| To: Business Editor | 8th September 1998 For immediate release |
JARDINE LLOYD THOMPSON GROUP plc
INTERIM RESULTS FOR THE SIX MONTHS TO 30TH JUNE 1998
The following press announcement was issued today by the Company's 34%-owned associate, Jardine Lloyd Thompson Group plc. For immediate release
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For further information please contact:
| Ludgate Asia Limited | Tel: (852) 2543 5413 (office) |
| Martin Spurrier |
Full text of the announcement can be accessed through the Internet at "http://www.irasia.com/listco/sg/jm1" . It is also available through "First Call".
8th September 1998
JARDINE LLOYD THOMPSON GROUP plc
INTERIM RESULTS FOR THE SIX MONTHS TO 30th JUNE 1998
Jardine Lloyd Thompson Group plc today announces interim results of the Group for the six months to 30th June 1998.
Profit before tax was £30.3 million for the six months to 30th June 1998, (1997 : £26.7 million before exceptional items). The Group has declared an interim dividend of 5.0p per share (net) payable on 16th November 1998.
Highlights:
Ken Carter, Chief Executive, commented:
"In February 1997 when JIB and LTG merged we said we were committed to delivering significant earnings enhancement in 1998, our first full year of operating as JLT. These interim results demonstrate a successful first step towards achieving this aim."
Enquiries:
| Ken Carter, Chief Executive George Stuart-Clarke, Finance Director | Jardine Lloyd Thompson | 0171 528 4444 |
| Rupert Younger Timothy Grey | Finsbury | 0171 251 3801 |
CHAIRMAN'S STATEMENT
Report to Shareholders
I am pleased to report that the Group has made significant progress in the first half of 1998 with an increase in pre-tax profit of 14%, before the effect of exceptional items for the same period in 1997.
The results have benefited from the additional revenues now being generated as a result of increased trading between group companies and realisation of the cost savings envisaged at the time of the merger in February 1997.
As predicted in my last report to shareholders, market conditions have remained extremely competitive with surplus capital available in virtually all of our markets. This has made trading conditions very tough and it is a credit to its management team and staff that the Group has been able to increase both revenues and profits in this period.
Results
In the six months ended 30th June 1998, the operating profit of the Group (before exceptional items included in the comparative figures for 1997) increased by 17% to £28.3 million.
Turnover for the six months grew by 2% and by 7% at constant rates of exchange. Growth has been held back by weak markets where substantial rate reductions are still commonplace. However, the Group has had some tangible and important successes in realising the benefits of merging JIB Group with Lloyd Thompson. The Group has secured significant new business and made good progress in London in remarketing our existing business, particularly emanating from Asia Pacific. This, combined with new product innovation and growth in our Alternative Risk Transfer ("ART") business, has led to gains in both revenues and profits which could not have been achieved by either group prior to the merger.
In addition, the Group achieved cost savings in the UK as a result of last year's merger, in line with the estimate included in my statement in the 1997 Report & Accounts. As a result, profit before investment income increased by 18% to £17.9 million giving the Group a margin before investment income of 15% up from 13% last year.
Investment income was 14% up on the first half of 1997 reflecting not only higher achieved rates but also the improvement in the Group's balance sheet in the first six months of 1998.
Pension Transfer Review
The Group has reviewed its position in relation to possible costs arising from Phases 1 and 2 of the Pension Transfer Review of the Personal Investment Authority which affects a small part of the Specialty business. Following this review and based on information presently available it is felt that the current level of provisions already made within the Group are adequate to meet any potential costs.
Dividend
The board has declared an interim dividend of 5.0p per share (net) payable on 16th November 1998 to holders of ordinary shares on the register on 16th October 1998. Although not comparable in all respects, this represents an increase of 11% on the dividend of 4.5p paid in November 1997.
Operational Review
International Insurance Group
This group comprises the London based insurance broker and risk adviser, Lloyd Thompson Limited, and specialist offices in the Americas, Africa, Asia and Russia. Turnover was £43.2 million, up 7% on 1997 aided in part by acquisition. The soft market has inevitably impacted some of the key London market specialist areas, with revenues from the Property, Marine and Energy divisions down on 1997, despite exceeding their budgeted expectations. However, the Casualty, Construction, Financial and Special Risks divisions all showed excellent growth in the first six months. Agnew Higgins, the new energy business launched in February, had a very good start and will exceed its initial target for 1998 and Colburn French and Kneen, the Greek marine specialist acquired in December 1997, fulfilled its pre-acquisition expectations. The overseas operations in USA and Bermuda performed as planned with Financial Solutions making its first meaningful contribution to the Group's profit. In the USA, Flood Underwriters of the South East was acquired which adds to and complements our Managing General Agency business.
International Reinsurance Group
Turnover from the treaty reinsurance broking operations in the UK, America and Asia Pacific was £19.8 million, down 3% on 1997. In London, a combination of soft markets and the consolidation in the Lloyd's market, which has reduced the number of potential clients, resulted in near flat revenues. However, the restructuring which followed the merger last year has reduced costs and, as a result, profits have shown good progress on 1997. The overseas operations in the USA and Asia performed satisfactorily in the first six months although profits were marginally down on 1997.
Since 30th June, the Group has acquired the outstanding 7.7% shareholding in Intermediary Insurance Services Inc, the North American medical stop loss business.
Specialty Group
This group comprises the retail, employee benefits and affinity group businesses in Europe and the Americas. Turnover was £34.3 million up 8% on 1997.
