continue to see some of the largest rate
reductions experienced by the Group. This effect has been
compounded by reduced activity in a number of industry sectors,
such as Energy and Marine, which continue to operate in challenging
industry trading conditions. However, the strengths of JLT Europe
span a range of industries and it is not overexposed to one
specific sector. The majority of its Specialty divisions have
reported impressive organic revenue growth; areas such as Financial
Lines, Credit, Political & Security, Aviation and Property
& Casualty. The performance of the Northern European businesses
has also been good, with recent investments now generating
increasing levels of revenue growth.
JLT Europe continues to work closely with its Specialty
colleagues in the US; of particular note has been the early success
of a joint natural resources initiative which has secured two
significant global accounts in the first half.
The business has entered the second half with high levels of
activity and remains confident about its prospects for the
year.
JLT Re
JLT Re saw a 13% increase in revenues to GBP144.4 million, or 5%
at CRE, with organic revenue growth of 2%.
JLT Re is building a strong reputation as a provider of complex
structured solutions to insurance capital providers by the
application of analysis-based intelligence.
Organic revenue growth was achieved through significant new
business wins in the period, despite reinsurance rates continuing
to decline. Revenues also benefitted from the contributions of the
two acquisitions made in late 2016, both of which have performed in
line with expectations and contributed 3% of total JLT Re
revenues.
The UK, Europe and North America businesses saw strong new
business wins generated both from new and existing clients and as a
result of the substantial investment in the business.
JLT Re delivered trading profit of GBP51.6 million in the
period, a 7% increase over the same period in 2016. This reflects
the meaningful and steady investments made in people, geographies
and infrastructure which are expected to deliver increasing returns
going forward.
JLT Re has started the second half of the year strongly, despite
the continued decline in property catastrophe rates. The July 1(st)
renewal season saw good business retention and new business
generation, giving the Group confidence in the outlook for the
business.
JLT Australia and New Zealand
On a reported basis the Australia and New Zealand businesses saw
revenues increase by 12% to GBP69.3 million. This translates into a
3% reduction on a CRE basis, reflecting a very competitive trading
environment with continued pressure on insurance rates throughout
the first half. The trading margin nevertheless remains one of the
strongest in the Group, at 34%. In the second half of this year,
the business will commence the management of a new scheme for
municipal councils in Victoria, representing a significant new
client win.
JLT Asia
Asia delivered a good performance in the period, with a 16%
increase in revenues to GBP51.7 million and 4% organic revenue
growth. Reported trading profits increased by 16%. Revenue
performance in Hong Kong, Singapore and Japan was particularly
strong in the first half.
JLT Latin America
The Group's Latin American operations delivered revenue growth
of 25% in the period, or 5% at CRE, with a 3% organic growth rate.
Significant investments are being made in building out Specialty
capabilities across the region and, while the early benefit of this
investment is being seen through increased revenue, trading profit
has reduced year on year as a result. The business is expected to
perform more strongly in the second half of the year, however,
resulting in a year-on-year improvement in trading profit.
JLT USA
Now employing over 300 people, the US Specialty business more
than doubled headline revenues to GBP35.2 million for the period, a
92% increase on the same period last year at CRE. These results
include the first contribution from Construction Risk Partners
(CRP), which was acquired at the end of January 2017. Organic
revenue growth, which excludes the benefit of acquisitions, was
43%. The net investment of GBP13.4 million in the period reduced
from GBP17.2 million in the first half of 2016, demonstrating that
the business has passed the high-water mark for losses.
The Group remains confident that US Specialty revenues will see
a significant uplift in 2017 as a whole and that the business
remains on track to turn to profits for the first time in 2019.
EMPLOYEE BENEFITS
6 months to Total Revenue Underlying Trading Margin
30 June Trading Profit
GBPm 2017 Growth CRE Organic 2016 2017 CRE 2016 2017 CRE 2016
---------------- ----- ------ ----- ------- ----- ------ ----- ---- ------ ---- ----
UK & Ireland 81.8 9% 9% 9% 74.9 5.3 5.0 0.2 6% 6% 0%
Asia 41.0 0% (11%) (9%) 41.2 11.8 10.3 15.0 29% 28% 36%
Australia
& New Zealand 13.8 17% 2% (1%) 11.7 1.6 1.4 1.4 12% 12% 12%
Latin America 10.1 21% 1% 0% 8.3 (1.0) (0.7) 0.7 (10%) (8%) 9%
Middle East
& Africa 1.3 75% 34% 34% 0.8 0 0 0 (1%) (1%) 1%
Canada 1.1 52% 35% 28% 0.7 0.2 0.2 0.1 17% 17% 11%
---------------- ----- ------ ----- ------- ----- ------ ----- ---- ------ ---- ----
149.1 8% 2% 2% 137.6 17.9 16.2 17.4 12% 12% 13%
---------------- ----- ------ ----- ------- ----- ------ ----- ---- ------ ---- ----
UK & Ireland Employee Benefits
Reported revenues in UK and Ireland Employee Benefits for the
first half were GBP81.8 million, compared to GBP74.9 million for
the same period in 2016, representing a 9% increase, all of which
was organic and delivered across the business through strong client
penetration and new business wins. Trading profit of GBP5.3 million
for the period compared to what was effectively a breakeven
position for the first half of 2016.
These results provide a further indication of how the business
has returned to revenue and profit growth. The business is expected
to show continued momentum in the second half, with several new
business opportunities, particularly in its Pension Administration
division and its wealth management platform. The Group remains
confident that the trend of trading margin improvement will
continue through the balance of 2017 and into 2018.
International Employee Benefits
JLT's international Employee Benefits businesses deploy
different client offerings in different parts of the world,
highlighting the Group's focus on specialisation. These range from
services related to workers compensation insurance in Australia to
high-net-worth solutions in Asia. JLT has now put in place more
extensive arrangements to coordinate both its own employee benefits
operations and those of its network partners around the world. The
benefits of doing this are beginning to be seen, not just in
applications, process and client propositions, but also in
multi-country appointments for leading regional and global clients.
The aims of the business are also to facilitate cross-selling
opportunities in JLT's Specialty businesses, and to export the
Group's Employee Benefits capabilities to new markets.
Some short term external influences impacted the international
EB businesses in the first half; however, the Group is confident
about the prospects and opportunities for each of these
businesses.
Asia
Asia EB had flat reported revenues but an 11% decline at CRE,
which was attributable to the life insurance broking business. The
revenue pipeline remains strong; however conversion of the pipeline
slowed in the first half in certain Southeast Asian markets as the
maturing of the regulatory framework has lengthened the on-boarding
process for new clients. The trading margin remains strong.
Australia and New Zealand
JLT's Australia and New Zealand business achieved 17% revenue
growth, or 2% at CRE. While organic revenue growth was lower in the
first half, it is expected to improve by the full year.
Latin America
In Latin America, revenues increased 21% on a reported basis,
largely driven by foreign exchange. JLT's business in Brazil had a
particularly challenging first half, given its economic and
political environment. By contrast, JLT's business in Colombia
continues to perform well, delivering strong organic revenue growth
in the period.
ASSOCIATES
The Group's income from its Associates increased by GBP0.2
million to GBP2.1 million. The Group anticipates that Associate
earnings will remain at this level for the full year.
OPERATING COSTS
During the first half of 2017, the Group's underlying operating
expenses (excluding exceptional items) increased by GBP58.9
million, or 11%, to GBP579.9 million. The foreign exchange impact
included therein was GBP41.9 million.
There was a net reduction in costs of GBP4.9 million (1%) from
acquisitions and disposals, primarily relating to the disposal of
most of the Thistle business late in 2016, which reduced costs by
GBP14 million. This was offset in part by the acquisitions
completed in US Specialty, JLT Re and other businesses, which added
GBP9 million of operating expenses.
The overall organic growth in the Group's cost base was GBP21.9
million, or 4%.
Underlying staff costs rose by GBP12.3 million, an increase of
3% against the equivalent period in 2016, which includes
investments in people across several businesses. Headcount
increased by 235 across the Group year-on-year, reflecting the net
impact of acquisitions and disposals, as well as continued hiring
in the US, Asia and Latin America.
There was an increase in some provisions in the Group's captive,
as well as an increase in premises costs, primarily driven by the
expanded space in JLT's London headquarters.
As is the case with revenue and profit, foreign exchange
movements continue to have a significant impact on the Group's
reported costs with the translation of overseas results into
Sterling, driving costs up by 8% year-on-year.
The Group will continue to invest in the business, but will
remain focussed on ensuring that costs and trading margins are
well-managed as the Group continues to grow.
EXCEPTIONAL ITEMS
Net exceptional items in the first half totalled less than GBP1
million and mainly related to acquisitions made in 2016 and
year-to-date in 2017.
BALANCE SHEET AND FUNDING
The net assets of the Group increased to GBP355 million, from
GBP351 million at the 2016 financial year end. The key movements
were:
-- Goodwill and intangibles increased by GBP33 million
principally as a result of completed acquisitions;
-- Working capital, which for balance sheet presentation
includes working capital acquired, taxation and provisions,
increased by GBP69 million. On a cash flow basis there was a
working capital outflow of GBP82 million, the main change from the
same period in 2016 being the ending of the rent free period
included in the premises lease of the Group's London headquarters;
and
-- A decrease in the pension liability of GBP19 million, net of
deferred tax, mainly due to changes in some of the underlying
actuarial assumptions.
