INTERIM RESULTS 2015 FOR THE SIX MONTHS ENDING 30th JUNE 2015

Transcription

1 INTERIM RESULTS 2015 FOR THE SIX MONTHS ENDING 30th JUNE 2015

2 INTERIM RESULTS 2015 HIGHLIGHTS Organic revenue growth of 2%, lower than recent years as a result of: - Shift in phasing of revenues and trading profit between two halves of the year 200 basis point impact on organic revenue growth - Accelerated reduction in commission payments within UK Employee Benefits 100 basis point impact on organic revenue growth - Ongoing challenging rating environment Full year organic revenue growth anticipated to be in line with previous year Encouraging progress with build-out of US Specialty business Excluding US Specialty investment, underlying trading profit would have increased by 3% Acquired 5 new businesses for a total consideration of 18.9 million Disposed of stake in Siaci St Honoré for 80.2 million Continued investment in talent 530 new colleagues joined the Group in the period Increased interim dividend by 5% to 11.1p

3 2015 INTERIM FINANCIAL HIGHLIGHTS Six months to June ( m) Growth Actual CRE 3 Organic 4 Total revenue % 6% 2% Underlying trading profit (7%) (9%) Underlying profit margin % 19.7% Underlying PBT (10%) Reported PBT % Underlying EPS (diluted) p 33.6p (10%) Reported EPS (diluted) 33.6p 30.3p 11% Dividend per share 11.1p 10.6p 5% 1. Total revenue comprises fees, commissions and investment income 2. Underlying results exclude exceptional items 3. CRE = constant rates of exchange 4. Organic growth is based on total revenue excluding the effect of currency, acquisitions, disposals and investment income

4 RISK & INSURANCE JLT SPECIALTY Total Revenue m 2015 Growth CRE Organic Trading Profit 2015 CRE 2014 Trading Margin 2015 CRE 2014 JLT Specialty % 5% 1% % 17% 17% Highlights Good performance in difficult market conditions Without movement of certain existing business into H2, organic revenue growth would have been 4% Merger of Lloyd & Partners has created market leading Specialty focused broker Hayward Aviation provides a significant opportunity to build out a global General Aviation offering Full year organic revenue growth expected to be broadly in line with the previous year

5 RISK & INSURANCE JLT RE Total Revenue m 2015 Growth CRE Organic Trading Profit 2015 CRE 2014 Trading Margin 2015 CRE 2014 JLT Re % 1% 1% % 34% 30% Highlights Trading profit increased by 17% Without movement of certain existing business into H2, organic revenue growth would have been 3% Good growth outlook for this business given ability to attract talent and build on areas of specialism Strong new business pipeline anticipate good positive year-on-year organic revenue growth Remain on track to deliver 20% trading margin by the end of 2016

6 RISK & INSURANCE JLT AUSTRALIA & NEW ZEALAND Total Revenue m 2015 Growth CRE Organic Trading Profit 2015 CRE 2014 Trading Margin 2015 CRE 2014 JLT Australia & NZ 61.1 (5%) 1% 1% % 34% 35% Highlights Without movement of certain existing business into H2, organic revenue growth would have been 4% Solid growth in Construction, Corporate Risks and Local Government Continuing to invest in building out capabilities in key Specialisms Business well positioned to deliver improved organic revenue growth for the full year

7 RISK & INSURANCE JLT ASIA Total Revenue m 2015 Growth CRE Organic Trading Profit 2015 CRE 2014 Trading Margin 2015 CRE 2014 JLT Asia % (1%) (1%) % 19% 18% Highlights Strong increase in trading profit Challenging trading conditions - marked influx of new capacity in the region Benefits of Business Transformation Programme delivering improved trading profit margin New senior management team in place in Singapore and China Significant investment to be made in building out China operations

