TIDMJLT
RNS Number : 1637G
Jardine Lloyd Thompson Group PLC
28 February 2018
28 FEBRUARY 2018
Jardine Lloyd Thompson Group plc
PRELIMINARY RESULTS
FOR THE YEARED 31 DECEMBER 2017 (UNAUDITED)
Jardine Lloyd Thompson Group plc ("JLT" or "the Group")
announces its preliminary results for the year ended 31 December
2017.
group Financial Highlights
-- Revenues of GBP1,386m, up 10%
-- Organic revenue growth of 5%:
-- 6% in Specialty businesses
-- 4% in JLT Re
-- 8% in UK & Ireland Employee Benefits
-- Underlying* profit before tax of GBP191.5m, up 11%
-- Reported profit before tax of GBP181.6m, up 35%
-- Underlying* trading margin constant at 15.4%
-- Reported diluted earnings per share (EPS) increased from 37.8p to 54.7p, up 45%
-- Underlying* diluted EPS increased from 51.4p to 58.5p, up 14%
-- Final cash dividend of 21.8p bringing total dividend for 2017 to 34.0p, up 5.6%
* Underlying results exclude exceptional items
BUSINESS Highlights
-- All businesses in the Group achieved headline revenue growth
year on year, underpinned by strong organic revenue growth of 5%
(2016: 2%) which was in line with historical rates.
-- Trading profit in global Risk & Insurance grew 19% year
on year, demonstrating the growing strength of the Group
worldwide.
-- US Specialty tapered the net investment loss and made further
progress with the build-out, adding new clients, people and
offices; the business remains on track to achieve profit in
2019.
-- The recovery in UK Employee Benefits drove its profit up 40%
year on year, with higher margins, and saw a number of substantial
client wins in the year.
Business Strategy
-- Effective 1 April 2018, the Group will be aligned into three
divisions to facilitate closer global coordination and enhance
client delivery: Reinsurance, Specialty, and Employee Benefits.
-- Group-wide Transformation Programme will deliver globally
consistent processes and operational efficiencies creating
opportunities for improved returns through global client solutions.
Annualised savings of GBP40m are projected by 2020 for a one-off
cost of GBP45m spread across 2018 and 2019.
-- US Specialty build-out will focus on continuing organic
growth, complemented by targeted acquisitions.
-- International Employee Benefits proposition is being
developed, with close coordination of existing operations and the
launch of an integrated offering to multinational clients.
Dominic Burke, Group Chief Executive, commented:
"2017 was an important year for the JLT Group. The decisions we
took during the year and the strategic developments we have
initiated will, I believe, mark the start of a new chapter in the
growth of JLT."
Enquiries
Jardine Lloyd Thompson Group plc
Dominic Burke Group Chief Executive 020 7558 3373
Charles Rozes Group Finance Director 020 7558 3380
Paul Dransfield Head of Investor Relations 020 7528 4933
Brunswick Group LLP
Tom Burns/Dania Saidam Brunswick Group LLP 020 7404 5959
A presentation to investors and analysts will take place at 9am
today at The St Botolph Building, 138 Houndsditch, London, EC3A
7AW. A live webcast of the presentation can be viewed on the
Group's website www.jlt.com and it will also be available after the
event.
This announcement contains inside information which is disclosed
in accordance with the Market Abuse Regulations.
PRELIMINARY STATEMENT
JLT made substantial financial progress in 2017, returning to
strong organic revenue growth.
Total revenues increased by 10%, or 6% at constant rates of
exchange (CRE), to GBP1,386m with strong overall organic revenue
growth of 5%, in line with historical rates.
Total Revenue Underlying Trading Profit Trading Margin
GBPm 2017 Growth CRE Organic 2016 2017 CRE 2016 2017 CRE 2016
Risk &
Insurance
Specialty
Businesses 848.7 11% 6% 6% 765.3 155.5 148.7 126.1 18% 18% 16%
JLT Re 217.1 11% 7% 4% 195.6 42.4 43.5 40.5 20% 21% 21%
-------- ------- ----- -------- -------- ------- -------- -------- ------ ------ ------
1,065.8 11% 6% 5% 960.9 197.9 192.2 166.6 19% 19% 17%
Employee
Benefits
UK & Ireland 172.0 7% 7% 8% 160.0 17.2 16.9 12.3 10% 10% 8%
International
EB 148.2 6% (1%) - 140.4 32.9 32.7 37.2 22% 23% 26%
-------- ------- ----- -------- -------- ------- -------- -------- ------ ------ ------
320.2 7% 4% 4% 300.4 50.1 49.6 49.5 16% 16% 16%
Group* 1,386.0 10% 6% 5% 1,261.3 213.7 208.1 193.7 15.4% 15.6% 15.4%
Notes:
- CRE: Constant rates of exchange are calculated by translating
2017 results at 2016 exchange rates.
