PRELIMINARY RESULTS 2014 FOR THE YEAR ENDING 31st DECEMBER Tuesday 3rd March 2015

Transcription

1 PRELIMINARY RESULTS 2014 FOR THE YEAR ENDING 31st DECEMBER 2014 Tuesday 3rd March 2015

2 PRELIMINARY RESULTS 2014 HIGHLIGHTS Strong organic revenue growth of 6% Underlying PBT increased by 3% Established Specialty insurance broking business in USA 5.2m net expenses in the year as expected Underlying Group PBT up 6% excluding these expenses Completed 8 acquisitions for a total consideration of 63m Announced merger of JLT Specialty and Lloyd & Partners Successful integration of JLT Re and Towers Watson Re continued Joined by 950 new employees taking employee numbers over 10,000 Completed Business Transformation Programme, delivering 16m of recurring savings by the end of 2014 Increased final dividend of 18.3p

3 2014 PRELIMINARY FINANCIAL HIGHLIGHTS Year ending 31 st December ( m) Growth Actual CRE 3 Organic 4 Total revenue 1 1, % 18% 6% Underlying trading profit % 12% Underlying profit margin % 18.9% Underlying PBT % Reported PBT % Underlying EPS (diluted) p 54.5p 3% Reported EPS (diluted) 47.8p 46.4p 3% Dividend per share 28.9p 27.2p 6% 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 TOTAL REVENUE AND TRADING PROFIT Total Revenue m 2014 Growth CRE Organic Trading Profit 2014 CRE 2013 Trading Margin 2014 CRE 2013 Risk & Insurance % 19% 5% % 19% 21% Employee Benefits % 14% 7% % 23% 22% Central Costs (22.5) (22.5) (20.3) , % 18% 6% % 18.1% 18.9%

5 RISK & INSURANCE JLT SPECIALTY Total Revenue m 2014 Growth CRE Organic Trading Profit 2014 CRE 2013 Trading Margin 2014 CRE 2013 JLT Specialty % 7% 6% % 21% 21% Highlights Strong organic revenue growth of 6% Strategic and operational benefits of merger with LPL to be realised in 2015 Merged business better positioned for growth

6 RISK & INSURANCE LLOYD & PARTNERS Total Revenue m 2014 Growth CRE Organic Trading Profit 2014 CRE 2013 Trading Margin 2014 CRE 2013 Lloyd & Partners % 3% 1% % 22% 22% Highlights Good performance given challenging market conditions Strength of wholesale relationships shown in good performance since merger announcement

7 RISK & INSURANCE JLT RE Total Revenue m 2014 Growth CRE Organic Trading Profit 2014 CRE 2013 Trading Margin 2014 CRE 2013 JLT Re % 115% 7% % 16% 15% Highlights Organic revenue growth of 7%, despite very challenging rating environment Trading margin flat at 15%, in line with guidance, as business continues to invest Trading profit margin of 20% achievable by the end of 2016 High levels of client and employee retention Confident in JLT Re s ability to continue to win market share

8 RISK & INSURANCE JLT AUSTRALIA & NEW ZEALAND Total Revenue m 2014 Growth CRE Organic Trading Profit 2014 CRE 2013 Trading Margin 2014 CRE 2013 JLT Australia & NZ (8%) 2% 2% % 28% 30% Highlights Organic revenue growth of 2% Revenue and trading profit impacted by adverse FX movements Continued hiring is successfully repositioning JLT as one of the leading Specialty brokers to large corporate buyers

9 RISK & INSURANCE JLT ASIA Total Revenue m 2014 Growth CRE Organic Trading Profit 2014 CRE 2013 Trading Margin 2014 CRE 2013 JLT Asia % 14% 9% % 16% 15% Highlights Strong organic revenue growth of 9% Trading profit increased by 9%, or 17% at constant rates of exchange Margin increased from 15% to 16%, in line with plans Dominic Samengo-Turner appointed CEO of JLT Asia with effect from 1st May 2015

10 RISK & INSURANCE JLT LATIN AMERICA Total Revenue m 2014 Growth CRE Organic Trading Profit 2014 CRE 2013 Trading Margin 2014 CRE 2013 JLT Latin America % 24% 22% % 31% 31% Highlights Strong organic revenue growth of 22% New start-up operation in Argentina successfully launched during the year Successfully established regional Affinity business with bespoke technology platform

