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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 June 30, 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
<PAGE>
WILLIS GROUP LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(in millions of pounds sterling)
(unaudited)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Operating revenues
Commissions and fees....................................... 192.8 168.2 402.7 361.6
Interest and investment income............................. 11.2 10.1 20.0 19.7
-------------- -------------- -------------- --------------
204.0 178.3 422.7 381.3
Operating expenses......................................... (179.1) (173.4) (357.5) (345.3)
Operating expenses -- pensions review (Note 2)............. --- (15.0) --- (15.0)
-------------- -------------- -------------- --------------
Operating income/(loss).................................... 24.9 (10.1) 65.2 21.0
Share of (loss)/profit of associates....................... (0.2) 0.7 9.5 9.3
Interest receivable........................................ 14.3 14.6 28.4 28.9
Interest payable........................................... (14.1) (13.5) (27.7) (27.6)
Profit on disposal of operations........................... --- 0.5 --- 0.5
-------------- -------------- -------------- --------------
Income/(loss) before taxation.............................. 24.9 (7.8) 75.4 32.1
Taxation................................................... (8.0) (0.1) (23.7) (11.3)
-------------- -------------- -------------- --------------
Income/(loss) after taxation............................... 16.9 (7.9) 51.7 20.8
Minority interests......................................... --- (0.5) 0.1 (1.2)
-------------- -------------- -------------- --------------
Net income/(loss) (i)...................................... 16.9 (8.4) 51.8 19.6
============== ============== ============== ==============
Net income/(loss) per ordinary share (i)................... 3.5p (1.8)p 10.9p 4.2p
============== ============== ============== ==============
Average number of ordinary shares outstanding (in millions) 476.1 466.2 476.1 466.2
============== ============== ============== ==============
</TABLE>
(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 6 of Notes to Condensed Financial Statements.
CONSOLIDATED STATEMENT OF TOTAL RECOGNIZED GAINS AND LOSSES
(in millions of pounds sterling)
(unaudited)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Net income/(loss).......................................... 16.9 (8.4) 51.8 19.6
Currency translation differences........................... (21.8) (9.0) (32.6) (25.0)
-------------- -------------- -------------- --------------
Total recognized gains and losses (ii)..................... (4.9) (17.4) 19.2 (5.4)
============== ============== ============== ==============
</TABLE>
(ii) A statement of Comprehensive Income under U.S. GAAP is set forth in Note 6
of Notes to Condensed Financial Statements.
The Notes to Condensed Financial Statements are an integral part of these
Condensed Consolidated Financial Statements.
2
<PAGE>
WILLIS GROUP LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(in millions of pounds sterling)
(unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
<S> <C> <C>
ASSETS
Current assets
Cash and short-term deposits............... 291.7 329.3
Investments................................ 430.3 294.5
Receivables................................ 4,661.6 3,878.6
-------------- --------------
5,383.6 4,502.4
-------------- --------------
Fixed assets
Intangible assets.......................... 31.0 30.1
Tangible assets............................ 131.8 135.7
Investments................................ 50.6 46.6
-------------- --------------
213.4 212.4
-------------- --------------
Total assets................................ 5,597.0 4,714.8
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade payables............................. 3,833.2 2,985.6
Corporate tax.............................. 43.6 29.8
Accruals and deferred income............... 64.4 72.8
Bank loans and overdrafts.................. 0.3 1.6
Other...................................... 775.8 746.3
-------------- --------------
4,717.3 3,836.1
-------------- --------------
Noncurrent liabilities
Bank loans................................. 287.8 270.1
9% Senior Subordinated Notes due 2009...... 357.2 334.6
Other...................................... 32.4 36.6
-------------- --------------
677.4 641.3
-------------- --------------
Provisions for liabilities and charges...... 112.9 124.5
Minority interests.......................... 10.7 11.1
-------------- --------------
Total liabilities and minority interests.... 5,518.3 4,613.0
Shareholders' equity (ii)
Share capital.............................. 59.5 59.5
Share premium.............................. 118.0 118.0
Revaluation reserve........................ 14.9 14.9
Retained deficit........................... (113.7) (90.6)
-------------- --------------
78.7 101.8
-------------- --------------
Total liabilities and shareholders' equity.. 5,597.0 4,714.8
============== ==============
</TABLE>
(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 6 of Notes to Condensed Financial
Statements.