- Organic revenue growth is based on total revenue excluding the
effect of currency, acquisitions, disposals and investment
income.
- Underlying results exclude exceptional items.
* Group underlying trading profit includes central costs.
JLT's Risk & Insurance businesses delivered revenue growth
of 11%, or 5% on an organic revenue basis. Trading profit rose
substantially, increasing from GBP166.6m to GBP197.9m, contributing
to a 200 bps increase in trading margin to 19%.
JLT's Employee Benefits businesses generated revenue growth of
7%, or 4% on an organic revenue basis. Strong organic revenue
growth in the UK of 8% was offset by weakness in some parts of the
international Employee Benefits business.
GBPm 2017 2016
Underlying trading profit 213.7 193.7
Underlying share of associates 2.1 1.0
Net finance costs (24.3) (22.1)
------- -------
Underlying profit before taxation 191.5 172.6
Exceptional items (9.9) (37.7)
------- -------
Profit before taxation 181.6 134.9
Underlying tax expense (53.3) (52.3)
Tax on exceptional items 0.4 8.3
Underlying non-controlling interests (11.5) (9.4)
Non-controlling interests on exceptional items 1.2 -
------- -------
Profit after taxation and non-controlling interests 118.4 81.5
------- -------
Underlying profit after taxation and non-controlling interests 126.7 110.9
------- -------
Diluted earnings per share 54.7p 37.8p
Underlying diluted earnings per share 58.5p 51.4p
Total dividend per share 34.0p 32.2p
The Group's underlying trading profit increased by 10% to
GBP213.7m, and by 7% at CRE. Underlying profit before tax increased
by 11%, or 8% at CRE, to GBP191.5m. While foreign exchange (FX)
movements provided a positive impact on underlying profit before
tax during the year, the impact was significantly lower than that
of 2016. However, sterling has strengthened significantly since
December 2017 and should sterling remain at its highest point in
the year to date, the Group anticipates that this would reduce
underlying profit before tax by approximately GBP10m.
The trading margin was maintained at 15.4%.
Reported profit before tax increased by 35% to GBP181.6m, which
includes the impact of exceptional items of GBP9.9m. Reported EPS
increased to 54.7p.
OPERATIONAL REVIEW
The Group operated two sets of businesses throughout 2017: Risk
& Insurance and Employee Benefits. The results of the
businesses within each of these areas are reported in more detail
below.
risk & insurance
Total Revenue Underlying Trading Margin
Trading Profit
GBPm 2017 Growth CRE Organic 2016 2017 CRE 2016 2017 CRE 2016
JLT Europe 399.3 1% (1%) 3% 393.8 90.6 87.2 79.9 23% 22% 20%
JLT Re 217.1 11% 7% 4% 195.6 42.4 43.5 40.5 20% 21% 21%
JLT Australia
& New Zealand 125.7 7% (1%) (2%) 117.7 35.5 32.5 34.1 28% 28% 29%
JLT Asia 100.3 11% 6% 6% 90.3 17.3 17.3 16.8 17% 18% 19%
JLT Latin
America 93.3 31% 20% 19% 71.4 26.1 24.7 21.1 28% 29% 30%
JLT Middle
East & Africa 23.2 9% 4% 4% 21.3 2.7 2.4 1.4 11% 11% 7%
JLT USA 73.9 79% 71% 28% 41.3 (16.4) (15.1) (27.0) (22%) (21%) (65%)
JLT Canada 22.5 17% 9% 9% 19.2 0.3 0.3 (0.5) 1% 1% (2%)
JLT Insurance
Management 10.5 2% (2%) (2%) 10.3 (0.6) (0.6) 0.3 (6%) (6%) 3%
------- ------ ---- ------- ----- ------ ------ ------ ----- ----- -----
1,065.8 11% 6% 5% 960.9 197.9 192.2 166.6 19% 19% 17%
JLT EUROPE
JLT Europe delivered revenues of GBP399.3m in 2017. After
adjusting for the disposal of Thistle, which produced GBP20.0m of
revenue and a loss of GBP3.6m, at the end of 2016, this represented
revenue growth of 7%, of which 4% was organic. Trading profit
increased by 9% to GBP90.6m, and the trading margin increased 100
bps to 23% on an adjusted basis.
