Yield junkies - Maybe worth keeping an eye on?


JARDINE LLOYD THOMPSON Final Results - Killick & Co report



It has been a tough year for Jardine Lloyd, one of the leading insurance brokerages. At an industry level, the pricing environment has been favourable but it has been scrutinized by regulators over the practice of commissions between wholesale providers and agents. At the business level, Jardine has under performed, struggled with the dollar, the loss of a chief executive and suffered a large pension deficit. The net result is that the shares, over a one year period are down 30% against a rising market.





Today, the company is announcing full year results. Turnover is up around 10% to 468 million but trading profit is down a similar amount to 84 million. Total profit before tax including interest income is 99.8 million in line with expectations.



A difficult year for Risk Solutions is reported and a refocusing of this business has been announced today. Soft insurance markets and a continued weak dollar will continue to impact on 2005 results. The Chairman has taken an executive role for two years in order to handle the appointment of a new Chief Executive.



For investors, the question is whether this business can be turned around. The rating is not expensive on 12.5x expected 2005 earnings and, importantly, the dividend of around 20p has been maintained giving a real sense of commitment to this going forward. As a result, at 375p, the yield is around 5.4% net. Not a buy yet, but a hold for recovery.

What are the management up to at this company? The staff have just had a pay freeze while any shares they may own are falling in value and the pension deficit worsens - I don't envy them. Meantime, the company maintains the dividend that is barely covered by earnings and says there is tough times ahead. Also, the shares in issue increased by 10 million (5%) so the dividend burden worsened. The analyst Q&A can be seen on the website and the "answer" to the question about tackling the pension deficit was alarming. The next actuarial report on this is due in a few months and may well finally force the management to do what they should have done on McGill's departure - halve the dividend.

only fallen 3% since last post 2 weeks ago, though 30% this year. Lots of money still to be made on the september sell spreads. Other than the unavoidable bid by idiots with cash can anyone see the upside as the inexperienced new management try to totally reposition this company?

Am I on my own here? There is a great downward ride going on which (imho) can only end with a bid. The pension scheme is not nice and due an update - who knows, it may have bounced back with the recovery in equities but that would probably only offer an opportunity to get a bit more realistic on the underlying mortality assumptions.
PS Nice to see two new boys joining the Group Board with plenty of London Market experience to sort out the Risk Solutions Division. My mistake - no such experience. Please join me on this thread, feeling lonely!

something could be happen

StockMarketWire.com
Jardine Lloyd Thompson Group posts underlying profit before tax of GBP170.1m for the year ended 31 December, down 7%, reflecting planned US investment.

Underlying profit before tax, excluding US investment, was up 3% at £190.6m. Reported profit before tax fell by 3% to £155.0m and underlying profit margins were down 160bp at 16.2%.

The group reports revenue growth of 5% to £1,155.1m with organic revenue growth of 2%.

The total cash dividend of 30.6p is up 6%, reflecting the board's confidence in the Group's underlying trading performance.

JLT says: "As anticipated, the Group's underlying trading profit decreased by 5% to £187.5 million, with underlying profit before tax reducing by 7% to £170.1 million. As a result, the trading profit margin reduced from 17.8% to 16.2%.

"This reduction in the Group's trading profit reflects both our investment in building out our US Specialty business and the specific challenges faced by our UK & Ireland Employee Benefits business.

"Excluding the US net investment of 20.5 million, the Group's underlying profit before tax increased by 3% and the Group's trading profit margin increased by 10bp to 18.4% when compared to 2014.

"This reflects the strong performances delivered by our Risk & Insurance businesses and the continued success of our International Employee Benefits businesses, as well as good cost control in the year.

"Our reported profit before tax reduced by 3% to £155.0 million, which includes the impact of net exceptional costs of £15.1 million and, as a consequence, reported diluted earnings per share decreased to 47.0p."

Group chief executive Dominic Burke commented: "The Group faces a number of external headwinds as we go into 2016. However, our focus remains on those factors that we can control and on maintaining the revenue momentum and cost control established over the last ten years. We remain confident in our strategy, our platform and our continued ability to grow."