The factors above were offset by net debt, defined as own funds,
less total borrowings net of transaction costs, of GBP565 million
and a change in derivatives of GBP43 million, net of deferred
tax.
As at 30 June 2017 the Group had long-term credit facilities
totalling approximately GBP1 billion. This comprised the private
placement loan note programmes of $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
2022.
Utilisation of the RCF stood at GBP259 million, compared to
GBP248 million at June 2016. This leaves unutilised headroom of
GBP241 million, a level consistent with prior years, as June is
historically the high point during the year for the Group's net
debt seasonality.
The Net Debt to EBITDA ratio was 2.1:1 on reported basis and
1.8:1 on a bank covenant basis, both of which are improvements on
the same period last year, demonstrating the Group's ability to
operate and grow the business within a conservative range.
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 was GBP93 million, of which
GBP40 million was in respect of acquisitions and disposals.
Dividend outflows have grown in line with the increase in the final
dividend declared. The other main cash outflows were consistent
with prior period averages.
FOREIGN EXCHANGE
Foreign exchange (FX) has continued to have a positive impact as
a result of the movement in exchange rates due to continued
Sterling weakness since the EU referendum in June 2016.
The FX market currently remains volatile, consequently it is
difficult to predict the impact of foreign exchange on the Group's
2017 underlying profit before tax.
BOARD DEVELOPMENTS
As announced at the time of the Group's preliminary results in
March 2017, Bruce Carnegie-Brown stepped down from the Board on 14
June 2017, following his appointment as Chairman of Lloyd's of
London. The recruitment of a new Non-executive Director is
underway.
GROUP STRATEGY
During the first half of 2017, the Group concluded that it would
be appropriate to carry out a review of its strategy in order to
ensure that it remains aligned with, and will deliver, future
growth ambitions.
Since the start of 2014, which was a pivotal year for JLT due to
the launch of JLT Specialty in the United States, the shape and
profile of the Group have been materially transformed:
-- The build-out of US Specialty has played a leading role in
the Group's development of truly global Specialty practices,
enabling multinational client wins across all of the Group's
Specialty businesses; and
-- The substantial investment in JLT Re has significantly
bolstered the Group's global reinsurance proposition and enabled it
to apply analysis-based intelligence to help meet the needs and
address the issues faced by insurance capital providers across the
world.
The review has validated the Group's strategy for Specialty,
Reinsurance and Employee Benefits and has confirmed that JLT is on
the right track to achieve its ambition, which has now been
articulated as to become the 'Leading Global Specialty Risk Adviser
and Broker'.
The Group is now taking further steps to deliver on this
strategy, by developing the coordination between JLT's businesses
around the world in how they operate; the propositions JLT offers
to its clients; the information-based advice it provides; and the
ways JLT delivers client service. Improved coordination will better
equip JLT to develop new emerging Specialties, particularly
fast-maturing 'intangible' risks such as cyber.
OUTLOOK
The Group has entered the second half with many of its
businesses showing increasing momentum and it remains confident
that it will deliver full year organic revenue growth more in line
with historical rates, generating sustained year-on-year financial
progress.
Consolidated income statement
Unaudited Interim Results for the six months ended 30 June
2017
6 months 6 months
ended ended
30 June 30 June
2017 2016
Notes GBP'000 GBP'000
========================================== ===== ========== =========
Fees and commissions 2 686,912 617,590
------------------------------------------ ----- ---------- ---------
Investment income 2 3,021 1,803
========================================== ===== ========== =========
Total revenue 2 689,933 619,393
========================================== ===== ========== =========
Salaries and associated expenses (423,083) (388,892)
------------------------------------------ ----- ---------- ---------
Premises (35,564) (33,793)
------------------------------------------ ----- ---------- ---------
Other operating costs (105,469) (115,007)
------------------------------------------ ----- ---------- ---------
Depreciation, amortisation and impairment
charges 1,3 (16,668) (17,273)
========================================== ===== ========== =========
Operating profit 1,2,3 109,149 64,428
========================================== ===== ========== =========
Analysed as:
------------------------------------------ ----- ---------- ---------
Operating profit before exceptional
items 1,2 110,040 98,405
------------------------------------------ ----- ---------- ---------
Acquisition and integration costs 3 (1,022) (414)
------------------------------------------ ----- ---------- ---------
Restructuring costs 3 - (10,151)
------------------------------------------ ----- ---------- ---------
Net litigation costs 3 - (22,000)
------------------------------------------ ----- ---------- ---------
Other exceptional items 3 131 (1,412)
========================================== ===== ========== =========
Operating profit 1,2,3 109,149 64,428
========================================== ===== ========== =========
Finance costs (13,520) (12,156)
------------------------------------------ ----- ---------- ---------
Finance income 1,567 1,017
------------------------------------------ ----- ========== =========
Finance costs - net (11,953) (11,139)
------------------------------------------ ----- ---------- ---------
Share of results of associates 2,051 1,948
========================================== ===== ========== =========
Profit before taxation 1,2 99,247 55,237
========================================== ===== ========== =========
Income tax expense 4 (28,730) (19,048)
========================================== ===== ========== =========
Profit for the period 70,517 36,189
========================================== ===== ========== =========
Profit attributable to:
------------------------------------------ ----- ---------- ---------
Owners of the parent 2 68,316 33,328
------------------------------------------ ----- ---------- ---------
Non-controlling interests 2,201 2,861
========================================== ===== ========== =========
70,517 36,189
========================================== ===== ========== =========
Earnings per share attributable to
the owners of the parent during the
period
(expressed in pence per share) restated
------------------------------------------ ----- ---------- ---------
Basic earnings per share 5 32.4p 15.8p
------------------------------------------ ----- ---------- ---------
Diluted earnings per share 5 31.8p 15.6p
------------------------------------------ ----- ---------- ---------
Consolidated statement of comprehensive income
Unaudited Interim Results for the six months ended 30 June
2017
6 months 6 months
ended ended
30 June 30 June
2017 2016
Notes GBP'000 GBP'000
============================================ ===== ======== ========
Profit for the period 70,517 36,189
============================================ ===== ======== ========
Other comprehensive income/(expense)
-------------------------------------------- ----- -------- --------
Items that will not be reclassified
to profit or loss
-------------------------------------------- ----- ======== ========
Remeasurement of post-employment
benefit obligations 20 25,446 (66,372)
============================================ ===== -------- --------
Taxation thereon (4,774) 11,293
-------------------------------------------- ----- ======== ========
Total items that will not be reclassified
to profit or loss 20,672 (55,079)
-------------------------------------------- ----- -------- --------
Items that may be reclassified subsequently
to profit or loss
-------------------------------------------- ----- -------- --------
Fair value gains/(losses) net of
tax:
-------------------------------------------- ----- ======== ========
- available-for-sale 35 (10)
-------------------------------------------- ----- -------- --------
- available-for-sale reclassified
to the income statement - (146)
-------------------------------------------- ----- -------- --------
- cash flow hedges 39,639 (18,043)
-------------------------------------------- ----- -------- --------
Currency translation differences (23,097) 62,767
-------------------------------------------- ----- ======== ========
Total items that may be reclassified
subsequently to profit or loss 16,577 44,568
============================================ ===== ======== ========
Other comprehensive income/(expense)
net of tax 37,249 (10,511)
============================================ ===== ======== ========
Total comprehensive income for the
period 107,766 25,678
============================================ ===== ======== ========
Attributable to:
-------------------------------------------- ----- -------- --------
Owners of the parent 106,821 20,091
-------------------------------------------- ----- ======== ========
Non-controlling interests 945 5,587
============================================ ===== ======== ========
107,766 25,678
============================================ ===== ======== ========
Consolidated balance sheet
Unaudited Interim Results as at 30 June 2017
As at As at As at
30 June 30 June 31 Dec
2017 2016 2016
Notes GBP'000 GBP'000 GBP'000
================================== ===== ============ =========== ===========
NET OPERATING ASSETS
---------------------------------- ----- ------------ ----------- -----------
Non-current assets
================================== ===== ============ =========== ===========
Goodwill 7 571,100 529,124 543,013
================================== ===== ============ =========== ===========
Other intangible assets 107,364 101,937 101,963
---------------------------------- ----- ------------ ----------- -----------
Property, plant and equipment 66,030 64,441 64,330
---------------------------------- ----- ------------ ----------- -----------
Investments in associates 2 53,401 46,981 50,928
---------------------------------- ----- ------------ ----------- -----------
Available-for-sale financial
assets 8,13 17,343 16,821 23,805
---------------------------------- ----- ------------ ----------- -----------
Derivative financial instruments 9,13 92,641 95,080 117,043
================================== ===== ============ =========== ===========
Retirement benefit surpluses 20 125 - 509
---------------------------------- ----- ------------ ----------- -----------
Deferred tax assets 45,691 82,368 70,088
================================== ===== ============ =========== ===========
953,695 936,752 971,679
================================== ===== ============ =========== ===========
Current assets