Strong client retention and new business drove good performances
from most divisions, particularly Financial Lines, Northern Europe
and Credit & Political Risks. This achievement was delivered
despite challenging market conditions, particularly in the Energy
and Marine sectors.
The Group made investments in 2017 to strengthen JLT's
representation in continental Europe, including the acquisition of
Belgibo, the Belgian specialty broker, in August 2017. These
investments support the Group's Brexit planning, enabling the Group
to manage the consequences of different Brexit scenarios. In light
of these investments, and other preparatory work, the Group does
not anticipate that Brexit will materially impact JLT's ability to
serve clients and access markets in the European Union.
JLT International Specialty Businesses
Outside of Europe, JLT's international Specialty businesses
together delivered revenues of GBP449.4m, a headline increase of
21% or 13% at CRE, with organic revenue growth of 8%. The combined
trading margin of the international Specialty businesses increased
from 12% to 14%.
Australia and New Zealand
The Australian and New Zealand businesses saw revenues increase
by 7% to GBP125.7m. It is anticipated that earnings from a number
of significant business wins secured in 2017 will help these
businesses return to organic revenue growth in 2018.
Asia
Asia produced a good performance in the year, with an 11%
increase in revenues to GBP100.3m and a 6% organic revenue growth
rate. Revenue performance was driven by core specialties,
particularly Financial Lines and Construction.
Latin America
JLT's Latin American operations grew revenues by 31% to
GBP93.3m, with 19% organic revenue growth. Trading profit increased
by 24% to GBP26.1m, a 17% increase at CRE. JLT has been making
significant investments in building its Specialty capabilities
across Latin America and these results demonstrate the success of
that strategy.
US Specialty
The US Specialty business continued to make good progress in the
year, delivering revenue approaching USD 100m. Net investment
losses reduced from GBP27m to GBP16m, delivering on the Group's
previous guidance that these losses had reached the 'high-water'
mark at the end of 2016.
The US Specialty business is now firmly established with 335
employees in 17 locations and an increasing market presence, now
representing 5% of the Fortune 500.
JLT Re
JLT Re delivered revenues of GBP217.1m, an increase of 11%,
reflecting organic revenue growth of 4%. This performance was
delivered despite the continued decline in pricing across most
lines of reinsurance business and in most geographies across the
year. This was underlined by the 1 January 2017 renewals, which saw
risk-adjusted global property-catastrophe pricing reduce by almost
6%.
JLT Re's trading profit increased by 5% to GBP42.4m. The trading
margin was 20% in the year, reflecting JLT Re's continued
investment in market leading talent across all of its geographies,
increasing headcount by approximately 10% year on year. Organic
revenue growth in Europe and North America was offset in part by
Asia Pacific, which experienced significant headwinds from the
rating environment combined with reductions in facultative buying
activity.
JLT Employee Benefits
Total Revenue Underlying Trading Margin
Trading
Profit
GBPm 2017 Growth CRE Organic 2016 2017 CRE 2016 2017 CRE 2016
UK & Ireland 172.0 7% 7% 8% 160.0 17.2 16.9 12.3 10% 10% 8%
Asia 89.6 3% (2%) (1%) 87.3 25.1 25.0 27.2 28% 29% 31%
Australia
& New Zealand 30.1 9% 1% 1% 27.5 6.3 5.8 5.5 21% 21% 20%
Latin America 23.5 8% (1%) (1%) 21.7 1.2 1.5 3.7 5% 7% 17%
Middle East
& Africa 2.9 50% 29% 28% 1.9 - 0.1 0.2 (1%) 4% 10%
Canada 2.1 8% - (5%) 2.0 0.3 0.3 0.6 14% 14% 31%
------ ------ ----- ------- ------ ----- ----- ----- ------ ---- -----
320.2 7% 4% 4% 300.4 50.1 49.6 49.5 16% 16% 16%
UK & IRELAND employee benefits
JLT's UK and Ireland Employee Benefits business grew revenues to
GBP172.0m, reflecting an impressive organic revenue growth of 8%.