8 RISK & INSURANCE JLT LATIN AMERICA Total Revenue m 2015 Growth CRE Organic Trading Profit 2015 CRE 2014 Trading Margin 2015 CRE 2014 JLT Latin America % 18% 18% % 23% 26% Highlights Strong organic revenue growth of 18% Flat trading profit reflects continued investment in the business Confidence in short and long-term growth prospects supported by continued investment in the business

9 RISK & INSURANCE JLT USA Total Revenue m 2015 Growth CRE Organic Trading Profit 2015 CRE 2014 Trading Margin 2015 CRE 2014 JLT USA % 178% 93% (12.6) (11.6) (0.8) - - (31%) Highlights Business progressing in line with expectations Nearing 150 colleagues, operating out of 12 offices in key locations across the US Construction and Entertainment added to key Specialties of Aviation, Energy, Technology, Cyber, D&O and Credit, Political & Security Strong sales momentum continues, with large and growing pipeline of new business

10 EMPLOYEE BENEFITS UK & IRELAND Total Revenue m 2015 Growth CRE Organic Trading Profit 2015 CRE 2014 Trading Margin 2015 CRE 2014 UK & Ireland (8%) % 8% 14% Highlights Accelerated decline in commissions impacted revenues by 5.3 million Despite this impact, expect to deliver revenue growth for the full year in 2015 Expect full year 2015 trading profit margin to reduce by 300 basis points Confident about future of broader business BenPal - one million DC members on platform JLT investment platform now has 4 billion under management Anticipate organic revenue growth to return to historic levels in 2016 with 2015 margin being maintained

11 EMPLOYEE BENEFITS INTERNATIONAL Total Revenue m 2015 Growth CRE Organic Trading Profit 2015 CRE 2014 Trading Margin 2015 CRE 2014 Asia % 21% 19% % 33% 36% Latin America 9.1 (2%) 11% 5% % 19% 28% Australia & NZ % 191% 20% % 5% 10% Other 1.6-3% 3% (0.7) (0.7) (0.3) (44%) (44%) (19%) Highlights Asia impressive organic growth of 19%, acquisition of Essential Healthcare in China Latin America 5% organic growth, with significant investment made to build out EB offering across Brazil Australia and New Zealand organic growth of 20%; acquisitions of Recovre and Alpha position JLT as a leading rehabilitation services provider in a rapidly expanding sector

12 ASSOCIATES m 2015 CRE 2014 Growth Total contribution to JLT after tax (20%) Principal Associate Holdings as at 30 th June 2015 March-JLT Spain 25% GrECo Austria 20% MAG-JLT Italy 25% JLT Sterling Mexico 36% Highlights Reduced contribution principally reflects sale of stake in French Associate Transaction generated cash proceeds of 80.2m and an exceptional gain of 18.5m Other Associates have performed in line with expectations % = JLT equity interest

13 MIKE REYNOLDS GROUP FINANCE DIRECTOR

14 FINANCIAL REVIEW AGENDA Underlying operating cost ratio USD revenue protection Breakdown of exceptional items Balance sheet and cash flow Group funding update 2015 anticipated impact of exceptional items

15 UNDERLYING OPERATING COST RATIO m Variance Total revenue % % 32 Operating costs: Staff costs % % 35 Premises % % 2 Depreciation & amortisation % % 1 Other operating costs % % % % 40

16 USD REVENUE PROTECTION Full Year Projections Forward rates Actual USD hedging rates achieved as at 24th July Current USD hedged positions 70% 50% 20% Forward USD rates as at 24th July Blended USD rates post hedging Value of 2015 revenue ($360m) 231m 232m 232m 232m Illustrative YOY revenue impact 1m 0m 0m

17 BREAKDOWN OF EXCEPTIONAL ITEMS m Net exceptional items: Business Transformation Programme costs - (2.8) Profit on sale of Siaci Acquisition and integration costs (6.8) (6.2) Restructuring costs (6.7) - Other (9.0) Taxation impact of exceptional items: Tax credit on exceptional items

