Transformation costs take some shine off Jardine Lloyd Thompson first half

Jardine Lloyd Thompson Group issued its interim results for the six months ended 30 June on Thursday, reporting total revenue growth of 3% to £713.5m year-on-year, and organic revenue growth of 4%.

The FTSE 250 company said of that organic revenue growth, it saw 4% in its Specialty unit, 6% in the Reinsurance division, and 4% in Employee Benefits.

Its underlying trading margin increased 80 basis points from 15.8% to 16.6%, and its underlying profit before tax rose 10% to £108.8m.

Reported profit before tax fell 9% to £89.4m, which the board claimed reflected the exceptional costs of its ‘Global Transformation Programme’.

Its underlying diluted earnings per share rose 11% from 31.4p to 34.7p, while reported diluted earnings per share fell 12% from 31.2p to 27.5p, which was reportedly also reflective of the exceptional costs of the Global Transformation Programme.

The board declared an interim cash dividend of 12.7p, up 4.1%.

On the operational front, Jardine Lloyd Thompson said its new leadership and management structure in the Specialty division was is driving closer coordination and increasing global opportunities.

It said strong performances were delivered in that division in Latin America, Australia and in the global Energy specialty.

New business wins were made in Reinsurance across the UK, European and US markets, alongside the launch of the company’s “next-generation” economic capital modelling software, ANSER.

It said Employee Benefits won several global mandates from large multinational clients, accompanied by good organic revenue growth in Brazil and Asia.

UK Employee Benefits remained on track to achieve a 15% trading margin in 2019.

Its US Specialty unit delivered 17% organic revenue growth, and was apparently on track to move into profit in 2019.

That business now employed 380 people, and continued to attract what the board described as “the best” industry practitioners.

The ‘Global Transformation Programme’ delivered benefits of £6.1m in the period, with the company saying it remained on track to deliver annualised benefits of £40m by 2020 for a one-off cost of £45m.

“The group's results for the first six months of 2018 represent a robust trading performance,” said chief executive officer Dominic Burke.

“The strategic initiatives we are implementing are already generating tangible benefits for our clients and for the group.

“We are trading with real momentum as we move into the second half and we expect to report continued strong organic revenue growth and further financial progress for the full year.”