Trading profit for the year was GBP17.2m, an increase of 40% over
the previous year.
At the time of its 2017 interim results, the Group indicated
that the momentum seen in the first half of the year would
continue, and this has proved to be the case with good performances
delivered across the business.
Trading margins in the UK and Ireland Employee Benefits business
improved by 200 basis points to 10%. The Group now expects to
achieve its 15% trading margin target for this business in 2019,
rather than in 2018, with the benefit of the Global Transformation
Programme. The Group anticipates that the business will make
further progress in 2018 towards this target, with the majority of
the progress being made in 2019.
INTERNATIONal Employee Benefits
JLT's international Employee Benefits businesses achieved mixed
headline results, although there was improving momentum and some
good performances within individual businesses.
In Asia, the Private Client Services (PCS) life assurance
broking business experienced a difficult first half to the year.
However, this was followed by a positive performance in the second
half of the year. The business is now expanding into new
geographies, including mainland China.
In Australia, a slower rate of revenue growth resulted from
structural changes in the workers compensation market. However, the
Group anticipates better revenue performance in Australia in 2018,
building on the trading profit growth seen in 2017.
In Brazil, corporate payrolls fell as the economy remained weak,
leading to slower headline revenue growth and a year on year
reduction in trading profit in the region. However, Latin America
Employee Benefits has been successful in winning significant
volumes of new business and the Group looks forward to growth rates
returning to former levels in that business as economies in the
region recover.
ASSOCIATES
The Group's income from its Associates increased by GBP1.1m to
GBP2.1m.
OPERATING COSTS
Total underlying operating costs (excluding exceptional items)
increased by GBP104m, or 10%, to GBP1,172.3m. Of that increase,
GBP48m arose from changes in foreign exchange rates. The mix of the
cost base remained broadly unchanged, with staff and premises costs
being the major individual expense items. Head Office costs rose to
GBP34.3m in the year, in line with previous guidance, and are
expected to remain at a similar level in 2018, subject to any
changes in provisions. The increase in the year related to rising
premises costs, higher UK employment taxes and normalised
self-insurance costs.
EXCEPTIONAL ITEMS
Total net exceptional costs were GBP9.9m (2016: GBP37.7m) and
related to three items: net costs of GBP9.1m relating to the
settlement of litigation; GBP2.6m of acquisition and integration
costs, primarily in respect of Construction Risk Partners (CRP) and
Belgibo; and GBP1.8m of net gains made on two small disposals.
BalanCe Sheet and funding
The net assets of the Group increased to GBP398m from GBP351m.
The key movements were:
-- an increase in goodwill of GBP35m, mainly due to the
acquisitions of a majority stake in CRP and the entire shareholding
of Belgibo, partly offset by the impact of foreign exchange. The
Group completed three acquisitions during the year for a total
consideration of GBP61.2m;
-- a net increase in working capital of GBP33m, which is GBP10m
lower than the same period in 2016, despite
higher overall revenues and no significant shift in
seasonality;
-- a decrease of GBP29m in the net pension liability primarily
as a result of the Group's annual contributions and returns on
scheme assets. The associated deferred tax asset was recognised
accordingly; and
-- the derivatives position decreased by GBP30m, mainly due to
the Group's mark to market adjustments. The associated deferred tax
asset was recognised accordingly.
Net debt, defined as own funds less total borrowings net of
transaction costs, was GBP506m (2016: GBP496m). The Group's
principal measure of leverage, the Net Debt to EBITDA ratio,
reduced from 2.1:1 to 1.8:1 on a reported basis and remained at
1.6:1 on a bank covenant basis.
As at 31 December 2017, the Group had committed long-term
unsecured revolving credit facilities of GBP500m and drawn private
placement loan notes equivalent to GBP420m, resulting in total debt
facilities equivalent to GBP920m with maturities between 2020 and
2029. A long term private placement loan note for USD 42m, issued
in 2010, was repaid in September 2017. Gross borrowings were
GBP710m, which includes GBP691m of borrowings under the Group's
committed facilities, leaving unutilised committed facilities
headroom of GBP229m.
The Group continues to be well funded with an appropriate mix of
short-term and long-term debt, with a range of maturities that
extend to 2029.
