A backdrop of softening premium rates is never good for insurance brokers, because their commissions are usually linked to rates. But Jardine Lloyd Thompson's (JLT) focus on both organic and acquisition-led growth is off-setting most of the pressures. Indeed, underlying pre-tax profit rose 13 per cent year-on-year to £177m, which was in line with analysts’ expectations.
Some 10 bolt-on acquisitions were pushed though in 2013. That activity, which was driven particularly by September’s £156m acquisition of the Tower Watson reinsurance brokerage, boosted the net-debt pile from £142m to £345m, and the net finance charge also rose by a third. Yet at £16m it looks manageable, and the group still has £115m of headroom left in its banking facilities.
Even without acquisitions, growth looks good. Organic revenues rose 9 per cent in 2013, helped by an increasing focus on faster-growth emerging markets. Indeed, at the core risk and insurance division organic revenue growth in Latin America and Asia reached 14 per cent and 9 per cent respectively, and management says 28 per cent of group revenue is now generated from emerging markets.
Numis Securities expects pre-tax profit of £186m for 2014, giving EPS of 58p.
JARDINE LLOYD THOMPSON (JLT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,064p | MARKET VALUE: | £2.33bn | |
| TOUCH: | 1,063-1,065p | 12-MONTH HIGH: | 1,106p | LOW: 794p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 156p* | NET DEBT: | 96% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 613 | 102 | 33.3 | 21.0 |
| 2010 | 741 | 119 | 41.8 | 22.5 |
| 2011 | 819 | 134 | 40.7 | 24.0 |
| 2012 | 880 | 152 | 46.7 | 25.5 |
| 2013 | 979 | 155 | 46.6 | 27.2 |
| % change | +11 | +2 | - | +7 |
Ex-div:02 Apr Payment:01 May *Includes intangible assets of £499m or 228p a share | ||||