The Notes to Condensed Financial Statements are an integral part of these
Condensed Consolidated Financial Statements.
3
<PAGE>
WILLIS GROUP LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions of pounds sterling)
(unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
2000 1999
<S> <C> <C>
Net cash inflow from operating activities... 130.0 136.0
Dividends from associated undertakings...... 2.7 1.3
Returns on investments and servicing of
finance
Interest received.......................... 28.4 19.8
Interest paid.............................. (26.7) (18.7)
Minority dividends paid.................... (0.4) (1.1)
Bank fees on borrowings.................... (0.3) (4.7)
-------------- --------------
1.0 (4.7)
-------------- --------------
Taxation.................................... (6.8) (4.4)
Capital expenditure and financial investment
Purchase of tangible fixed assets.......... (8.3) (12.8)
Sale of tangible fixed assets.............. 1.2 2.8
Purchase of fixed asset investments........ (0.2) (0.1)
Sale of fixed asset investments............ --- 0.3
-------------- --------------
(7.3) (9.8)
-------------- --------------
Acquisitions and disposals
Purchase of subsidiaries................... (4.5) (1.3)
Purchase of associates..................... --- (10.1)
Sale of subsidiaries....................... --- 5.8
Net cash transferred on purchase/sale of
subsidiaries .............................. (0.2) (0.3)
-------------- --------------
(4.7) (5.9)
-------------- --------------
Equity dividends paid....................... (6.8) (10.0)
Cash flow before management of liquid
resources and financing ................... 108.1 102.5
Management of liquid resources.............. (23.6) (75.7)
Financing
Amounts due to/from parent company......... (36.0) 15.2
Debt due within a year:
Decrease in short-term borrowings......... --- (347.8)
Debt due beyond a year:
Increase in long-term borrowings.......... --- 319.4
-------------- --------------
(36.0) (13.2)
-------------- --------------
Increase in cash............................ 48.5 13.6
============== ==============
</TABLE>
The significant differences between the consolidated statement of cash flows
presented above and that required under U.S. GAAP are described in Note 6 of
Notes to Condensed Financial Statements.
The Notes to Condensed Financial Statements are an integral part of these
Condensed Consolidated Financial Statements.
4
<PAGE>
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 six months
ended June 30, 2000 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2000.
Note 2 -- Operating expenses -- pensions review
An exceptional charge of L15.0 million was recorded in the second quarter
of 1999 relating to further provisions made in connection with the review of
U.K. personal pension plans sold between 1988 and 1994.
Note 3 -- Interest receivable
Substantially all the Group's external borrowings have been advanced to
the Company's parent company, Trinity Acquisition Limited. Interest receivable
on the amounts advanced has been disclosed separately from interest receivable
on other funds, which is included in operating revenue.
