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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the Quarter ended March 31, 2000
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WILLIS GROUP LIMITED
(Translation of registrant's name into English)
Ten Trinity Square, London EC3P 3AX
(Address of principal executive offices)
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(Indicate by check mark whether the registrant files or will
file annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F ____x____ Form 40-F ________
(Indicate by check mark whether the registrant by furnishing the
information contained in this form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.)
Yes ________ No ____x____
(If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-________.)
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1
WILLIS GROUP LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(in millions of pounds sterling)
(unaudited)
Three months ended
March 31,
2000 1999
Operating revenues
Commissions and fees.................................. 209.9 193.4
Interest and investment income........................ 8.8 9.6
--------- ---------
218.7 203.0
Operating expenses.................................... (178.4) (171.9)
--------- ---------
Operating income...................................... 40.3 31.1
Share of profit of associates......................... 9.7 8.6
Interest receivable (Note 2).......................... 14.1 14.3
Interest payable...................................... (13.6) (14.1)
--------- ---------
Income before taxation................................ 50.5 39.9
Taxation.............................................. (15.7) (11.2)
--------- ---------
Income after taxation................................. 34.8 28.7
Minority interests.................................... 0.1 (0.7)
--------- ---------
Net income (i)........................................ 34.9 28.0
========= =========
Net income per Ordinary Share (i)..................... 7.3p 6.1p
========= =========
Average number of ordinary shares outstanding (in
millions) ........................................... 474.9 457.3
========= =========
(i) A summary of the significant adjustments to net income that would be
required if United States generally accepted accounting principles were to
be applied instead of those generally accepted in the United Kingdom is
set forth in Note 5 of Notes to Condensed Financial Statements.
CONSOLIDATED STATEMENT OF TOTAL RECOGNIZED GAINS AND LOSSES
(in millions of pounds sterling)
(unaudited)
Three months ended
March 31,
2000 1999
Net income............................................ 34.9 28.0
Currency translation differences...................... (10.8) (16.0)
--------- ---------
Total recognized gains and losses (ii)................ 24.1 12.0
========= =========
(ii) A statement of Comprehensive Income under U.S. GAAP is set forth in Note 5
of Notes to Condensed Financial Statements.
The Notes to Condensed Financial Statements are an integral part of these
Condensed Consolidated Financial Statements.
2
WILLIS GROUP LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(in millions of pounds sterling)
(unaudited)
March 31, December 31,
2000 1999
ASSETS
Current assets
Cash and short-term deposits............... 368.5 329.3
Investments................................ 314.9 294.5
Receivables................................ 4,505.0 3,878.6
-------------- --------------
5,188.4 4,502.4
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Fixed assets
Intangible assets.......................... 30.6 30.1
Tangible assets............................ 133.4 135.7
Investments................................ 52.3 46.6
-------------- --------------
216.3 212.4
-------------- --------------
Total assets................................ 5,404.7 4,714.8
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade payables............................. 3,687.6 2,985.6
Corporate tax.............................. 39.3 29.8
Accruals and deferred income............... 58.5 72.8
Bank loans and overdrafts.................. --- 1.6
Other...................................... 709.3 746.3
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4,494.7 3,836.1
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Noncurrent liabilities
Bank loans................................. 275.2 270.1
9% Senior subordinated notes due 2009...... 341.3 334.6
Other...................................... 35.7 36.6
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652.2 641.3
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Provisions for liabilities and charges...... 120.9 124.5
Minority interests.......................... 10.7 11.1
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Total liabilities and minority interests.... 5,278.5 4613.0
Shareholders' equity(ii)
Share capital.............................. 59.5 59.5
Share premium.............................. 118.0 118.0
Revaluation reserve........................ 14.9 14.9
Retained deficit........................... (66.2) (90.6)
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126.2 101.8
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Total liabilities and shareholders' equity.. 5,404.7 4,714.8
============== ==============
(i) The balance sheet at December 31, 1999 has been derived from the audited
financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
(ii) A summary of the significant adjustments to shareholders' equity that
would be required if United States generally accepted accounting
principles were to be applied instead of those generally accepted in the
United Kingdom is set forth in Note 5 of Notes to Condensed Financial
Statements.
