JLT’s UK Employee Benefits arm saw a 12 per cent fall in revenue in the first half of 2016, but says its restructure is on track to deliver £7m of savings by the year end.
UK EB revenues fell to £74.9m in H1 of 2016, compared to £85m in the same period last year, with profit down to £0.2m from £7m, with the fall blamed on the ending of commission-related revenues following the Retail Distribution Review (RDR), resulting in a total of £5 million earned in the previous year as expected not being repeated in 2016.
JLT says first half revenues and profits were further impacted by muted demand from pension scheme trustees and corporate sponsors for any more than obligatory services, driven in large part by government actions.
The firm says its restructuring plan, being spearheaded by JLT UK Employee Benefits CEO Bala Viswanathan (pictured) will better align costs with revenues. The firm has already introduced a flatter, more client-centric structure, which has resulted in headcount reducing by over 300 employees.
Around £2m of the planned £9m 2016 savings have been achieved in H1, although the firm says it expects to achieve the remaining £7m in H2. JLT says it expects the reshaped business to move to an approximate 15 per cent trading profit margin by the end of 2017. The firm says it is confident that the restructuring programme will deliver annualised savings of £14m in 2017.
In the medium term JLT intends to strengthen its platforms and technology and its client propositions in response to the continuing changes in the long term retirement and savings market.
The group as a whole saw global revenue growth of 5 per cent to £619.4m in H1, 2016.
JLT group chief executive Dominic Burke: “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. Economic and industry conditions remain challenging; nevertheless we remain confident about the Group’s ability to deliver year-on-year financial progress.”