11 RISK & INSURANCE JLT USA Total Revenue m 2014 Growth CRE Organic Trading Profit 2014 CRE 2013 Trading Margin 2014 CRE 2013 JLT USA (5.2) (5.4) Highlights Announced in August expected investment of $80m between 2015 and 2017; moving into profit in 2018 Hiring ahead of initial expectations; advised in November that some costs brought forward into 2014 Encouraging progress being made

12 EMPLOYEE BENEFITS UK & IRELAND Total Revenue m 2014 Growth CRE Organic Trading Profit 2014 CRE 2013 Trading Margin 2014 CRE 2013 UK & Ireland % 6% % 20% 19% Highlights Good progress when set against challenging economic and trading conditions Trading profit increase of 12%; 100bp increase in trading margin to 20% JLT now largest administrator of UK private pension schemes Duncan Howorth to re-assume role as CEO from 1 st June 2015

13 EMPLOYEE BENEFITS INTERNATIONAL Total Revenue m 2014 Growth CRE Organic Trading Profit 2014 CRE 2013 Trading Margin 2014 CRE 2013 Asia % 32% 28% % 33% 34% Latin America % 26% 6% % 21% 24% Australia & NZ 7.7 1% 13% 13% % 26% 14% Other % 80% 4% (0.6) (0.7) (0.4) (18%) (18%) (17%) Highlights Strong organic growth in Asia of 28% Asia high-net-worth life insurance broker maintains positive track record Acquisition of SCK in Brazil broadens overall client proposition and differentiates JLT s client offering Acquisition of Recovre positions JLT as one of the clear market leaders in workplace rehabilitation services

14 ASSOCIATES m 2014 CRE 2013 Growth Underlying contribution to JLT after tax (5%) Principal Associate Holdings in 2014 Siaci Saint Honoré France 26% March-JLT Spain 25% GrECo Austria 20% MAG-JLT Italy 25% JLT Sterling Mexico 36% Highlights Reduced contribution reflects poor macro economic conditions across Europe Cash proceeds of around 82 million expected on sale of Siaci in May 2015 Siaci contribution in 2015 is to reduce to around 2 million from 5 million in % = JLT equity interest

15 MIKE REYNOLDS GROUP FINANCE DIRECTOR Tuesday 3rd March 2015

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

17 UNDERLYING OPERATING COST RATIO m Variance Total revenue 1, % % 125 Operating costs: Staff costs % % 86 Premises % % 8 Depreciation & amortisation % % 3 Other operating costs % % % % 113

18 USD REVENUE PROTECTION Full Year Projections Forward rates Actual USD hedging rates achieved as at 27th Feb Current USD hedged positions 63% 43% 10% Forward USD rates as at 27th Feb Blended USD rates post hedging Value of 2014 revenue ($355m) 228m 229m 228m 228m Illustrative YOY revenue impact 1m ( 1m) -

19 BREAKDOWN OF EXCEPTIONAL ITEMS m Net exceptional items: Business Transformation Programme costs (7.8) (9.5) St Botolph costs - (5.0) Acquisition and integration costs (13.3) (9.0) Restructuring Cost (2.5) - Other (23.3) (22.8) Taxation impact of exceptional items: Tax on exceptional items

20 BUSINESS TRANSFORMATION PROGRAMME ( m) 2013 Actual 2014 Actual Incremental: One-off costs (9.5) (7.8) Associated benefits Cumulative: One-off costs (9.5) (17.3) Total recurring benefit

21 BALANCE SHEET AS AT 31st DECEMBER m Change Goodwill and intangibles Fixed assets Associates and investments (2) Net working capital and other Hedging contracts after deferred tax 2 (7) 9 Net pension deficit after deferred tax (146) (106) (40) Other deferred net tax assets Net debt (474) (345) (129) Net assets (53)

22 CASH FLOW (OPERATIONAL BASIS) m EBITDA Deduct: Net interest (15) (9) Tax paid (37) (41) Net working capital increase (58) (27) Annual capex* (49) (72) Net shares acquired (32) (21) Pension deficit funding (9) (16) Acquisitions/disposals (68) (177) Dividends paid (69) (63) Foreign exchange (15) (9) Other non cash items (17) 13 Net cash outflow (129) (203) * Note: Including 2013 fit-out of the St Botolph Building

23 GROUP FUNDING Successful issues of private placement long term notes in m unsecured 2026 loan notes at 4.27% $125m unsecured loan notes at 4.13% Swapped to GBP floating rates, currently at 2.3% Proceeds used to refinance existing shorter term bank borrowings Renewal of Group Revolving Credit Facility in February year unsecured committed revolving credit facility of 450m Group committed debt facilities now total 893m April 2015, expected receipt of 82m proceeds from disposal of 26% interest in Siaci Net debt / EBITDA ratio of 2:1* at 2014 year end * Calculated in accordance with JLT bank covenants

