JLT REPORTS UPPED PROFITS AFTER 2007 ONE-OFF IS STRIPPED OUT

UK-based broker Jardine Lloyd Thompson (JLT) has reported a 9% increase in underlying trading profit for the half, up £3.6m to £44.0m ($86.9m), on fees and commissions up 9% to £266.2m, ahead of market expectations. Three percentage points of this were due to exchange rate benefits and two points were the result of bolt-on acquisitions. The interim dividend per share is maintained at 8.5p. Diluted earnings per share dropped 39% to 17.3p. Pre-tax profit in H1 2007 benefited from a net exceptional gain arising from the merger of Siaci with French operation Saint Honoré, in which JLT owns a 20% stake. JLT reported that “all territories achieved good revenue growth of 10% at constant exchange rates. However, the trading margin in Europe, which includes UK retail business, dropped to 3% from 8% “due to a proportional shift in profits into the second half of the year due principally to acquisitions”. Keefe, Bruyette & Woods analyst William Hawkins noted that “we believe that these results confirm that the turnaround on JLT is on track, but we see little material incremental positive newsflow versus expectations”. He added that. “the group has flagged the challenge of the soft reinsurance market, but we expect there to be further strategic questions about whether such a small business that is still in build-up mode should yet be suffering from top-down headwinds”. JLT’s share price was off by 2.5% to 400p in early morning trade, in a slightly falling market.