The Notes to Condensed Financial Statements are an integral part of these
Condensed Consolidated Financial Statements.
3
WILLIS GROUP LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASHFLOWS
(in millions of pounds sterling)
(unaudited)
Three months ended
March 31,
2000 1999
Net cash inflow from operating activities............. 92.2 119.2
Dividends from associated undertakings................ 0.4 ---
Returns on investments and servicing of finance
Interest received.................................... 22.6 13.6
Interest paid........................................ (21.2) (13.4)
Bank fees on borrowings.............................. --- (4.6)
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1.4 (4.4)
--------- ---------
Taxation.............................................. (3.1) (2.3)
Capital expenditure and financial investment
Purchase of tangible fixed assets.................... (4.4) (7.3)
Sale of tangible fixed assets........................ 0.8 ---
Sale of fixed asset investments...................... --- 0.1
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(3.6) (7.2)
--------- ---------
Acquisitions and disposals
Purchase of subsidiaries............................. (1.2) (1.0)
Purchase of associates............................... --- (11.1)
Sale of subsidiaries................................. --- 1.2
Net cash transferred on purchase/sale of subsidiaries --- 0.3
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(1.2) (10.6)
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Cash flow before management of liquid resources and
financing ........................................... 86.1 94.7
Management of liquid resources........................ 5.9 (69.6)
Financing
Amounts due from parent company...................... (4.2) 15.2
Amounts due to parent company........................ (25.0) ---
Debt due within a year:
Decrease in short-term borrowings................... --- (348.5)
Debt due beyond a year:
Increase in long-term borrowings.................... --- 327.2
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(29.2) (6.1)
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Increase in cash...................................... 62.8 19.0
========= =========
The significant differences between the consolidated statement of cash flows
presented above and that required under U.S. GAAP are described in Note 5 of
Notes to Condensed Financial Statements.
The Notes to Condensed Financial Statements are an integral part of these
Condensed Consolidated Financial Statements
4
WILLIS GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
(in millions of pounds sterling)
(unaudited)
Note 1---Basis of preparation
These condensed consolidated financial statements, which are unaudited,
have been prepared in accordance with U.K. GAAP and the accounting policies
described in the Company's audited consolidated financial statements for the
year ended December 31, 1999. In the opinion of the Company's management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the three months
ended March 31, 2000 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2000.
Note 2---Interest receivable
Interest receivable for the three months ended March 31, 2000 included
interest of L13.9 million, receivable from the Company's parent company,
Trinity Acquisition Limited ("Trinity").
Note 3---Reconciliation of operating income to net cash inflow from operating
activities
Three months ended
March 31,
2000 1999
Operating income...................................... 40.3 31.1
Depreciation and amortization......................... 6.6 6.7
Increase in receivables............................... (553.2) (349.6)
Increase in payables.................................. 598.3 427.9
Net movement on provisions............................ 0.2 3.1
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Net cash inflow from operating activities............. 92.2 119.2
========= =========
Reconciliation of net cash flow to movement in net funds
Three months ended
March 31,
2000 1999
Net funds at beginning of period...................... 583.8 486.5
Net cash flow......................................... 62.8 19.0
Management of liquid resources........................ (5.9) 69.6
Financing ............................................ 29.2 99.0
Currency exchange movements........................... (5.8) (8.7)
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Net funds at end of period............................ 664.1 665.4
========= =========
5
WILLIS GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)
(in millions of pounds sterling)
(unaudited)
Note 4---Reconciliation of movements in shareholders' equity
Three months ended
March 31,
2000 1999
Net income............................................ 34.9 28.0
New ordinary shares issued............................ --- 92.9
Goodwill written back on disposals.................... 0.3 ---
Exchange adjustments.................................. (10.8) (16.0)
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Net increase in shareholders' equity.................. 24.4 104.9
Shareholders' equity at beginning of period........... 101.8 89.0
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Shareholders' equity at end of period................. 126.2 193.9
========= =========
Note 5---Differences between accounting principles generally accepted in the
United Kingdom and the United States
The unaudited condensed consolidated financial statements are prepared in
accordance with U.K. GAAP which differ in certain respects from U.S. GAAP.