18 BALANCE SHEET AS AT 30 TH JUNE m Change 31 Dec 2014 Goodwill and intangibles Fixed assets Associates and investments (64) 105 Net working capital and other (7) 181 Derivatives after deferred tax (14) (5) (9) 2 Net pension deficit after deferred tax (128) (120) (8) (146) Other deferred net tax assets Net debt (457) (436) (21) (474) Net assets (46) 307

19 CASH FLOW (OPERATIONAL BASIS) m EBITDA Deduct: Net interest (8) (7) Tax paid (16) (18) Net working capital increase (52) (101) Annual capex (33) (31) Net shares acquired (17) (15) Pension deficit funding (1) (1) Acquisitions/disposals (13) (12) Dividends paid (43) (41) Proceeds on disposal of associates 80 - Foreign exchange (5) 6 Other non cash items (3) (9) Net cash inflow / (outflow) 17 (91)

20 GROUP FUNDING Renewal of Core Revolving Credit Facility in February Completion of unsecured committed revolving credit facility of 450m Strong Financial Position - Group committed debt facilities of total c 890m - Significant available committed debt facility headroom Receipt of 80m proceeds from disposal of 26% interest in Siaci - Proceeds used to repay borrowings Net debt / EBITDA ratio of 2:1* at 30 June 2015 * Calculated in accordance with JLT bank covenants

21 EXCEPTIONAL ITEMS 2015 CURRENT ESTIMATE m 2015 Acquisition and integration costs (13) Restructuring costs (9) Disposal of Associate 18 Others (2) (6)

22 DOMINIC BURKE GROUP CEO

23 MARKET UPDATE Market remains very competitive, driven by: - Benign loss environment - Changing reinsurance buying habits - Excess capital More complex picture emerging - Rate decline slowing in some limited areas e.g. June Florida renewals - Specialty lines down double digits in most areas - Sharp downturn in Energy rates at end of second quarter Positive environment for clients JLT prospects driven more by fundamental macro-economic and demographic factors and underlying growth initiatives

24 INVESTING FOR GROWTH USA JLT Re Emerging Markets Broadening geographic presence International EB Specialty - Hiring - Bolt on M&A - Deepening and expanding capabilities

25 OUTLOOK We remain confident that our full year organic revenue growth will be in line with the previous year. As we look forward, the business is wellpositioned to deliver sustainable earnings growth.

26 SUPPLEMENTARY SLIDES

27 PROFIT & LOSS 6 months to June ( m) Change Revenue Operating costs (489.2) (449.1) (40.1) Underlying trading profit (8.1) Underlying share of Associates (1.4) Net finance costs (11.9) (10.3) (1.6) Underlying PBT (11.1) Exceptional items 5.2 (9.0) 14.2 PBT Underlying tax expense (26.0) (26.8) 0.8 Tax on exceptional items Non-controlling interests (3.9) (6.6) 2.7 PAT (after non-controlling interests) Underlying PAT (after non-controlling interests) (7.6) Diluted EPS 33.6p 30.3p 3.3p Underlying diluted EPS 30.2p 33.6p (3.4p) Interim dividend per share 11.1p 10.6p 0.5p