24 EXCEPTIONAL ITEMS 2015 CURRENT ESTIMATE m 2015 Acquisition and integration costs (11) Restructuring costs (9) Disposal of Associate 21 1

25 DOMINIC BURKE GROUP CEO Tuesday 3rd March 2015

26 INVESTING FOR GROWTH 2014 a pivotal year Established JLT Re as a dynamic new force in the global reinsurance market Created Specialty powerhouse through the merger of JLT Specialty and Lloyd & Partners Went on the ground in the US, the world s largest Specialty insurance market

27 INVESTING FOR GROWTH JLT USA Investment reflects commitment to drive long term growth prospects; focus on Energy, Construction, Financial Lines, Credit, Political & Security and Aerospace Opportunity to create a dynamic platform for long term growth in the world's largest insurance market with growing demand from clients Encouraging momentum and increasing confidence in scale of the opportunity and the team s ability to deliver it: - Now employ some 100 people in 7 offices - ahead of our plans - High quality recruits who share our culture and ambition - Strong support from markets and clients 2015 anticipate revenues of ~$50m and a trading loss of ~$35m

28 INVESTING FOR GROWTH Positioned for growth JLT Re JLT Specialty US Specialty CORPORATE BUYER SURVEY 2015 Strengthening teams Asia / Latam specialty alignment Client Satisfaction Scores Employee Benefits Service proposition Culture JLT Lockton Marsh Miller Aon AJG Willis Ranking overall client experience on a 1 to 5 scale

29 MARKET UPDATE Our performance all the more pleasing set against this backdrop Insurance rates unlikely to firm in the immediate future. January reinsurance renewals down by between 10% and 15% Rating headwind creates a challenging short term trading environment JLT s longer term prospects driven by fundamental macro-economic and demographic factors Remain confident in our continued ability to drive sustainable growth

30 OUTLOOK Despite a challenging insurance rating environment, we are confident in JLT s revenue growth momentum and in our strategy of continuing to invest to deliver sustainable long term earnings growth

31 SUPPLEMENTARY SLIDES

32 PROFIT & LOSS 12 months to December ( m) Change Revenue 1, Operating costs (907.3) (793.8) (113.5) Underlying trading profit Underlying share of Associates (0.4) Net finance costs (21.5) (16.1) (5.4) Underlying PBT Exceptional items (23.3) (22.8) (0.5) PBT Underlying tax expense (47.2) (46.8) (0.4) Tax on exceptional items Non-controlling interests (12.3) (10.8) (1.5) PAT (after non-controlling interests) Underlying PAT (after non-controlling interests) Diluted EPS 47.8p 46.4p 1.4p Underlying diluted EPS 56.1p 54.5p 1.6p Total dividend per share 28.9p 27.2p 1.7p

33 TOTAL REVENUE & TRADING PROFIT BY BUSINESS SEGMENT Total Revenue 12 months to Dec ( m) 2014 Growth CRE Organic Trading Profit Trading Margin 2014 CRE CRE 2013 Risk & Insurance: JLT Specialty % 7% 6% % 21% 21% JLT Re % 115% 7% % 16% 15% JLT Australia & NZ (8%) 2% 2% % 28% 30% Lloyd & Partners % 3% 1% % 22% 22% JLT Asia % 14% 9% % 16% 15% JLT Latin America % 24% 22% % 31% 31% Thistle UK 33.2 (5%) (5%) (5%) % 8% 7% JLT Canada 20.5 (20%) (11%) (8%) (1.1) (1.4) 1.5 (6%) (6%) 6% JLT Middle East and Africa % (0.3) (0.3) (0.4) (3%) (3%) (9%) JLT Insurance Management 7.4 (8%) (4%) (5%) % 5% 7% JLT USA (5.2) (5.4) Employee Benefits: % 19% 5% % 19% 21% UK & Ireland % 6% % 20% 19% Asia % 32% 28% % 33% 34% Latin America % 26% 6% % 21% 24% Australia & NZ 7.7 1% 13% 13% % 26% 14% Canada 1.7 (10%) 1% 1% (0.4) (0.4) - (21%) (21%) (1%) Middle East and Africa (0.2) (0.3) (0.4) (15%) (15%) % 14% 7% % 23% 22% Central Costs (22.5) (22.5) (20.3) Total 1, % 18% 6% % 18.1% 18.9% CRE = Constant Rate of Exchange