---------------------------------- ----- ------------ ----------- -----------
Trade and other receivables 10 617,561 568,051 588,640
---------------------------------- ----- ------------ ----------- -----------
Derivative financial instruments 9,13 8,667 6,632 7,930
---------------------------------- ----- ------------ ----------- -----------
Available-for-sale financial
assets 8,13 124,193 99,598 116,933
---------------------------------- ----- ------------ ----------- -----------
Cash and cash equivalents 11,13 965,764 929,215 939,945
================================== ===== ============ =========== ===========
1,716,185 1,603,496 1,653,448
================================== ===== ============ =========== ===========
Current liabilities
================================== ===== ============ =========== ===========
Borrowings 13,14 (51,093) (22,748) (54,729)
================================== ===== ============ =========== ===========
Trade and other payables 12 (1,240,852) (1,148,506) (1,257,782)
---------------------------------- -----
Derivative financial instruments 9,13 (17,873) (18,194) (33,136)
---------------------------------- ----- ------------ ----------- -----------
Current tax liabilities (14,332) (4,142) (5,119)
---------------------------------- ----- ------------ ----------- -----------
Provisions for liabilities and
charges 15 (12,695) (10,829) (8,826)
================================== ===== ============ =========== ===========
(1,336,845) (1,204,419) (1,359,592)
================================== ===== ============ =========== ===========
Net current assets 379,340 399,077 293,856
================================== ===== ============ =========== ===========
Non-current liabilities
================================== ===== ============ =========== ===========
Borrowings 13,14 (696,087) (731,367) (633,103)
================================== ===== ============ =========== ===========
Derivative financial instruments 9,13 (96,878) (55,026) (69,652)
---------------------------------- ----- ------------ ----------- -----------
Deferred tax liabilities (7,423) (34,452) (11,378)
---------------------------------- ----- ------------ ----------- -----------
Retirement benefit obligations 20 (175,679) (201,474) (198,921)
---------------------------------- ----- ------------ ----------- -----------
Provisions for liabilities and
charges 15 (1,798) (837) (1,571)
================================== ===== ============ =========== ===========
(977,865) (1,023,156) (914,625)
================================== ===== ============ =========== ===========
355,170 312,673 350,910
================================== ===== ============ =========== ===========
TOTAL EQUITY
---------------------------------- ----- ------------ ----------- -----------
Capital and reserves attributable
to the owners of the parent
---------------------------------- ----- ------------ ----------- -----------
Ordinary shares 11,008 11,008 11,008
---------------------------------- ----- ------------ ----------- -----------
Share premium 16 104,111 104,077 104,111
---------------------------------- ----- ------------ ----------- -----------
Fair value and hedging reserves 16 (14,779) (31,026) (54,453)
---------------------------------- ----- ------------ ----------- -----------
Exchange reserves 16 61,720 42,761 83,561
---------------------------------- ----- ------------ ----------- -----------
Retained earnings 174,477 166,464 183,919
================================== ===== ============ =========== ===========
Shareholders' equity 336,537 293,284 328,146
---------------------------------- ----- ------------ ----------- -----------
Non-controlling interests 18,633 19,389 22,764
================================== ===== ============ =========== ===========
355,170 312,673 350,910
================================== ===== ============ =========== ===========
Consolidated statement of
changes in equity
Unaudited Interim Results for the six months ended 30 June
2017
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
2017 11,008 133,219 183,919 328,146 22,764 350,910
-------------------------- ----- -------- --------- --------- ------------- ------------ ---------
Profit for the
period - - 68,316 68,316 2,201 70,517
-------------------------- ----- -------- --------- --------- ------------- ------------ ---------
Other comprehensive
income for the
period - 17,833 20,672 38,505 (1,256) 37,249
========================== ===== ======== ========= ========= ============= ============ =========
Total comprehensive
income for the
period - 17,833 88,988 106,821 945 107,766
-------------------------- ----- -------- --------- --------- ------------- ------------ ---------
Dividends 6 - - (44,280) (44,280) (6,223) (50,503)
-------------------------- ----- -------- --------- --------- ------------- ------------ ---------
Amounts in respect
of share based
payments:
-------------------------- ----- -------- --------- --------- ------------- ------------ ---------
- reversal of
amortisation net
of tax - - 14,145 14,145 - 14,145
-------------------------- ----- -------- --------- --------- ------------- ------------ ---------
- shares acquired - - (15,009) (15,009) - (15,009)
-------------------------- ----- -------- --------- --------- ------------- ------------ ---------
Acquisitions - - - - 1,926 1,926
-------------------------- ----- -------- --------- --------- ------------- ------------ ---------
Change in non-controlling
interests - - (53,286) (53,286) (779) (54,065)
========================== ===== ======== ========= ========= ============= ============ =========
Balance at 30
June 2017 11,008 151,052 174,477 336,537 18,633 355,170
========================== ===== ======== ========= ========= ============= ============ =========
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)
-------------------------- ----- -------- --------- --------- ------------- ------------ ---------
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
========================== ===== ======== ========= ========= ============= ============ =========
Consolidated statement of cash flows
Unaudited Interim Results for the six months ended 30 June
2017
6 months 6 months
ended ended
30 June 30 June
2017 2016
Notes GBP'000 GBP'000
============================================= ===== ========== =========
Cash flows from operating activities
--------------------------------------------- ----- ---------- ---------
Cash generated from operations 17 64,708 29,305
--------------------------------------------- ----- ---------- ---------
Interest paid (8,148) (8,530)
--------------------------------------------- ----- ---------- ---------
Interest received 4,330 2,628
--------------------------------------------- ----- ---------- ---------
Taxation paid (16,647) (17,576)
--------------------------------------------- ----- ---------- ---------
Increase in net insurance broking
payables 28,248 82,422
============================================= ===== ========== =========
72,491 88,249
--------------------------------------------- ----- ---------- ---------
Dividend received from associates 1,030 895
============================================= ===== ========== =========
Net cash generated from operating
activities 73,521 89,144
============================================= ===== ========== =========
Cash flows from investing activities
--------------------------------------------- ----- ---------- ---------
Purchase of property, plant and equipment (9,096) (4,153)
--------------------------------------------- ----- ---------- ---------
Purchase of other intangible assets (23,947) (13,166)
--------------------------------------------- ----- ---------- ---------
Proceeds from disposal of property,
plant and equipment 750 367
--------------------------------------------- ----- ---------- ---------
Proceeds from disposal of other intangible
fixed assets 122 -
============================================= ----- ---------- ---------
Acquisition of businesses, net of
cash acquired 18 (32,131) (4,631)
--------------------------------------------- ----- ---------- ---------
Acquisition of associates (89) -
--------------------------------------------- ----- ---------- ---------
Proceeds from disposal of businesses,
net of cash disposed 19 1,601 914
--------------------------------------------- ----- ---------- ---------
Proceeds from disposal of available-for-sale
other investments - 259
============================================= ===== ========== =========
Net cash used in investing activities (62,790) (20,410)
============================================= ===== ========== =========
Cash flows from financing activities
--------------------------------------------- ----- ---------- ---------
Dividends paid to owners of the parent (44,620) (41,653)
--------------------------------------------- ----- ---------- ---------
Purchase of available-for-sale financial
assets 8 (119,467) (99,701)
--------------------------------------------- ----- ---------- ---------
Proceeds from disposal of available-for-sale
financial assets 8 117,133 19
--------------------------------------------- ----- ---------- ---------
Purchase of shares (15,009) (8,085)
--------------------------------------------- ----- ---------- ---------
Proceeds from issuance of ordinary
shares - 3
--------------------------------------------- ----- ---------- ---------
Proceeds from borrowings 96,379 87,360
--------------------------------------------- ----- ---------- ---------
Repayments of borrowings (1,981) (63)
--------------------------------------------- ----- ---------- ---------
Dividends paid to non-controlling
interests (6,223) (4,514)
============================================= ===== ========== =========
Net cash generated/(used) in financing
activities 26,212 (66,634)
============================================= ===== ========== =========
Net increase in cash and cash equivalents 36,943 2,100
--------------------------------------------- ----- ---------- ---------
Cash and cash equivalents at beginning
of period 939,945 901,087
--------------------------------------------- ----- ---------- ---------
Exchange (losses)/gains on cash and
cash equivalents (11,124) 26,028
============================================= ===== ========== =========
Cash and cash equivalents at end
of period 965,764 929,215
============================================= ===== ========== =========
Notes to the unaudited interim results
For the six months ended 30 June 2017
BASIS OF ACCOUNTING
The Group's condensed consolidated interim financial statements
for the six months ended 30 June 2017 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 2016, 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 2016 were approved by the Board of Directors on 28
February 2017 and delivered to the Registrar of Companies. The
report of the auditors on those accounts was unqualified, did not
contain an emphasis of matter paragraph and did not contain any
statement under section 498 of the Companies Act 2006.
These condensed 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 2016.
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
2016.
