JLT chief reveals a £250m revolving credit facility to fund acquisitions
JLT Group chief executive Dominic Burke has confirmed that there will be no further salary freezes or redundancies at the broker.
As its 2006 results were announced, Burke said JLT would continue to improve its bottom line, despite challenging market conditions and competitive premium rates, without job cuts or salary freezes.
Last year the broker went through major changes, including the merger of JLT Risk Solutions with JLT subsidiary Agnew Higgins Pickering.
It sold US-based property and casualty insurance and employee benefits businesses to Alliant Insurance Services and also froze salaries across its corporate risk and risk solutions businesses.
The weakening dollar had an impact in some areas of business in 2006, but overall the group presented improved results, with pre-tax profit in continuing operations increasing 28% to £90.8m.
Burke did not rule out the possibility of further mergers and acquisitions. He said the group had in place a five-year revolving credit facility worth £250m, which could be used for a future acquisition that would "add value to the business".
However, he warned that high values called for caution and that there was nothing imminent. "We are looking for acquisitions that meet our criteria, not only in the UK but also in Australia, Canada and Asia. We have no net debt and significant funds. We will be cautious."
Turnover at JLT's risk and insurance business grew by 2% in 2006 to £379.1m or 6% at constant rates of exchange. Trading profit fell 5% to £61.4m, but pre-tax profit increased to £79.4m, from £77.3m in 2005.
The UK and Ireland broking business increased turnover by 5% to £49.1m. The trading margin of 19% was maintained.
Analysts viewed the results as a sign that the broker was turning a corner. Nick Johnson, analyst at Numis Securities, said: "JLT highlights the challenging trading conditions although the group expects to make further progress in financial performance in 2007.
"This suggests that the group's efforts to improve efficiency and strengthen growth prospects are having a positive impact."