Note 4 -- Reconciliation of operating income to net cash inflow from operating
activities
<TABLE>
<CAPTION>
Six months ended June 30,
2000 1999
<S> <C> <C>
Operating income............................ 65.2 21.0
Increase in pension review provision........ --- 15.0
Depreciation and amortization............... 13.5 13.6
Increase in receivables..................... (699.2) (360.3)
Increase in payables........................ 765.7 449.3
Net movement on provisions.................. (15.2) (2.6)
-------------- --------------
Net cash inflow from operating activities... 130.0 136.0
============== ==============
</TABLE>
Reconciliation of net cash flow to movement in net funds
<TABLE>
<CAPTION>
Six months ended June 30,
2000 1999
<S> <C> <C>
Net funds at beginning of period............ 583.8 486.5
Net cash flow............................... 48.5 13.6
Management of liquid resources.............. 23.6 75.7
Financing................................... 36.0 13.2
Non-cash movements.......................... (35.8) 92.9
Currency exchange movements................. (8.9) (13.6)
-------------- --------------
Net funds at end of period.................. 647.2 668.3
============== ==============
</TABLE>
5
<PAGE>
Note 5 -- Reconciliation of movements in shareholders' equity
<TABLE>
<CAPTION>
Six months ended June 30,
2000 1999
<S> <C> <C>
Net income.................................. 51.8 19.6
Dividends................................... (42.6) (61.1)
New ordinary shares issued.................. --- 92.9
Goodwill written back on disposals.......... 0.3 3.0
Exchange adjustments........................ (32.6) (25.0)
-------------- --------------
Net (decrease)/increase in shareholders'
equity .................................... (23.1) 29.4
Shareholders' equity at beginning of period. 101.8 89.0
-------------- --------------
Shareholders' equity at end of period....... 78.7 118.4
============== ==============
</TABLE>
Note 6 -- 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
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Net income/(loss) as reported in the consolidated statement
of income ................................................ 16.9 (8.4) 51.8 19.6
Adjustments
Operating expenses -- restructuring costs.................. (0.7) --- (0.9) ---
Operating expenses -- pensions review...................... --- 15.0 --- 15.0
Goodwill................................................... (5.4) (2.1) (10.2) (7.1)
Revaluation of forward exchange contracts and other
financial instruments .................................... (4.4) (1.2) (4.2) (2.0)
Pension costs.............................................. 3.8 (14.5) 8.2 (14.8)
Deferred taxes -- effect of above adjustments.............. 0.4 5.8 (1.1) 6.1
-------------- -------------- -------------- --------------
Net income/(loss) as adjusted to accord with U.S. GAAP..... 10.6 (5.4) 43.6 16.8
============== ============== ============== ==============
</TABLE>
6
<PAGE>
Note 6 -- Differences between accounting principles generally accepted in the
United Kingdom and the United States (continued)
<TABLE>
<CAPTION>
Comprehensive income
Three months ended June 30, Six months ended June 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Net income/(loss) as adjusted to accord with U.S. GAAP..... 10.6 (5.4) 43.6 16.8
Other comprehensive income:
Foreign currency translation adjustments.................. 13.1 6.1 18.1 10.5
Unrealized holding losses................................. 0.5 (1.3) 0.5 (1.3)
-------------- -------------- -------------- --------------
Comprehensive income/(loss)................................ 24.2 (0.6) 62.2 26.0
============== ============== ============== ==============
</TABLE>
Shareholders' equity
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
<S> <C> <C>
Shareholders' equity as reported in the
consolidated balance sheet ................ 78.7 101.8
Adjustments
Intangible assets:
Goodwill --- cost........................... 892.9 836.2
--- amortization..................... (40.0) (27.4)
Current assets:
Investments................................ (0.4) (0.9)
Receivables --- forward exchange contracts. (3.5) 0.7
Noncurrent liabilities :
Other --- pension costs liability.......... (23.6) (27.5)
Provisions for liabilities and charges:
Surplus properties......................... 6.0 6.5
Deferred taxes --- effect of above
adjustments ............................... 8.6 9.7
-------------- --------------
Shareholders' equity as adjusted to accord
with U.S. GAAP ............................ 918.7 899.1
============== ==============
</TABLE>
The categories of cashflow activity under U.S. GAAP can be summarized as
follows:
Consolidated statement of cash flows
<TABLE>
<CAPTION>
Six months ended June 30,
2000 1999
<S> <C> <C>
Cash inflow from operating activities....... 127.3 121.5
Cash inflow on investing activities......... 10.9 13.3
Cash outflow on financing activities........ (44.6) (19.4)
-------------- --------------
Increase in cash and cash equivalents....... 93.6 115.4
Effect of foreign exchange rate changes..... 24.4 11.1
Cash and cash equivalents at beginning of
period .................................... 540.9 499.9
-------------- --------------
Cash and cash equivalents at end of period.. 658.9 626.4
============== ==============
</TABLE>
7
<PAGE>
Note 7 -- 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:
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Total operating revenues................................... 94.6 85.2 186.2 173.3
Operating income/(loss).................................... 7.9 (1.5) 14.7 4.6
Net income................................................. 6.9 0.9 12.0 2.0
============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
<S> <C> <C>
Current assets.............................. 2,047.1 1,880.9
Fixed assets................................ 76.9 70.8
-------------- --------------
2,124.0 1,951.7
============== ==============
Current liabilities......................... 1,965.0 1,816.4
Noncurrent liabilities...................... 54.3 48.6
Shareholders' equity........................ 104.7 86.7
-------------- --------------
2,124.0 1,951.7
============== ==============
</TABLE>
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
<PAGE>
WILLIS GROUP LIMITED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Summary
For the quarter ended June 30, 2000, income before taxation grew by L17.7
million to L24.9 million and net income by L14.8 million to L16.9 million. For
the same quarter of 1999, income before tax was L7.2 million and net income was
L2.1 million, in both cases stated after excluding the exceptional charge of
L15.0 million (L10.5 million after taxation) made in the second quarter of
1999.