28 TOTAL REVENUE & TRADING PROFIT BY BUSINESS SEGMENT 6 months to June ( m) 2015 Growth CRE Organic 2015 CRE CRE 2014 Risk & Insurance: JLT Specialty % 5% 1% % 17% 17% JLT Re % 1% 1% % 34% 30% JLT Australia & NZ 61.1 (5%) 1% 1% % 34% 35% JLT Asia % (1%) (1%) % 19% 18% JLT Latin America % 18% 18% % 23% 26% JLT Insurance Services 25.0 (8%) (9%) (9%) % 6% 11% JLT Europe Middle East and Africa % 24% 24% % 14% 10% JLT Canada % 7% 10% (1.6) 8% 7% (16%) JLT USA % 178% 93% (12.6) (11.6) (0.8) - - (31%) JLT Insurance Management 3.9 7% (1%) (1%) (0.1) (0.1) 0.2 (2%) (2%) 6% Employee Benefits: Total Revenue Trading Profit Trading Margin % 4% 2% % 20% 22% UK & Ireland (8%) % 8% 14% Asia % 21% 19% % 33% 36% Latin America 9.1 (2%) 11% 5% % 19% 28% Australia & NZ % 191% 20% % 5% 10% Europe Middle East and Africa % 24% 24% (0.6) (0.6) (0.1) (68%) (68%) (16%) Canada 0.7 (17%) (14%) (14%) (0.1) (0.1) (0.2) (16%) (16%) (22%) % 10% % 15% 20% Central Costs (11.3) (11.4) (10.4) Total % 6% 2% % 17.1% 19.7% CRE = Constant Rate of Exchange

29 TOTAL REVENUE GROWTH COMPONENTS 6 months to June 2015 (%) Risk & Insurance: JLT Specialty 0.8% 4.0% - 4.8% (0.2%) 4.6% JLT Re 0.5% % 4.0% 4.5% JLT Australia & NZ 1.4% % (6.5%) (5.1%) JLT Asia (0.9%) 0.3% - (0.6%) 5.9% 5.3% JLT Latin America 17.7% 0.2% (0.2%) 17.7% (9.4%) 8.3% JLT Insurance Services (9.1%) (0.1%) - (9.2%) 1.3% (7.9%) JLT Europe Middle East and Africa 24.0% - 0.1% 24.1% (5.8%) 18.3% JLT Canada 9.6% (2.6%) (0.2%) 6.8% (2.1%) 4.7% JLT USA 92.6% 85.0% % 25.7% 203.3% JLT Insurance Management (0.6%) - - (0.6%) 7.8% 7.2% Employee Benefits: Organic Growth Acquisition Disposal Impact Investment Income & Other CRE Growth Currency Impact Total Growth 2.4% 1.7% - 4.1% - 4.1% UK & Ireland (8.0%) 7.9% - (0.1%) (0.3%) (0.4%) Asia 19.3% 1.5% % 9.8% 30.6% Latin America 5.0% 6.2% % (13.3%) (2.1%) Australia & NZ 20.1% 170.5% % (18.7%) 171.9% Europe Middle East and Africa 23.5% % (2.4%) 21.1% Canada (13.9%) - (0.1%) (14.0%) (3.0%) (17.0%) 0.2% 10.0% % 0.7% 10.9% Total 1.9% 3.6% - 5.5% 0.2% 5.7%

30 EBITDA CALCULATION 6 months to June ( m) Underlying trading profit Add-back: Amortisation of staff share options Depreciation and other amortisation Profit from associates Other non-recurring items (13.5) (6.4) EBITDA

31 NET DEBT As at 30th June ( m) Cash and investments: Cash and cash equivalents Available-for-sale cash deposits: Current - 2 Non current Less: fiduciary cash (insurance payables) (798) (731) Own funds Borrowings: Committed borrowings (582) (533) Uncommitted/other borrowings (24) (22) (606) (555) Net debt (457) (436)

32 CURRENCY IMPACT ON UNDERLYING PBT 6 months to June ( m) A) Transactional impact UK subsidiaries 1.0 (2.7) Overseas subsidiaries (2.7) B) Translational impact (2.4) (8.3) Total exchange effect 0.4 (11.0)

33 FOREIGN EXCHANGE EXPOSURE SENSITIVITY Sensitivity to USD income earned in the UK as at 24th July 2015 Full Year Projections Current hedged position 70% 50% 20% Potential achieved rate if balance sold forward based off a spot exchange rate of: (current spot)

34 ACHIEVED INTEREST RATES ON INVESTMENT INCOME 6 months to June Sterling 0.3% 0.3% US Dollars 0.1% 0.1% Australian Dollars 2.5% 3.1%