During 1997 the UK retail division was re-organised and a number of non-core businesses were exited. These included Financial Consulting which was transferred to Professional Affinity Group Services, the joint venture with the British Medical Association and this has resulted in a small decrease in revenues. The UK Corporate business has delivered a sustained improvement in profitability. Since 30th June, the Group has sold its Credit Insurance business to a joint venture with Transamerica Commercial Finance Limited for £2.5 million (subject to adjustment) and the Group retains a 25% minority interest in this business. The other UK businesses, Affinity Group Services and Employee Benefit Consulting, performed in line with expectations.
The Canadian business has been reorganised, which will improve performance in 1999. The Brazilian business performed satisfactorily in the period and the new acquisition in the USA, Administrative Consultants Inc, performed well, fully meeting expectations in its first year of operations within the Affinity Group business.
Asia Pacific Group
Turnover was £21.6 million, down 12% on 1997. This was a creditable performance, given the large depreciation in the value of the currencies in the region (with the notable exception of the Hong Kong dollar). At constant rates of exchange turnover increased by 6%.
The general economic situation and the currency devaluations make us naturally cautious in any predictions for the region. Notwithstanding this, the Group has been particularly successful in attracting a flow of quality new business, some of which will fall into the second half of the year.
Markets remain very competitive especially in Australia. However, the development of claims management business for corporate clients and the provision of risk related services for Local Governments has proved a great success and is an area from which the Group can expect continued growth. New Zealand showed some good growth in turnover and profit.
SIACI
In a market which remains very competitive, turnover for the six months grew by 5% in French Francs with new business in Marine and Employee Benefits offsetting a small fall in Property Casualty revenues. The new Affinity Group subsidiary got off to a promising start and Tradassur, the marine broker acquired at the beginning of the year, performed well during the first six months of the year.
Prospects
Recent restructuring and consolidation within the insurance broking industry provides JLT with a unique opportunity to attract both new business and staff.
These events reinforce our strategy of building selected businesses where the Group can use its innovative skills to become a market leader. This focus is enabling the Group to forge new relationships and strengthen existing ties with both markets and clients, many of whom are concerned at the reduction of their choice of adviser.
Market conditions are challenging and are unlikely to change for the rest of 1998. However, we are very encouraged by the results of the first six months and it is our objective to maintain the improvements made since the completion of our merger and to exploit the new openings afforded by recent industry developments.
John Barton
Chairman
8th September 1998
Jardine Lloyd Thompson Group plc
Consolidated Profit and Loss Account
Unaudited results for the six months ended 30th June 1998
Jardine Lloyd Thompson Group plc
Consolidated Balance Sheet
Unaudited as at 30th June 1998
Jardine Lloyd Thompson Group plc
Statement of Total Recognised Gains and Losses
Unaudited for the six months ended 30th June 1998
Jardine Lloyd Thompson Group plc
Consolidated Cashflow Statement
Unaudited for the six months ended 30th June 1998
Jardine Lloyd Thompson Group plc
Notes to the Interim Report
For the six months ended 30th June 1998
1. Basis of Accounting
The unaudited results for the six months ended 30th June 1998 have been prepared under the historical cost convention using the accounting policies adopted in respect of the period ended 31st December 1997, except in respect of goodwill. Goodwill arising on acquisitions in 1998 is stated as an intangible asset on the balance sheet and is amortised to the profit and loss account over 20 years in accordance with current accounting standards.
The financial information for the period ended 31st December 1997 relating to the Group set out above has been extracted from the audited accounts of the Company for that period. Such financial information does not constitute statutory accounts of the Company for that period within the meaning of section 240 of the Companies Act 1985. Consolidated statutory accounts for the Company for that period, upon which the auditors have given an unqualified report and which did not contain any statement under section 237 of the Act, have been delivered to the Registrar of Companies.
2. Segmental information
The 1997 figure for Europe (including UK) is stated after charging exceptional items of £8,294,000
3. Dividends
The interim dividend of 5.0p per share (1997: 4.5p) is payable on 16th November 1998 to shareholders who are registered at the close of business on 16th October 1998. The provisional ex-dividend date will be 12th October 1998.
4. Earnings per Share
The weighted average number of shares in issue has been calculated after excluding the Group's share of SIACI's interest in the share capital of Jardine Lloyd Thompson Group plc. The shares held by the Trustees of the Employees' Share Ownership Plan Trust in respect of the Jardine Lloyd Thompson Group Restricted Share Scheme have also been excluded.
Basic earnings per share for the six months to 30th June 1998 are calculated on the profit after taxation and minority interests of £19,554,000 (1997: £8,019,000) and the weighted average number of shares in issue of 185,134,438 (1997: 180,184,078).
Earnings per share for the six months to 30th June 1998 excluding exceptional items, are calculated on the profit after taxation and minority interests of £19,554,000 (1997: £16,313,000) and the weighted average number of shares in issue of 185,134,438 (1997: 180,184,078).
Fully diluted earnings per share for the six months to 30th June 1998 are calculated on the profit after taxation and minority interests of £19,964,000 (1997: £16,602,000) and the weighted average of 197,304,563 (1997: 186,924,372) ordinary shares of 5p each which would have been in issue during the six month period had all outstanding share options been exercised at 1st January 1998 or the date of grant if later.
5. Notes to the Consolidated Cashflow Statement
6. The interim report will be posted to shareholders on 10th September 1998 and will be available to the public upon request to the Company Secretary at Jardine House, 6 Crutched Friars, London EC3N 2HT.
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