Net finance costs increased by GBP2.2m to GBP24.3m as the Group
continued to invest, including the acquisitions of CRP and
Belgibo.
cashflow
The Group primarily monitors operational cash flows, which
report cash and net debt movements but exclude fiduciary funds;
statutory cash flows include movements in fiduciary funds. In 2017,
the Group generated GBP279m of EBITDA, reflecting an increase in
underlying profit and a reduction in exceptional items.
Operational free cash flows increased to GBP175m, reflecting the
EBITDA growth, offset by an increase in annual capex due to the
fit-out of additional space in the Group's London headquarters, as
well as improvements to its IT infrastructure. Acquisition capex
was primarily driven by the acquisitions of CRP and Belgibo.
Excluding discretionary spend on M&A activity, the Group was
GBP6m net cash positive in 2017; including this activity, there was
a GBP49m net cash outflow in the year.
IMPACT OF NEW ACCOUNTING STANDARDS
Two new accounting standards were implemented in January 2018,
IFRS 9 (Financial Instruments) and IFRS 15 (Revenue from Contracts
with Customers).
IFRS 9 is anticipated to have an immaterial impact on the
Group's profit and loss account, mainly due to JLT's conservative
bad debt provision policy and strong credit control.
In relation to the new revenue standard, IFRS 15, JLT has
historically recognised inception date as the primary trigger for
recognising revenue, a practice that has largely been upheld under
the new standard. As a consequence, the restatement of 2017
underlying PBT on adoption of IFRS 15 is expected to be limited, to
an overall rephasing of approximately GBP4.5m into subsequent
years. Most of this reduction relates to JLT's UK Employee Benefits
business due to the longer term nature of its contracts, and a
further amount to JLT Re for similar reasons. The residual balance
is split across the remainder of JLT's businesses.
Further details of the adjustments can be found in the
'Significant Accounting Policies' section of this document.
Including the Global Transformation Programme, the Group
anticipates a shift in the phasing of its profits in 2018 to
approximately 49% in the first half, and 51% in the second half of
the financial year.
DIVIDS
Subject to shareholder approval, the final dividend will be
increased to 21.8p per share for the year ended 31 December 2017
(2016: 20.6p) and will be paid on 8 May 2018 to shareholders on the
register at 3 April 2018. This brings the total dividend for the
year to 34.0p per share, compared to 32.2p for the prior year, an
increase of 5.6%.
GROUP STRATEGY and strategic plans
The Group's acquisition of TW Re in late 2013, followed by the
establishment of JLT's US Specialty business in 2014, has given JLT
a firm foundation in the US. As explained in the Group's 2017
interim results, that increase in scope and opportunity led the
Group to conduct an extensive re-examination of its strategy in the
course of 2017. The process confirmed that:
-- JLT's deep specialist strength is a key differentiator
between JLT and its larger competitors; and
-- Representation in the US now gives JLT the opportunity to
move from an international to a global business across each of
Reinsurance, Specialty and Employee Benefits.
JLT re-articulated its mission, 'To become the leading global
specialist risk adviser and broker", and the Group is now taking a
number of important steps towards its strategic objectives.
Structural Changes
The Group is making a number of structural changes to the
businesses and the management of JLT.
As announced in January 2018, Lucy Clarke has been appointed to
the new role of Global CEO of the Group's Specialty business. The
Group believes that bringing JLT's regional insurance broking
operations together into an integrated Specialty division, with
leaders appointed in each of JLT's principal industry specialities
(Energy, Construction, Financial Lines, Aerospace, Marine &
Cargo and Credit & Political Risks) responsible for globally
coordinated sales and delivery to clients, will enable JLT to
operate as a combined group of global specialists.
An integrated global management structure is already operating
effectively and delivering value in JLT's Reinsurance division. The
Group is confident that JLT will realise the same benefits in
Global Specialty and that its Specialties will see accelerated
growth, operating on a global basis.
Employee Benefits will also operate as a worldwide business. UK
& Ireland and International Employee Benefits (including PCS)
will be the third of JLT's three business divisions.
From the start of the second quarter, JLT's businesses will
therefore be structured into three divisions, Reinsurance,
Specialty and Employee Benefits, and the Group's results will be
reported on this basis going forward.