34 TOTAL REVENUE GROWTH COMPONENTS Acquisition Investment Organic Disposal Income CRE 12 months to Dec 2014 Growth Impact & Other Growth Currency Impact Total Growth Risk & Insurance: JLT Specialty 5.7% 1.1% - 6.8% (1.6%) 5.2% JLT Re 7.0% 107.2% 0.3% 114.5% (6.7%) 107.8% JLT Australia & NZ 2.3% % (10.6%) (8.3%) Lloyd & Partners 1.4% 1.3% - 2.7% (0.8%) 1.9% JLT Asia 8.9% 5.0% % (7.0%) 6.9% JLT Latin America 21.9% 1.9% (0.1%) 23.7% (14.4%) 9.3% Thistle UK (5.2%) 0.4% - (4.8%) - (4.8%) JLT Canada (7.6%) (3.5%) - (11.1%) (9.3%) (20.4%) JLT Middle East and Africa 14.2% - 0.2% - (16.2%) - JLT Insurance Management (4.5%) 0.9% - (3.6%) (3.9%) (7.5%) JLT USA % 13.5% % (5.5%) 13.3% Employee Benefits: UK & Ireland 0.2% 6.3% - 6.5% (0.1%) 6.4% Asia 28.2% 3.5% % (6.6%) 25.1% Latin America 6.0% 19.6% % (13.8%) 11.8% Australia & NZ 12.8% - 0.1% 12.9% (12.2%) 0.7% Canada 1.2% - 0.2% 1.4% (11.1%) (9.7%) Middle East and Africa % 7.0% % (3.0%) 11.1% Total 5.8% 11.7% % (4.7%) 12.8%

35 IMPACT OF JLT USA m Actual CRE Ex JLT Ex JLT USA USA (CRE) Total revenue 1, , , , Underlying trading profit Underlying profit margin 17.8% 18.1% 18.3% 18.6% 18.9%

36 EBITDA CALCULATION 12 months to December ( m) Underlying trading profit Add-back: Amortisation of staff share options Depreciation and other amortisation Profit from associates Other non-recurring items (19.0) (21.8) EBITDA

37 NET DEBT m Cash and investments: Cash and cash equivalents Available-for-sale cash deposits: Current Non current Less: fiduciary cash (insurance payables) (742.5) (655.7) Own funds Borrowings: Committed borrowings (593.3) (446.7) Uncommitted/other borrowings (18.9) (13.5) (612.2) (460.2) Net debt (473.8) (344.9)

38 CURRENCY IMPACT ON UNDERLYING PBT 12 months to December 2014 ( m) A) Transactional impact UK subsidiaries (2.2) (0.3) Overseas subsidiaries (1.5) 0.2 B) Translational impact (9.4) (1.9) Total exchange effect (10.9) (1.7)

39 FOREIGN EXCHANGE EXPOSURE SENSITIVITY Sensitivity to USD income earned in the UK as at 27 Feb 2015 Full Year Projections Current hedged position 63% 43% 10% Potential achieved rate if balance sold forward based off a spot exchange rate of: (current spot)

40 ACHIEVED INTEREST RATES ON INVESTMENT INCOME 12 months to December Sterling 0.3% 0.4% US Dollars 0.1% 0.1% Australian Dollars 2.8% 3.0%

41 RISK & INSURANCE 2014 RESTATED BASED ON NEW REPORTING STRUCTURE Revenue As JLTS/LPL Transfer to 2015 m Reported merger JLT USA Format Trading Profit As JLTS/LPL Transfer to 2015 Reported merger JLT USA Format Risk & Insurance: JLT Specialty (9.0) (1.7) 58.0 JLT Re JLT Australia & NZ Lloyd & Partners 85.2 (85.2) (18.4) - - JLT Asia JLT Latin America Thistle JLT Canada (1.1) - - (1.1) JLT Europe, Middle East and Africa (0.3) JLT Insurance Management JLT USA (5.2) (3.5)

42 This presentation contains forward-looking statements with respect to the operations, performance and financial condition of Jardine Lloyd Thompson Group plc. By their nature, these statements are subject to risks, assumption and uncertainties that could cause actual results to differ materially from those expressed or implied because they relate to future events. Unless otherwise required by applicable law, regulation or accounting standard, we do not undertake to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise. Nothing in this presentation should be construed as a profit forecast. Jardine Lloyd Thompson Group plc. Registered office: The St Botolph Building, 138 Houndsditch, London EC3A 7AW. Registered in England No VAT No