Full details of the audited accounts and accounting policies for
the year ended 31 December 2016 are available at www.jlt.com
1. Alternative income statement
The format of the consolidated income statement 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 2017 GBP'000 GBP'000 GBP'000
================================= ========== =========== ==========
Fees and commissions 686,912 - 686,912
--------------------------------- ---------- ----------- ----------
Investment income 3,021 - 3,021
--------------------------------- ---------- ----------- ----------
Salaries and associated expenses (422,051) (1,032) (423,083)
--------------------------------- ---------- ----------- ----------
Premises (35,529) (35) (35,564)
--------------------------------- ---------- ----------- ----------
Other operating costs (105,645) 176 (105,469)
--------------------------------- ---------- ----------- ----------
Depreciation, amortisation and
impairment charges (16,668) - (16,668)
================================= ========== =========== ==========
Trading profit 110,040 (891) 109,149
--------------------------------- ---------- ----------- ----------
Finance costs - net (11,953) - (11,953)
--------------------------------- ---------- ----------- ----------
Share of results of associates 2,051 - 2,051
================================= ========== =========== ==========
Profit before taxation 100,138 (891) 99,247
================================= ========== =========== ==========
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
================================= ========== =========== ==========
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.
Following the disposal of Thistle in 2016, the majority of what
was classified as JLT Insurance Services, plus Northern Europe
which was previously in JLT Europe Middle East and Africa, both
included in Other Risk & Insurance in the 2016 financial year,
now together with JLT Specialty, form the business group JLT
Europe. Prior period numbers have been restated to reflect this
change.
JLT Re principal locations includes North America, the United
Kingdom and Asia.
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 mainly in Spain. The investment and the
Group's share of the net results 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.
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
geographical 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.
3. Operating profit
The following items have been charged/(credited) in arriving at
operating profit:
6 months 6 months
ended ended
30 June 30 June
2017 2016
GBP'000 GBP'000
========================================== ======== ========
Foreign exchange losses/(gains):
------------------------------------------
- fees and commissions 17,525 6,527
------------------------------------------
- other operating costs (1,745) (3,717)
========================================== ======== ========
15,780 2,810
========================================== ======== ========
Amortisation of other intangible
assets:
------------------------------------------ -------- --------
- software costs 8,997 10,199
------------------------------------------ -------- --------
- other intangible assets 1,423 972
------------------------------------------ ======== ========
Depreciation on property, plant and
equipment 6,248 6,102
========================================== ======== ========
Total depreciation, amortisation
and impairment charges 16,668 17,273
========================================== ======== ========
Amortisation of other intangible
assets:
------------------------------------------ -------- --------
- employment contract payments (included
in salaries and associated expenses) 7,545 6,862
========================================== ======== ========
Gains on disposal of property, plant
and equipment (11) (56)
========================================== ======== ========
Fair value (gains)/losses on derivative
financial instruments (371) 90
========================================== ======== ========
Available-for-sale financial assets:
------------------------------------------ -------- --------
- Fair value losses 122 -
------------------------------------------ -------- --------
- Gain on sale - (129)
========================================== ======== ========
122 (129)
========================================== ======== ========
Exceptional items:
------------------------------------------ -------- --------
Acquisition and integration costs
of which:
------------------------------------------ ======== ========
- included in salaries and associated
expenses 606 165
------------------------------------------ -------- --------
- included in premises costs 7 69
------------------------------------------ -------- --------
- included in other operating costs 409 180
------------------------------------------ ======== ========
1,022 414
------------------------------------------ -------- --------
Restructuring costs of which:
------------------------------------------ ======== ========
- included in salaries and associated
expenses - 7,674
------------------------------------------ -------- --------
- included in premises costs - 1,777
------------------------------------------ -------- --------
- included in other operating costs - 700
------------------------------------------ ======== ========
- 10,151
------------------------------------------ -------- --------
Net (gains)/losses on disposal of
businesses of which:
------------------------------------------ ======== ========
- included in salaries and associated
expenses 426 -
------------------------------------------ -------- --------
- included in premises costs 28 -
------------------------------------------ -------- --------
- included in other operating costs (1,340) 1,363
------------------------------------------ ======== ========
(886) 1,363
------------------------------------------ -------- --------
Costs associated with a regulatory
review - 147
------------------------------------------ -------- --------
Net litigation costs - 22,000
------------------------------------------ -------- --------
Release of contingent consideration (464) (98)
------------------------------------------ -------- --------
Fair value losses on available-for-sale
financial assets 1,375 -
------------------------------------------ -------- --------
Additional deferred consideration
received on a disposal of a business (156) -
========================================== ======== ========
Total exceptional items included
within operating profit 891 33,977
========================================== ======== ========
We identified that the foreign exchange gain of GBP101,000
disclosed in 2016 should have been a loss of GBP6,527,000. This
does not result in a change to the consolidated income
statement.
4. Income tax expense
6 months 6 months
ended ended
30 June 30 June
2017 2016
---------------------------------------- -------- --------
GBP'000 GBP'000
======================================== ======== ========
Current tax expense
---------------------------------------- -------- --------
Current period 22,094 17,774
---------------------------------------- -------- --------
Adjustments in respect of prior periods (756) (5,297)
======================================== ======== ========
21,338 12,477
======================================== ======== ========
Deferred tax expense
---------------------------------------- -------- --------
Origination and reversal of temporary
differences 6,140 2,289
---------------------------------------- -------- --------
Reduction in tax rate 515 -
---------------------------------------- -------- --------
Adjustments in respect of prior periods 737 4,282
======================================== ======== ========
7,392 6,571
======================================== ======== ========
Total income tax expense 28,730 19,048
======================================== ======== ========
The total income tax expense in the income statement of
GBP28,730,000 (2016: GBP19,048,000) includes a tax credit on
exceptional items of GBP272,000 (2016: GBP6,560,000). There were no
non-recurring tax credits in the period.
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 2017, the additional 1% rate reduction to 17% from April
2020 has been enacted. The impact of the rate reduction to 17% has
been incorporated into the income tax charge for the 6 months ended
30 June 2017, 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
2017 2016
------------------------------------------- -------- --------
GBP'000 GBP'000
=========================================== ======== ========
Profit before taxation 99,247 55,237
=========================================== ======== ========
Tax calculated at UK Corporation Tax
rate of 19.25% (2016: 20%) 19,105 11,047
------------------------------------------- -------- --------
Non-deductible expenses 3,820 1,858
------------------------------------------- -------- --------
Non recognition of tax losses 2,421 2,384
------------------------------------------- -------- --------
Other* (953) 3
------------------------------------------- -------- --------
Adjustments in respect of prior periods (19) (1,015)
------------------------------------------- -------- --------
Effect of difference between UK and non-UK
tax rates 4,236 5,161
------------------------------------------- -------- --------
Effect of reduction in tax rate 515 -
------------------------------------------- -------- --------
Tax on associates (395) (390)
=========================================== ======== ========
Total income tax expense 28,730 19,048
=========================================== ======== ========
* Other includes the non-taxable (gain) / loss on disposal of
subsidiaries
5. Earnings per share
Following changes to the terms of several share-based staff
compensation schemes, whereby dividend rights eligibility were
removed in certain circumstances, a comprehensive review of IAS 33
('earnings per share' or 'EPS') was undertaken in 2016 to determine
the impact of these changes. The schemes affected by this change
include the JLT Long Term Incentive Plan (2004/2013), the Senior
Executive Share Scheme, the Executive Share Option Scheme, and the
Sharesave Scheme. The review considered whether the share options
in these plans continued to qualify as participating equity
instruments under IAS 33 for the purposes of calculating basic and
diluted EPS. With the changes to schemes, the review concluded that
only vested share options eligible to receive discretionary
dividend equivalents should be included in the basic calculation.
As a result, for the basic EPS calculation, the number of ordinary
shares as at June 2016 should reduce from 220,013,812 to
210,291,518, resulting in an increase in basic EPS of 0.7p from
15.1p to 15.8p. The review also concluded that unvested share
options should be included in the diluted EPS calculation, using
the treasury stock method. This has the effect of reducing the
number of ordinary shares in the June 2016 diluted EPS calculation
from 220,045,514 to 214,110,761, resulting in an increase in
diluted EPS of 0.5p from 15.1p to 15.6p.
Under the revised calculation, basic EPS is calculated by
dividing the profit attributable to shareholders by the sum of the
weighted average number of ordinary shares in issue during the year
and the vested share options eligible for discretionary dividend
equivalents, excluding unallocated shares held by the Trustees of
the Employees' Share Ownership Plan Trust, which are treated as
treasury shares. The profit attributable to shareholders is the
profit attributable to the owners of the parent adjusted for the
dividend equivalents and undistributed earnings attributable to the
unvested share options carrying unconditional dividend equivalent
rights.
Diluted EPS is calculated by adjusting the weighted average
number of ordinary shares in issue to take account of the potential
dilutive effect
of outstanding share options.
Basic and diluted EPS are also calculated based on underlying
earnings attributable to shareholders, which exclude any
exceptional items.