Global Transformation Programme
The Group will be implementing a two-year plus Group-wide Global
Transformation Programme which is designed to transform JLT's
operational capabilities and to facilitate consistent and
systematically coordinated working across the world.
The Group will streamline the operational processes used to
serve clients in each of its divisions, to deliver global
consistency and eliminate duplication of costs.
From 2020, JLT expects to use a consistent set of processes and
core operating platforms in each of its Reinsurance, Specialty and
Employee Benefits divisions.
In financial terms, the Group projects the Programme to deliver
a fully sustainable GBP40m reduction in operating costs by the end
of the 2020 financial year, secured at a one-off cost estimated at
GBP45m, which will be treated as exceptional items over a two-year
period. The table below sets out the anticipated phasing of the
projected benefits and costs of the Programme:
GBPm Cost to achieve* Incremental Annualised
Benefit Benefit
2018 33 16 16
2019 12 19 35
2020 - 5 40
------ ----------------- ------------ -----------
* Treated as exceptional items
Operating on a consistent basis across each of JLT's global
divisions will achieve significant, tangible benefits: a better
client experience, improved cost efficiency and stronger
controls.
US Strategy
The objective of building a US Specialty business that
contributes to the Group on a scale that better reflects the
importance of the US to the global economy is at the heart of the
Group's medium-term strategy.
The Group intends to build on the firm foundation that it has
already established in the US through continuing organic revenue
growth, complemented by targeted acquisitions. This began with the
purchase of a controlling interest in the construction specialist,
CRP, in January 2017 which has proven to be highly successful,
delivering a continuing stream of domestic wins and increasing
coordination throughout the Group to win and service international
construction clients.
In 2017, US Specialty represented 5% of the Group's revenues.
That proportion is expected to grow in the next few years.
Following its move into profitability in 2019 as previously guided,
the Group anticipates that trading margins in US Specialty will
move broadly into line with those in JLT's other major global
Specialty businesses in the medium term.
JLT Employee Benefits
The Group is confident about the momentum throughout the
Employee Benefits businesses going into 2018, and the prospects for
the division's revenue and profit growth.
In UK Employee Benefits, the largest business, the Group
anticipates further strong growth in both revenue and trading
margin as it sees a return on the investments made in recent years.
This business has a strong position in the occupational pension
scheme market. It is also making appropriate investments for the
future so as to generate new business from today's employees.
JLT now operates Employee Benefits across the Group and through
its international network, and has begun work to coordinate the
presentation and marketing of its Employee Benefits activities
worldwide. During 2017, the Group took advantage of its
international coverage to launch a coordinated global Employee
Benefits offering sold, managed and delivered by a single global
team. The initial response from clients confirms that JLT can grow
revenues in the international employee benefits market.
BOARD AND SENIOR MANAGEMENT DEVELOPMENTS
There were a number of Board and senior management changes
during 2017. Two Directors left the Board during the year: Bruce
Carnegie-Brown stepped down from the Board on 14 June 2017,
following his appointment as the Chairman of Lloyd's of London, and
Jonathan Dawson retired on 3 October 2017.
Andrew Didham and Richard Meddings were appointed as
Non-Executive Directors and joined the Board on 2 October 2017.
Richard Meddings has become Chair of the Remuneration Committee and
Andrew Didham has become Chair of the Audit & Risk Committee.
Annette Court was appointed as the Company's Senior Independent
Director upon Jonathan Dawson's retirement.
At a senior management level, Jonathan Palmer-Brown stepped down
as a member of the Group Executive Committee at the end of the year
and continues to act as an Advisor to the Group Chief Executive.
Leo Demer stepped down as CEO of JLT's Australia and New Zealand
business at the end of December 2017 and was succeeded by Nick
Harris, who joined the Group Executive Committee on 1 January 2018.
Leo assumes the new role of Head of Global Public Sector
Specialties.
Lucy Clarke has been appointed as Global CEO of the Group's
Specialty business with effect from 1 April 2018. In JLT's US
Specialty business, with effect from 26 February 2018, Mike Rice
became Executive Chairman to focus on M&A and to continue to
play a lead role in driving new business development. Pat Donnelly,
formerly President and Deputy CEO, assumed the role of CEO, US
Specialty.
