Broking group Jardine Lloyd Thompson (JLT) made a profit before tax of £55.2m in the first half of 2016, down 46% on the £101.5m it reported in the same period last year.
The main cause of the drop was one-off costs of £34m. These included £10.2m for restructuring JLT’s UK and Ireland employee benefits business and a £22m settlement for a legal battle with rival broking group Willis over staff poaching.
The result was also hit by increased investment in JLT’s US business to £17.2m (H1 2015: £12.6m).
JLT’s revenues increased 5% to £619.4m (H1 2015: £591.6m). But organic growth was 1%, following a 10% organic decline in the employee benefits business, which has been hit by the ending of commission-related revenue as part of the Retail Distribution Review.
Employee benefits revenues were also affected by “muted demand from pension scheme trustees and corporate sponsors for any more than obligatory services”.
The company said that the UK and Ireland employee benefits business has now stabilised following the restructuring, which included cutting more than 300 jobs.
JLT’s insurance and reinsurance broking division fared better, reporting organic growth of 4% overall. The insurance broking business, which JLT calls Specialty Businesses, reported 5% organic growth, while reinsurance broker JLT Re reported 3% organic growth.
Despite the profit drop, JLT chief executive Dominic Burke was upbeat about the results.
He said: ”During the first half of this year we have been encouraged by the level of client wins, which have been as strong as at any time since I became CEO.
“We are seeing significant financial benefit from collaboration between our specialty operations around the world, which is helping sustain momentum and drive organic revenue growth across the business.”
He added: “Economic and industry conditions remain challenging; nevertheless we remain confident about the Group’s ability to deliver year-on-year financial progress.”