A reconciliation of earnings is set out below:
As at As at
30 June 30 June
2017 2016
------------------------------------ ------------ ------------
No. of No. of
shares shares
restated
==================================== ============ ============
Weighted average number of shares 210,691,298 210,291,518
------------------------------------ ------------ ------------
Effect of outstanding share options 4,388,282 3,819,243
==================================== ============ ============
Adjusted weighted average number of
shares 215,079,580 214,110,761
==================================== ============ ============
6 months ended 30 June 2017
------------------------------ ===========================================================
GBP'000 GBP'000 GBP'000 Pence Pence
------------------------------ -------- -------------- ---------- ---------- ---------
Adjusted
earnings Diluted
for basic Basic earnings
earnings earnings per
Earnings Adjustments(2) per share per share share
============================== ======== ============== ========== ========== =========
Underlying profit after
taxation and non-controlling
interests(1) 68,653 (51) 68,602 32.6 31.9
------------------------------ ======== -------------- ---------- ---------
Exceptional items before
tax (891)
------------------------------ -------- -------------- ---------- ---------
Taxation thereon 272
------------------------------ -------- -------------- ---------- ---------
Non-controlling interests
thereon 282
------------------------------ ======== -------------- ---------- ---------
(337) - (337) (0.2) (0.1)
============================== ======== ============== ========== ========== =========
Profit attributable to
the owners of the parent 68,316 (51) 68,265 32.4 31.8
============================== ======== ============== ========== ========== =========
6 months ended 30 June 2016
------------------------------ ============================================================
GBP'000 GBP'000 GBP'000 Pence Pence
------------------------------ -------- -------------- ---------- ---------- ----------
Adjusted
earnings Basic Diluted
for basic earnings earnings
earnings per share per share
Earnings Adjustments(2) per share restated restated
============================== ======== ============== ========== ========== ==========
Underlying profit after
taxation and non-controlling
interests(1) 60,745 (106) 60,639 28.8 28.4
------------------------------ ======== -------------- ---------- ----------
Exceptional items before
tax (33,977)
------------------------------ -------- -------------- ---------- ----------
Taxation thereon 6,560
------------------------------ ======== -------------- ---------- ----------
(27,417) 48 (27,369) (13.0) (12.8)
============================== ======== ============== ========== ========== ==========
Profit attributable
to the owners of the
parent 33,328 (58) 33,270 15.8 15.6
============================== ======== ============== ========== ========== ==========
(1) Underlying excludes exceptional items
(2) Adjustments related to the dividends and undistributed
earnings on unvested share options carrying dividend equivalent
rights.
6. Dividends
6 months 6 months
ended ended
30 June 30 June
2017 2016
------------------------------------- -------- --------
GBP'000 GBP'000
===================================== ======== ========
Final dividend in respect of 2016 of
20.6p per share (2015: 19.5p) 44,280 42,550
===================================== ======== ========
An interim dividend in respect of 2017 of 12.2p per share (2016:
11.6p) amounting to a total of GBP26,810,000 (2016: GBP25,637,000)
is payable on 3 October 2017 to shareholders who are registered at
the close of business on 25 August 2017. The dividend proposed will
not be accounted for until it is paid. The ex-dividend date will be
24 August 2017.
7. Goodwill
Gross Impairment Net carrying
amount losses amount
------------------------ -------- ---------- ------------
GBP'000 GBP'000 GBP'000
======================== ======== ========== ============
At 30 June 2017
------------------------ -------- ---------- ------------
Opening net book amount 548,117 (5,104) 543,013
------------------------ -------- ---------- ------------
Exchange differences (9,596) (137) (9,733)
------------------------ -------- ---------- ------------
Acquisitions 37,820 - 37,820
======================== ======== ========== ============
Closing net book amount 576,341 (5,241) 571,100
======================== ======== ========== ============
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
======================== ======== ========== ============
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 deposit. 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 and some debt instruments. The
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 2017 13,079 127,659 140,738
---------------------------------- ------------ ----------- ----------
Exchange differences (273) 117 (156)
---------------------------------- ------------ ----------- ----------
Additions - 119,467 119,467
---------------------------------- ------------ ----------- ----------
Finance income 154 - 154
---------------------------------- ------------ ----------- ----------
Disposals/maturities - (117,133) (117,133)
---------------------------------- ------------ ----------- ----------
Revaluation gain (included within
equity) - 42 42
---------------------------------- ------------ ----------- ----------
Amounts written off (1,576) - (1,576)
================================== ============ =========== ==========
At 30 June 2017 11,384 130,152 141,536
================================== ============ =========== ==========
Analysis of available-for-sale
financial assets
---------------------------------- ------------ ----------- ----------
Current - 124,193 124,193
---------------------------------- ------------ ----------- ----------
Non-current 11,384 5,959 17,343
================================== ============ =========== ==========
At 30 June 2017 11,384 130,152 141,536
================================== ============ =========== ==========
Analysis of available-for-sale
investments & deposits
---------------------------------- ------------ ----------- ----------
Fiduciary funds 129,849
---------------------------------- ------------ ----------- ----------
Own funds 303
================================== ============ =========== ==========
At 30 June 2017 130,152
================================== ============ =========== ==========
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 deficit (included
within equity) - (10) (10)
---------------------------------- ------------ ----------- ----------
Amounts 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 & deposits
---------------------------------- ------------ ----------- ----------
Fiduciary funds 109,572
---------------------------------- ------------ ----------- ----------
Own funds 279
================================== ============ =========== ==========
At 30 June 2016 109,851
================================== ============ =========== ==========
9. Derivative financial instruments
As at 30 As at 30 June
June 2017 2016
------------------------------ ===================== =====================
Assets Liabilities Assets Liabilities
------------------------------ -------- ----------- -------- -----------
GBP'000 GBP'000 GBP'000 GBP'000
============================== ======== =========== ======== ===========
Interest rate swaps - fair
value hedges 18,034 (4,230) 36,578 (203)
------------------------------ -------- ----------- -------- -----------
Forward foreign exchange
contracts - cash flow hedges 83,274 (32,144) 65,134 (47,076)
------------------------------ -------- ----------- -------- -----------
Redemption liabilities -
option contracts - (78,377) - (25,941)
============================== ======== =========== ======== ===========
Total 101,308 (114,751) 101,712 (73,220)
============================== ======== =========== ======== ===========
Current 8,667 (17,873) 6,632 (18,194)
------------------------------ -------- ----------- -------- -----------
Non-current 92,641 (96,878) 95,080 (55,026)
============================== ======== =========== ======== ===========
Total 101,308 (114,751) 101,712 (73,220)
============================== ======== =========== ======== ===========
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 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, 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 income
statement.
The fair value of financial derivatives based upon market values
as at 30 June 2017 and designated as effective cash flow hedges was
an asset of GBP51.1 million and has been deferred in equity (2016:
net assets of GBP18.1 million). Gains and losses arising on
derivative instruments outstanding as at 30 June 2017 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) 12 years in respect of specific hedges on USD denominated
long-term debt drawn under the Group's USD private placement
programme.
c) 9 years in respect of specific hedges on GBP 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 2017 the Group had
outstanding foreign exchange contracts, principally in USD,
amounting to a principal value of GBP1,327,379,000 (2016:
GBP1,051,545,000).
b) Interest rate swaps
The Group uses interest rate hedges, principally interest rate
swaps, to mitigate the impact of changes in interest rates. As at
30 June 2017, the notional principal amounts of outstanding cross
currency interest rate swaps was USD 500,000,000 and sterling
interest rate swaps was GBP75,000,000 (2016: USD 500,000,000 and
GBP75,000,000). A net gain of GBP13.8 million (2016: net gain
GBP36.4 million) on these instruments was offset by a fair value
movement of GBP13.8 million (2016: GBP36.4 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 provided in the shareholders agreements of JLT Specialty
Insurance Services Inc., JLT Sigorta ve Reasurans Brokerligi Ltd
Sirketi, JLT SCK Corretora e Administradora and Construction Risk
Partners, LLC.
The redemption liability increased in the period following the
recognition of put option liabilities. These are detailed as
follows:
a) options provided in the operating agreement of CRP Holding
Company LLC for GBP48,898,000.
b) options in respect of new shareholders in JLT Specialty
Insurance Services Inc. for GBP290,000.
The recognition of those liabilities resulted in a reduction in
equity, related to transactions with non-controlling interest of
GBP49,188,000.
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 derivatives in the balance sheet.
10. Trade and other receivables
As at As at
30 June 30 June
2017 2016
---------------------------------------- --------- ---------
GBP'000 GBP'000
======================================== ========= =========
Trade receivables 429,666 414,994
---------------------------------------- --------- ---------
Less: provision for impairment of trade
receivables (22,414) (19,699)
======================================== ========= =========
Trade receivables - net 407,252 395,295
---------------------------------------- --------- ---------
Other receivables 172,837 140,174
---------------------------------------- --------- ---------
Prepayments 37,472 32,582
======================================== ========= =========
617,561 568,051
======================================== ========= =========
As at 30 June 2017, 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
2017 2016
------------------------- -------- --------
GBP'000 GBP'000
========================= ======== ========
Cash at bank and in hand 527,878 550,648
------------------------- -------- --------
Short-term bank deposits 437,886 378,567
========================= ======== ========
965,764 929,215
========================= ======== ========
Fiduciary funds 783,974 719,420
------------------------- -------- --------
Own funds 181,790 209,795
========================= ======== ========
965,764 929,215
========================= ======== ========
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 1.03% (2016: 0.43%). These deposits have an average maturity of
14 days (2016: 15 days).