Summaries of the significant differences as they apply to the Company are set
forth in Note 31 of Notes to the Company's Consolidated Financial Statements
for the year ended December 31, 1999.
The effect on net income, comprehensive income and shareholders' equity of
applying the significant differences between U.K. GAAP and U.S. GAAP described
above is summarized as follows:
Net income
Three months ended
March 31,
2000 1999
Net income as reported in the consolidated statement
of income ........................................... 34.9 28.0
Adjustments
Operating expenses---restructuring costs.............. (0.2) ---
Goodwill.............................................. (4.8) (5.0)
Revaluation of forward exchange contracts............. 0.2 (0.8)
Pension costs......................................... 4.4 (0.3)
Deferred taxes---effect of above adjustments.......... (1.5) 0.3
--------- ---------
Net income as adjusted to accord with U.S. GAAP....... 33.0 22.2
========= =========
Comprehensive income
Three months ended
March 31,
2000 1999
Net income as adjusted to accord with U.S. GAAP....... 33.0 22.2
Other comprehensive income:
Foreign currency translation adjustments............. 5.0 (16.0)
--------- ---------
Comprehensive income.................................. 38.0 6.2
========= =========
6
WILLIS GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)
(in millions of pounds sterling)
(unaudited)
Note 5 --- Differences between accounting principles generally accepted in the
United Kingdom and United States (continued)
Shareholders' equity
Three months ended
March 31,
2000 1999
Shareholders' equity as reported in the consolidated
balance sheet ...................................... 126.2 193.9
Adjustments
Intangible assets:
Goodwill---cost..................................... 852.5 825.6
---amortization..................................... (33.0) (11.1)
Current assets:
Investments......................................... (0.9) 0.8
Receivables---forward exchange contracts............ 0.9 1.9
Noncurrent liabilities:
Other---pension costs liability...................... (23.1) (16.6)
Provisions for liabilities and charges:
Surplus properties.................................. 6.4 ---
Deferred taxes---effect of above adjustments........ 8.3 5.8
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Shareholders' equity as adjusted to accord with U.S.
GAAP ............................................... 937.3 1,000.3
========== ==========
The categories of cashflow activity under U.S. GAAP can be summarized as
follows:
Consolidated statement of cash flows
Three months ended
March 31,
2000 1999
Cash inflow from operating activities................. 90.7 112.5
Cash inflow of investing activities................... 10.5 8.1
Cash (outflow) of financing activities................ (30.6) (8.5)
--------- ---------
Increase in cash and cash equivalents................. 70.6 112.1
Effect of foreign exchange rate changes............... 4.5 5.0
Cash and cash equivalents at beginning of period...... 540.9 499.9
--------- ---------
Cash and cash equivalents at end of the period........ 616.0 617.0
========= =========
7
WILLIS GROUP LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)
(in millions of pounds sterling)
(unaudited)
Note 6 --- Willis North America Inc. and Willis Partners
Willis North America Inc. is a wholly-owned subsidiary of Willis Partners,
of which Willis Group Limited is the 99.9% general partner and Willis Faber UK
Group Limited, a wholly-owned subsidiary of Willis Group Limited, is the 0.1%
general partner. Willis Group Limited and Willis Partners have jointly and
severally, fully and unconditionally, guaranteed the $550 million 9% Senior
Subordinated Notes ("the Notes"), issued by Willis North America Inc.