For the six months ended June 30, 2000, income before taxation rose by 60%
to L75.4 million and net income by 72% to L51.8 million. For the same period of
1999, income before tax was L47.1 million and net income was L30.1 million,
after excluding the exceptional charge.
Both revenues and expenses have contributed to this improved result.
Operating revenues grew at 14% in the quarter, and 11% for the six months,
while operating expenses grew by only 3% in the quarter and 4% over the six
months.
Proforma adjusted constant currency EBITDA (earnings before interest, tax,
depreciation and amortization) increased by 59% to L33.6 million in the quarter
and by 30% to L95.9 million in the six months compared with the same periods of
1999.
Operating Revenues
Operating revenues increased by 14% to L204.0 million in the quarter and
by 11% to L422.7 million in the six months compared with L178.3 million and
L381.3 million, respectively, in the corresponding periods of 1999. For the
quarter, all business units reported revenues ahead of the same period a year
ago. Excluding the benefit from movements in foreign currency exchange rates,
operating revenues were up by 11% in constant currency terms for the quarter
and 10% for the six months. Adjusting for the effect of acquisitions in Mexico
and Venezuela, which occurred towards the end of 1999, adjusted operating
revenues on a comparable basis were 9% higher for the quarter and 8% for the
six months.
Most units reported good new business and renewal performance, aided by
firming premium rates, particularly in specialist markets. Reinsurance revenues
were up by 29% in the quarter compared with a year ago, Global Specialities by
11% and International by 9%. North American operations increased its revenues
by 8% and UK Retail by 4%.
For the first six months, Reinsurance and Global Specialities' revenues
were ahead of the same period last year by 23% and 15%, respectively. North
American operations were up by 6%, UK Retail by 3% and International by 1%. The
Reinsurance and Global Specialities' business units earn proportionately more of
their annual revenues in the first six months of the year whereas North American
operations, UK Retail and International earn proportionately less.
Operating Expenses
Operating expenses increased by 3% to L179.1 million in the quarter and by
4% to L357.5 million in the quarter compared with the corresponding periods of
1999 excluding the L15.0 million exceptional charge made in the second quarter
of that year. The exceptional charge in 1999 related to further provisions in
connection with the review of U.K. personal pension plans sold between 1988 and
1994. Allowing for acquisitions, and excluding non-recurring bank fees incurred
in the first quarter of 1999, the increase in operating expenses on a comparable
basis was 2% for the quarter and 3% for the six months.
Associates
The Group's share of income before taxation from associates increased by
2% to L9.5 million in the six months compared with a year ago.
9
<PAGE>
Liquidity and capital resources
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 of L10.6 million for the quarter and L43.6
million for the six months, compares with net income under U.K. GAAP of L16.9
million and L51.8 million respectively. The principal differences relate to the
amortization of goodwill, pension expense and the revaluation of forward foreign
exchange contracts.
Quantitative and qualitative disclosures about market risk
There have been no material changes in either the second quarter or first
six months 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 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.
August 14, 2000
10
<PAGE>
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: August 14, 2000
11
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