12. Trade and other payables
As at As at
30 June 30 June
2017 2016
-------------------------------------- ---------- ----------
GBP'000 GBP'000
====================================== ========== ==========
Insurance payables 913,823 828,992
-------------------------------------- ---------- ----------
Social security and other taxes 21,160 20,663
-------------------------------------- ---------- ----------
Other payables 134,331 119,914
-------------------------------------- ---------- ----------
Accruals and deferred income 147,848 157,398
-------------------------------------- ---------- ----------
Deferred and contingent consideration 23,690 21,539
====================================== ========== ==========
1,240,852 1,148,506
====================================== ========== ==========
All payables are considered current as the non-current portion
is not material. We have reclassified GBP28,956,000 of accruals
from other payables to accruals and deferred income in 2016. The
trade and other payables include GBP92,639,000 of non-financial
liabilities (2016: 92,331,000).
13. Financial instruments by category
The accounting policies for financial instruments have been
applied to the line items below:
Derivatives
used
Loans for Available-
At 30 June 2017 and receivables hedging for-sale Total
--------------------------------- ---------------- ----------- ---------- ----------
Assets per balance sheet GBP'000 GBP'000 GBP'000 GBP'000
================================= ================ =========== ========== ==========
Available-for-sale financial
assets - - 141,536 141,536
--------------------------------- ---------------- ----------- ---------- ----------
Derivative financial instruments - 101,308 - 101,308
--------------------------------- ---------------- ----------- ---------- ----------
Trade and other receivables
(a) 580,089 - - 580,089
--------------------------------- ---------------- ----------- ---------- ----------
Cash and cash equivalents 965,764 - - 965,764
================================= ================ =========== ========== ==========
Total 1,545,853 101,308 141,536 1,788,697
================================= ================ =========== ========== ==========
Derivatives
used Other
for financial
hedging liabilities Total
--------------------------------- ----------- ------------ ------------
Liabilities per balance
sheet GBP'000 GBP'000 GBP'000
================================= =========== ============ ============
Borrowings - (747,180) (747,180)
---------------------------------- ----------- ------------ ------------
Trade and other payables
(b) - (1,148,213) (1,148,213)
---------------------------------- ----------- ------------ ------------
Redemption liabilities
- option contracts (78,377) - (78,377)
---------------------------------- ----------- ------------ ------------
Derivative financial instruments (36,374) - (36,374)
================================== =========== ============ ============
Total (114,751) (1,895,393) (2,010,144)
================================== =========== ============ ============
Derivatives
used
Loans for Available-
At 30 June 2016 and 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
used Other
for financial
hedging liabilities Total
--------------------------------- ----------- ------------ ------------
Liabilities per balance
sheet GBP'000 GBP'000 GBP'000
================================= =========== ============ ============
Borrowings - (754,115) (754,115)
---------------------------------- ----------- ------------ ------------
Trade and other payables
(b) - (1,056,175) (1,056,175)
---------------------------------- ----------- ------------ ------------
Redemption liabilities
- option contracts (25,941) - (25,941)
---------------------------------- ----------- ------------ ------------
Derivative financial instruments (47,279) - (47,279)
================================== =========== ============ ============
Total (73,220) (1,810,290) (1,883,510)
================================== =========== ============ ============
(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.
The following table presents the Group's financial assets and
liabilities that are measured at fair value at 30 June 2017.
Level Level Level
1 2 3 Total
-------------------------------------- -------- --------- ---------- ----------
At 30 June 2017 GBP'000 GBP'000 GBP'000 GBP'000
====================================== ======== ========= ========== ==========
Assets
-------------------------------------- -------- --------- ---------- ----------
Derivatives used for hedging - 101,308 - 101,308
-------------------------------------- -------- --------- ---------- ----------
Available-for-sale financial
assets
-------------------------------------- -------- --------- ---------- ----------
- equity securities - - 992 992
-------------------------------------- -------- --------- ---------- ----------
- debt investments - - 10,392 10,392
-------------------------------------- -------- --------- ---------- ----------
- fixed deposits 130,152 - - 130,152
====================================== ======== ========= ========== ==========
Total 130,152 101,308 11,384 242,844
====================================== ======== ========= ========== ==========
Liabilities
-------------------------------------- -------- --------- ---------- ----------
Deferred and contingent consideration - - (23,690) (23,690)
-------------------------------------- -------- --------- ---------- ----------
Redemption liabilities -
option contracts - - (78,377) (78,377)
-------------------------------------- -------- --------- ---------- ----------
Derivatives used for hedging - (36,374) - (36,374)
====================================== ======== ========= ========== ==========
Total - (36,374) (102,067) (138,441)
====================================== ======== ========= ========== ==========
Level Level Level
1 2 3 Total
-------------------------------------- -------- --------- --------- ---------
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)
====================================== ======== ========= ========= =========
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 period there were no transfers between level 1, 2 and
3. There were no changes in valuation techniques during the
period.
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.
A reconciliation of the movements in level 3 is provided
below:
Assets Liabilities
Level Level
3 3
GBP'000 GBP'000
============================ ======== ===========
At 1 January 2017 13,079 (57,134)
------------------------------ -------- -----------
Exchange differences (274) 3,262
------------------------------ -------- -----------
Companies acquired - (49,188)
------------------------------ -------- -----------
Utilised in the year - 2,973
------------------------------ -------- -----------
Charged to income statement (1,421) (1,980)
============================== ======== ===========
At 30 June 2017 11,384 (102,067)
============================== ======== ===========
Of the GBP1,421,000 charged to the income statement, GBP75,000
is credited in net finance costs and GBP1,496,000 charged to other
operating costs.
Of the GBP1,980,000 charged to the income statement,
GBP2,444,000 is charged to net finance costs and GBP464,000 is
credited to other operating costs.
14. Borrowings
----------------------------------------------
As at As at
30 June 30 June
2017 2016
GBP'000 GBP'000
========================== ======== ========
Current
-------------------------- -------- --------
Bank overdraft 16,605 22,055
-------------------------- -------- --------
Unsecured loan notes 34,010 -
-------------------------- -------- --------
Bank borrowings 239 449
-------------------------- -------- --------
Finance lease liabilities 239 244
========================== ======== ========
51,093 22,748
========================== ======== ========
Non Current
-------------------------- -------- --------
Unsecured loan notes 439,005 482,875
-------------------------- -------- --------
Bank borrowing 256,555 248,051
-------------------------- -------- --------
Finance lease liabilities 527 441
========================== ======== ========
696,087 731,367
========================== ======== ========
Total borrowings 747,180 754,115
========================== ======== ========
The borrowings include secured liabilities (finance leases) of
GBP766,000 (2016: GBP685,000).
15. Provisions for liabilities and charges
---------------------------------------------------------------------
Property
related Litigation
provisions provisions Other Total
GBP'000 GBP'000 GBP'000 GBP'000
======================= =========== =========== ======== ========
At 1 January 2017 2,919 7,442 36 10,397
----------------------- ----------- ----------- -------- --------
Exchange differences (32) (44) - (76)
----------------------- ----------- ----------- -------- --------
Utilised in the period (16) (970) - (986)
----------------------- ----------- ----------- -------- --------
Charged to the income
statement 40 5,088 - 5,128
----------------------- ----------- ----------- -------- --------
Interest charge 30 - - 30
======================= =========== =========== ======== ========
At 30 June 2017 2,941 11,516 36 14,493
======================= =========== =========== ======== ========
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
======================= ====== ========= ==== =========
At 30 June 2016 1,113 9,644 909 11,666
======================= ====== ========= ==== =========
As at As at
30 June 30 June
2017 2016
GBP'000 GBP'000
============================= ======== ========
Analysis of total provisions
----------------------------- -------- --------
Current - to be utilised
within one year 12,695 10,829
------------------------------- -------- --------
Non-current - to be utilised
in more than one year 1,798 837
=============================== ======== ========
14,493 11,666
============================= ======== ========
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 2026.
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.
The amount charged to the income statement in 2016 includes
litigation costs related to employment contract disputes.
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
2017, in connection with certain litigation matters, the Group's
litigation provisions include an amount of GBP0.1 million (2016:
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 period ended 30 June 2017
(2016: nil).
Other
Other provisions include provisions for clawback of commission
which arises on certain types of Employee Benefits contracts.