Willis North America Inc. prepares its financial information in accordance
with U.K. GAAP. Willis Group has not presented separate financial statements
for Willis North America Inc. because management has determined that such
information is not material to holders of the Notes. Summarized financial
information under U.K. GAAP relating to Willis North America Inc. is as
follows:
Three months ended
March 31,
2000 1999
Total operating revenues.............................. 91.6 88.1
Operating income...................................... 6.8 6.1
Net income............................................ 5.1 1.1
========= =========
December 31,
March 31, 2000 1999
Current assets.............................. 1,890.8 1,880.9
Fixed assets................................ 75.5 70.8
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1,966.3 1,951.7
============== ==============
Current liabilities......................... 1,820.3 1,816.4
Noncurrent liabilities...................... 52.5 48.6
Shareholders' equity........................ 93.5 86.7
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1,966.3 1,951.7
============== ==============
Willis Partners, formed on November 11, 1998, has no assets other than the
capital stock of Willis North America Inc. and conducts no business other than
the holding of such capital stock. Willis Group has not presented separate
financial statements or summarized financial information for Willis Partners
because management has determined that such information is not material to
holders of the Notes.
8
WILLIS GROUP LIMITED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Summary
Income before taxation increased by 27% in the quarter to L50.5 million
compared with L39.9 million a year ago and net income increased by 25% to L34.9
million.
Proforma adjusted constant currency EBITDA (earnings before interest, tax,
depreciation and amortization) was L62.3 million for the first quarter compared
with L52.8 million in the same quarter of 1999, an increase of 18%.
Operating Revenues
Operating revenues increased by 8% to L218.7 million in the first quarter
of 2000 compared with L203.0 million in the corresponding period of 1999. All
business units reported revenues ahead of the same period a year ago. There was
a small adverse impact from movements in foreign currency exchange rates and
operating revenues were up by 9% in constant currency terms. Adjusting for the
effect of acquisitions in Mexico and Venezuela, which occurred towards the end
of 1999, operating revenues were 7% higher.
Revenue growth reflects new clients and increased orders, combined with
flat or firming rates in certain areas.
In constant currency terms, Global Specialities' revenues were up by 18%
and Reinsurance by 19% with more modest increases being reported by North
American operations up 4% and UK Retail up 2%. International's revenues were
12% higher in constant currency terms although, adjusting for acquisitions,
revenues were broadly unchanged on a like-for-like basis.
Operating Expenses
Operating expenses increased by 4% to L178.4 million in the first quarter
of 2000 compared with the corresponding period in 1999. There was no
significant impact from foreign currency exchange rate movements. Adjusting for
acquisitions, and excluding non-recurring bank fees incurred in the first
quarter of 1999, the increase in operating expenses was also 4%.
Associates
The Group's share of income before taxation from associates increased by
13% to L9.7 million in the first quarter compared with a year ago. Gras Savoye,
in which the Group has a 33% interest, was the principal contributor to this
increase.
Liquidity and capital resources
The Group's cash and liquid resources, net of loans and overdrafts, were
L664.1 million at March 31, 2000 up from L583.9 million at December 31, 1999.
The Group's $150 million revolving credit facility remains undrawn.
Differences between U.K. GAAP and U.S. GAAP
Net income under U.S. GAAP for the three months ended March 31, 2000 of
L33.0 million, compares with net income under U.K. GAAP of L34.9 million. The
principal differences relate to the amortization of goodwill and pension
expense.
Quantitative and qualitative disclosures about market risk
There have been no material changes in the first quarter of 2000.
Forward looking information
Forward-looking statements in this quarterly report are made pursuant to
the safe-harbor provisions of the Securities Litigation Reform Act of 1995
including Section 21E(c) of the Securities Exchange Act of
9
1934. Such statements should be taken as the informed perspective of senior
management of the Company on possible future performance. Actual results could
differ materially from management's expectations because of many reasons,
including continued deterioration of the rating environment in the insurance
markets; loss of major accounts; regulatory and competitive conditions;
unexpected liabilities; further consolidation among insurance markets or major
insurance brokers; or fluctuation of exchange rates and interest rates.
May 15, 2000
10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
WILLIS GROUP LIMITED
By: /S/ THOMAS COLRAINE
----------------------------------------------------
Name: Thomas Colraine
Title: Group Finance Director
Date: May 15, 2000
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