The ratings environment for insurance brokers is tough right now, which makes the latest set of results from Jardine Lloyd Thompson (JLT) all the more admirable. According to chief executive Dominic Burke this is down to the group's specialist knowledge, which spans the construction, aviation and energy markets, and keeps demand for its services fairly robust.
However, JLT has had other things on its plate. A new office in the US added £21m to costs last year, which goes some way towards explaining the slight dip in reported pre-tax profit. Mr Burke said there will be further costs to come in the US - up to £57m by the end of 2018. So far the group has recruited 180 people spread over 13 cities across the Atlantic.
Another explanation for the profit slide is the decline in revenue, trading margins and profit at the employee benefits segment. Much of this relates to legislative changes in the UK occupational pensions market and the impact of the Retail Distribution Review, which brought an end to commission revenue for insurance brokers.
Panmure Gordon expects underlying pre-tax profit of £204m for 2016, giving EPS of 63.2p, compared with £170m and 51.2p in 2015.
| JARDINE LLOYD THOMPSON (JLT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 810p | MARKET VALUE: | £1.77bn | |
| TOUCH: | 809-811p | 12-MONTH HIGH: | 1,112p | LOW: 770p |
| DIVIDEND YIELD: | 3.8% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 143p* | NET DEBT: | 129% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 0.82 | 134 | 40.7 | 24.0 |
| 2012 | 0.88 | 152 | 46.7 | 25.5 |
| 2013 | 0.98 | 155 | 46.6 | 27.2 |
| 2014 | 1.10 | 160 | 47.9 | 28.9 |
| 2015 | 1.16 | 155 | 47.0 | 30.6 |
| % change | +5 | -3 | -2 | +6 |
Ex-div: 31 Mar Payment: 3 May *Includes intangible assets of £600m, or 274p a share | ||||