16. Other reserves
Fair
Share value Exchange
premium and hedging reserves Total
GBP'000 GBP'000 GBP'000 GBP'000
================================= ======== ============ ========= =========
At 1 January 2017 104,111 (54,453) 83,561 133,219
--------------------------------- -------- ------------ --------- ---------
Fair value gains net of
tax:
--------------------------------- -------- ------------ --------- ---------
- available-for-sale - 35 - 35
--------------------------------- -------- ------------ --------- ---------
- cash flow hedges - 39,639 - 39,639
--------------------------------- -------- ------------ --------- ---------
Currency translation differences - - (21,841) (21,841)
================================= ======== ============ ========= =========
Net gains/(losses) recognised
directly in equity - 39,674 (21,841) 17,833
--------------------------------- -------- ------------ --------- ---------
Issue of share capital - - - -
================================= ======== ============ ========= =========
At 30 June 2017 104,111 (14,779) 61,720 151,052
================================= ======== ============ ========= =========
Fair
Share value Exchange
premium and hedging reserves Total
GBP'000 GBP'000 GBP'000 GBP'000
=================================== ======== ============ ========= =========
At 1 January 2016 104,074 (12,827) (17,280) 73,967
----------------------------------- -------- ------------ --------- ---------
Fair value losses 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
=================================== ======== ============ ========= =========
17. Cash generated from operations
6 months 6 months
ended ended
30 June 30 June
2017 2016
GBP'000 GBP'000
============================================= ========= =========
Profit before taxation 99,247 55,237
============================================= ========= =========
Investment and finance income (4,588) (2,820)
--------------------------------------------- --------- ---------
Interest payable on bank loans and
finance leases 8,235 8,804
--------------------------------------------- --------- ---------
Fair value (gains)/losses on derivative
financial instruments (371) 90
--------------------------------------------- --------- ---------
Net pension financing expenses 2,812 2,499
--------------------------------------------- --------- ---------
Unwinding of liability discounting 2,473 853
--------------------------------------------- --------- ---------
Depreciation 6,248 6,102
--------------------------------------------- --------- ---------
Amortisation of other intangible assets 17,965 18,033
--------------------------------------------- --------- ---------
Amortisation of share based payments 13,031 13,490
--------------------------------------------- --------- ---------
Share of results of associates' undertakings (2,051) (1,948)
--------------------------------------------- --------- ---------
Non cash exceptional items 1,054 9,134
--------------------------------------------- --------- ---------
(Gains)/losses on disposal of businesses (1,455) 1,363
--------------------------------------------- --------- ---------
Gains on disposal of property, plant
and equipment (11) (56)
--------------------------------------------- --------- ---------
Impairment of available-for-sale financial
assets 122 -
--------------------------------------------- --------- ---------
Gains on disposal of available-for-sale
financial assets - (129)
--------------------------------------------- --------- ---------
Increase in trade and other receivables (24,663) (39,209)
--------------------------------------------- --------- ---------
Decrease in trade and other payables
- excluding insurance broking balances (57,682) (29,159)
--------------------------------------------- --------- ---------
Increase/(decrease) in provisions for
liabilities and charges 3,957 (13,597)
--------------------------------------------- --------- ---------
Decrease in retirement benefit obligations 385 618
============================================= ========= =========
Net cash inflow from operations 64,708 29,305
============================================= ========= =========
18. Business combinations
Adjustments in respect of 2016 acquisitions
During the period, provisional fair values have been updated in
respect of acquisitions made in 2016 and has resulted in the
following changes:
Provisional
fair
value
Revised reported
fair at Change
value 31 Dec in fair
acquired 2016 value
GBP'000 GBP'000 GBP'000
================================ ========== ============ =========
Stonehill Reinsurance Partners,
LLC (Stonehill) 2,123 2,085 38
--------------------------------- ---------- ------------ ---------
AssetVal Pty Ltd 573 637 (64)
================================= ========== ============ =========
2,696 2,722 (26)
================================ ========== ============ =========
These changes in fair value affected the following balance sheet
classes:
Provisional
fair
value
Revised reported Change
fair at in
value 31 Dec fair
acquired 2016 value
GBP'000 GBP'000 GBP'000
============================== ========= =========== ========
Property, plant and equipment 145 146 (1)
------------------------------- --------- ----------- --------
Other intangible assets 2,366 2,038 328
------------------------------- --------- ----------- --------
Trade and other receivables 391 607 (216)
------------------------------- --------- ----------- --------
Cash and cash equivalents
------------------------------ --------- ----------- --------
- own cash 1,078 1,078 -
------------------------------- --------- ----------- --------
- fiduciary cash 1,098 1,098 -
------------------------------- --------- ----------- --------
Insurance payables (1,098) (1,098) -
------------------------------- --------- ----------- --------
Trade and other payables (1,168) (1,004) (164)
------------------------------- --------- ----------- --------
Current taxation - (27) 27
------------------------------- --------- ----------- --------
Deferred taxation (116) (116) -
=============================== ========= =========== ========
2,696 2,722 (26)
============================== ========= =========== ========
At At
30 June 31 Dec
2017 2016 Change
Goodwill calculation GBP'000 GBP'000 GBP'000
============================= ======== ======== ========
Purchase consideration
----------------------------- -------- -------- --------
- cash paid 4,832 4,832 -
------------------------------ -------- -------- --------
- contingent consideration 1,731 1,731 -
------------------------------ -------- -------- --------
- deferred consideration 374 374 -
============================== ======== ======== ========
Total purchase consideration 6,937 6,937 -
------------------------------ -------- -------- --------
Less fair value of net
assets acquired 2,696 2,722 (26)
============================== ======== ======== ========
Goodwill 4,241 4,215 26
============================== ======== ======== ========
At At
30 June 31 Dec
2017 2016 Change
GBP'000 GBP'000 GBP'000
================================== ======== ======== ========
Purchase consideration
settled in cash 4,832 4,832 -
----------------------------------- -------- -------- --------
Cash and cash equivalents
- own cash in subsidiaries
acquired (1,078) (1,078) -
=================================== ======== ======== ========
3,754 3,754 -
================================== ======== ======== ========
Cash and cash equivalents
- fiduciary cash in subsidiaries
acquired (1,098) (1,098) -
=================================== ======== ======== ========
Cash outflow on acquisition 2,656 2,656 -
=================================== ======== ======== ========
Current period acquisitions
During the period the following new business acquisitions and
additional investments were completed:
Percentage
voting
Acquisition rights Cost
Notes date acquired GBP'000
=========================== ====== ============ ========== ========
Construction Risk Partners
LLC (CRP) i Jan 2017 50.1% 39,417
--------------------------- ------ ------------ ---------- --------
Additional investments Jan-
in existing businesses ii Jun 2017 various 4,877
=========================== ====== ============ ========== ========
44,294
=============================================== ========== ========
i) Acquisition of Construction Risk Partners LLC (CRP)
On 27 January 2017, the Group completed the acquisition of CRP
Holding Company LLC, the holding company of Construction Risk
Partners LLC (CRP), one of the leading construction risk and surety
specialty brokers in the USA, providing risk consulting and broking
services. The acquired business contributed revenue of GBP9,111,000
and net profit, including acquisition and integration costs
incurred to date, of GBP2,892,000 to the Group for the period since
acquisition. If the acquisition had taken place on 1 January 2017,
we estimate the contribution to Group revenue would have been
GBP10,933,000 and net profit, including acquisition and integration
costs incurred to date, would have been GBP3,470,000.
Goodwill calculation GBP'000
============================= =======
Purchase consideration
----------------------------- -------
- cash paid 39,417
================================ =======
- contingent consideration -
============================= =======
Total purchase consideration 39,417
-------------------------------- -------
Less fair value of net
assets acquired 1,623
================================ =======
Goodwill 37,794
================================ =======
The assets and liabilities arising from the acquisition were as
follows:
Acquiree's
carrying Fair
amount value
GBP'000 GBP'000
============================== ========== ========
Property, plant and equipment 381 381
-------------------------------- ---------- --------
Other intangible assets 2 2
-------------------------------- ---------- --------
Trade and other receivables 4,794 4,794
-------------------------------- ---------- --------
Cash and cash equivalents
------------------------------ ---------- --------
- own cash 2,574 2,574
-------------------------------- ---------- --------
- fiduciary cash 9,589 9,589
-------------------------------- ---------- --------
Insurance payables (9,589) (9,589)
-------------------------------- ---------- --------
Trade and other payables (4,202) (4,202)
-------------------------------- ---------- --------
Non-controlling interests (1,926) (1,926)
================================ ========== ========
1,623 1,623
============================== ========== ========
GBP'000
======================================= ========
Purchase consideration settled in cash 39,417
---------------------------------------- ========
Cash and cash equivalents - own cash
in subsidiary acquired (2,574)
======================================== ========
36,843
--------------------------------------- ========
Cash and cash equivalents - fiduciary
cash in subsidiary acquired (9,589)
======================================== ========
Cash outflow on acquisition 27,254
======================================== ========
As at 30 June 2017, the process of reviewing the fair values of
assets acquired had not been completed, consequently the fair
values stated above are provisional.
Goodwill recognised is expected to be deductible for income tax
purposes.
ii) Other acquisitions and additional investments
Goodwill calculation GBP'000
======================================= =======
Purchase consideration
--------------------------------------- =======
- cash paid 4,877
======================================== =======
Total purchase consideration 4,877
---------------------------------------- =======
Less fair value of net assets acquired 779
---------------------------------------- -------
Less equity movement on transactions
with non-controlling interest 4,098
======================================== =======
Goodwill -
======================================== =======
The assets and liabilities arising from the acquisition were as
follows:
Acquiree's Fair
carrying value
amount GBP'000
========================== ========== ========
Non-controlling interests 779 779
========================== ========== ========
779 779
========================== ========== ========
GBP'000
======================================= =======
Purchase consideration settled in cash 4,877
======================================== =======
Cash outflow on acquisition 4,877
======================================== =======
As at 30 June 2017, the process of reviewing the fair values of
assets acquired had not been completed, consequently the fair
values stated above are provisional.
Group summary of the net assets acquired and goodwill
CRP Others Total
GBP'000 GBP'000 GBP'000
======================================== ======== ======== ========
Purchase consideration:
---------------------------------------- -------- -------- ========
- cash paid 39,417 4,877 44,294
======================================== ======== ======== ========
Total purchase consideration 39,417 4,877 44,294
======================================== ======== ======== ========
Less fair value of net assets
acquired 1,623 779 2,402
---------------------------------------- -------- -------- --------
Less equity movement on transactions
with non-controlling interests - 4,098 4,098
======================================== ======== ======== ========
Goodwill on acquisitions occurring
during the period 37,794 - 37,794
======================================== ======== ======== ========
Impact of revision to fair value
adjustment in relation to acquisitions
completed in 2016 26
======================================== ======== ======== ========
Net increase in goodwill 37,820
======================================== ======== ======== ========
Impact of additional investments 4,098
======================================== ======== ======== ========
Net decrease in equity 4,098
======================================== ======== ======== ========
Group summary of cash flows
CRP Others Total
GBP'000 GBP'000 GBP'000
====================================== ======== ======== ========
Purchase consideration settled
in cash 39,417 4,877 44,294
-------------------------------------- ======== ======== ========
Cash and cash equivalents - own
cash in subsidiary acquired (2,574) - (2,574)
====================================== ======== ======== ========
36,843 4,877 41,720
-------------------------------------- -------- -------- --------
Cash and cash equivalents - fiduciary
cash in subsidiary acquired (9,589) - (9,589)
====================================== ======== ======== ========
Cash outflow on acquisitions
in the period 27,254 4,877 32,131
====================================== ======== ======== ========
19. Business disposals
On 31 May 2017, the Group disposed of 100% of its shareholdings
in Expacare Limited.
Net assets and proceeds of disposal
Fair
value
GBP'000
=================================== ========
Other intangible assets 8
------------------------------------ --------
Trade and other receivables 538
------------------------------------ --------
Cash and cash equivalents
----------------------------------- --------
- own cash 235
------------------------------------ --------
Trade and other payables (239)
------------------------------------ --------
Current taxation (48)
------------------------------------ --------
Deferred taxation 3
==================================== ========
Net assets at disposal 497
==================================== ========
Gain on disposal 682
==================================== ========
Proceeds on disposal 1,179
==================================== ========
Cash inflow on disposal during the
period 1,179
==================================== ========
Total consideration 1,179
==================================== ========
Total
GBP'000
======================================= ========
Disposal consideration settled in cash 1,179
---------------------------------------- --------
Cash and cash equivalents
--------------------------------------- --------
- own cash in subsidiary disposed (235)
======================================== ========
Cash inflow on disposal during the
period 944
======================================== ========
On 3 April 2017, the Group disposed of a retail book of business
in Australia for a total consideration of GBP773,000. After costs
on disposal of GBP501,000, the disposal resulted in a gain of
GBP272,000. The transaction generated a cash inflow of GBP657,000
and the remaining consideration of GBP116,000 will be received in
second half of the year.
Group summary of cash flows
Expacare Others Total
GBP'000 GBP'000 GBP'000
========================== ======== ======== ========
Disposal consideration
settled in cash 1,179 657 1,836
--------------------------- -------- -------- ========
Cash and cash equivalents
- own cash in subsidiary
disposed (235) - (235)
=========================== ======== ======== ========
Cash inflow on disposal
during the period 944 657 1,601
=========================== ======== ======== ========
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 service costs accrued for the period are as
follows:
Overseas
UK Schemes 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
2017 2016 2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
======================== ======== ======== ======== ======== ======== ========
Defined benefit schemes - - - 463 - 463
------------------------ ======== -------- ======== ======== ======== ========
Defined contribution
schemes 10,269 10,664 12,020 9,453 22,289 20,117
======================== ======== ======== ======== ======== ======== ========
10,269 10,664 12,020 9,916 22,289 20,580
======================== ======== ======== ======== ======== ======== ========
The amounts recognised in the consolidated income statement are
as follows:
Overseas
UK Schemes 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
2017 2016 2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
======================================================= ======== ========= ======== ======== ========= =========
Service cost - - - (463) - (463)
======== ========= ======== ======== =========
Expenses (180) (170) (205) (48) (385) (218)
======== ========= ======== ======== =========
Total (included within salaries and associated
expenses) (180) (170) (205) (511) (385) (681)
======== ========= ======== ======== ========= =========
Interest cost (9,170) (10,783) (1,247) (1,209) (10,417) (11,992)
======== ========= ======== ======== =========
Expected return on assets 6,605 8,508 1,000 985 7,605 9,493
======== ========= ======== ======== =========
Total (included within
finance costs) (2,565) (2,275) (247) (224) (2,812) (2,499)
======================================================= ======== ========= ======== ======== ========= =========
Expenses before taxation (2,745) (2,445) (452) (735) (3,197) (3,180)
=======================================================
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 2017
the Group has updated its assumption regarding the discount rate
applicable to the Schemes' liabilities in line with current market
information.
The amounts included in the consolidated statement of
comprehensive income are as follows:
UK Scheme Overseas Schemes Total
6 months ended 30 June 2017 GBP'000 % GBP'000 % GBP'000
Actual return less expected return on Scheme assets 16,433 1,999 18,432
% of period end market value of Scheme assets 3.4% 3.5%
Experience gains arising on Scheme liabilities (1) - (563) (563)
% of period end present value of Scheme liabilities (1) - (0.8%)
Changes in assumptions underlying the present value of the
Scheme liabilities 9,961 (2,384) 7,577
% of period end present value of Scheme liabilities 1.5% (3.3%)
Actuarial losses recognised in reserves (2) 26,394 - (948) 25,446
% of period end present value of Scheme liabilities 4.1% (1.3%)
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
2017 2016 2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Defined benefit obligation
Present value of funded obligations (644,242) (646,314) (71,441) (75,373) (715,683) (721,687)
Fair value of plan assets 483,395 464,946 56,734 55,267 540,129 520,213
Net liability recognised in the balance
sheet (160,847) (181,368) (14,707) (20,106) (175,554) (201,474)
Total
6 months 6 months
ended ended
30 June 30 June
2017 2016
GBP'000 GBP'000
Defined benefit obligation
Retirement benefit surpluses 125 -
Retirement benefit obligations (175,679) (201,474)
Net liability recognised in the balance
sheet (175,554) (201,474)
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
2017 2016 2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Reconciliation of defined benefit liability
Opening defined benefit liability (184,496) (118,947) (13,916) (11,440) (198,412) (130,387)
Exchange differences - - 609 (1,598) 609 (1,598)
Pension expense (2,745) (2,445) (452) (735) (3,197) (3,180)
Employer contributions - - - 63 - 63
Total gain/(loss) recognised in reserves (2) 26,394 (59,976) (948) (6,396) 25,446 (66,372)
Net liability recognised in the balance
sheet (160,847) (181,368) (14,707) (20,106) (175,554) (201,474)
(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
consolidated 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 162
of the Group's Annual Report for 2016. The basis of the
remuneration of the Directors and key management remains consistent
with that reported in the Group's Annual Report for 2016.
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 referendum on 23 June 2016 introduced
uncertainty in future periods. Whilst there has been much
speculation in the press about the scenarios the country faces, the
Group continues to serve its clients' best interests. The Group
continues 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 44 and 45 of the Group's Annual Report for
2016. 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 Group's strategic plan arising from
changes in the external environment,
markets, customer behaviour and political developments
such as Brexit, 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 or failure of an IT
outsourcing provider / IT supplier, malicious
act and/or cyber crime and internal operational issues.
Information Security Intermediaries and pension administrators process and
retain confidential data in the normal
course of business. Risks relate to loss of customer
records or breach of confidentiality
due to inadequate security and other key controls.
Data Privacy Risks arising from non-compliance with or
misinterpretation of local or international data
privacy regulation/legislation/laws.
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 / Financial Crime (including internal Risks arise from non-compliance with or misinterpretation
and external fraud) 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 and Liquidity Risks arising from an inability to 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 Risk There is a risk associated with a failure of a key
counterparty resulting in a loss of own
cash, fiduciary funds, investments and deposits,
derivative assets and/or trade receivables.
Defined Benefit Pension Scheme Risk of adverse impact on the balance 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 2016, subject to the
following change which has taken place since the publication of
that document: Bruce Carnegie-Brown stepped down from the Board on
14 June 2017.
On behalf of the Board
Charles Rozes
Finance Director
27 July 2017
independent review report to
jardine lloyd thompson group plc
report on the consolidated interim financial statement
Our conclusion
We have reviewed Jardine Lloyd Thompson Group plc's consolidated
interim financial statements (the 'interim financial statements')
in the interim results of Jardine Lloyd Thompson Group plc for the
6 month period ended 30 June 2017. Based on our review, nothing has
come to our attention that causes us to believe that the interim
financial statements are not prepared, in all material respects, in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- The consolidated balance sheet as at 30 June 2017;
-- The consolidated income statement and consolidated 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 interim financial
statements.
The 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 Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
As disclosed in note to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The interim results, including the 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 Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the 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 Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK and
Ireland) and, consequently, does not enable us to obtain assurance
that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
We have read the other information contained in the interim
results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
27 July 2017
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 interim 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 BLGDRRUDBGRL
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