In view of the changes to the Group business and management
structure, the Group Executive Committee will be reconstituted from
1 April 2018. The members of the Committee will comprise: Dominic
Burke, Mark Drummond Brady, Charlie Rozes, Lucy Clarke, Ross
Howard, Mike Methley, William Nabarro, Jim Pierce, Mike Reynolds
and Bala Viswanathan.
OUTLOOK
After five consecutive years of falling reinsurance rates,
global property catastrophe rates have experienced some upward
pressure but with significant variances across regions driven in
large part by the losses experienced following hurricanes Harvey,
Irma and Maria. Across most lines and most classes of reinsurance
and specialty, the trend of steady price reductions through a
number of years seems to have moderated or ended. However, a
consistent pattern is not evident and it would be premature to
refer to a hardening market.
In today's market each risk needs the broker to demonstrate real
understanding of the risk and real transactional expertise to
secure appropriate cover on the optimum terms for the client. This
is the specialist capability that JLT has built over the past
decade and the Group is confident that JLT is well placed to grow
and execute on its strategy.
JLT has entered 2018 with real momentum but we do not expect a
consistently hard insurance market. While the Group is positive
with regards to the factors within its control, volatile currency
markets present a risk. Therefore, taken together, JLT enters 2018
looking forward to continuing strong organic revenue growth and
further financial progress.
Disclaimer
This document may contain forward-looking statements that may or
may not prove accurate. For example, statements regarding expected
revenue growth, margins and market trends are forward-looking
statements. Phrases such as "aim", "plan", "intend", "anticipate",
"well-placed", "believe", "estimate", "expect", "target",
"consider" and similar expressions are generally intended to
identify forward-looking statements. Forward-looking statements
involve known and unknown risks, uncertainties and other important
factors that could cause actual results to differ materially from
what is expressed or implied by the statements. Any forward-looking
statement is based on information available to JLT as of the date
of the statement. All written or oral forward-looking statements
attributable to JLT are qualified by this caution. JLT does not
undertake any obligation to update or revise any forward-looking
statement to reflect any change in circumstances.
Consolidated income statement
for the year ended 31 December 2017
2017 2016
GBP'000 GBP'000
========================================== ===== ========== =========
Fees and commissions 2 1,378,554 1,256,556
------------------------------------------ ----- ---------- ---------
Investment income 2,4 7,474 4,730
========================================== ===== ========== =========
Total revenue 2 1,386,028 1,261,286
========================================== ===== ========== =========
Salaries and associated expenses 6 (861,189) (794,363)
------------------------------------------ ----- ---------- ---------
Premises (70,625) (66,849)
------------------------------------------ ----- ---------- ---------
Other operating costs (213,862) (209,518)
------------------------------------------ ----- ---------- ---------
Depreciation, amortisation and impairment
charges 3 (36,491) (34,951)
========================================== ===== ========== =========
Operating profit 1,2,3 203,861 155,605
========================================== ===== ========== =========
Analysed as:
------------------------------------------ ----- ---------- ---------
Operating profit before exceptional
items 1,2 213,743 193,672
------------------------------------------ ----- ---------- ---------
Acquisition and integration costs 3 (2,605) (546)
------------------------------------------ ----- ---------- ---------
Restructuring costs 3 - (13,900)
------------------------------------------ ----- ---------- ---------
Net litigation costs 3 (9,067) (21,114)
------------------------------------------ ----- ---------- ---------
Net gains/(losses) on disposals 3 1,835 (1,660)
------------------------------------------ ----- ---------- ---------
Other exceptional items 3 (45) (847)
========================================== ===== ========== =========
Operating profit 1,2,3 203,861 155,605
========================================== ===== ========== =========
Finance costs 5 (27,327) (24,225)
------------------------------------------ ----- ---------- ---------
Finance income 5 2,978 2,147
------------------------------------------ ----- ---------- ---------
Finance costs - net 5 (24,349) (22,078)
------------------------------------------ ----- ---------- ---------
Share of results of associates 2,149 1,353
========================================== ===== ========== =========
Profit before taxation 1,2 181,661 134,880
------------------------------------------ ----- ---------- ---------
Income tax expense 8 (52,980) (44,018)
========================================== ===== ========== =========
Profit for the year 128,681 90,862
========================================== ===== ========== =========
Profit attributable to:
------------------------------------------ ----- ---------- ---------
Owners of the parent 2 118,378 81,466
------------------------------------------ ----- ---------- ---------
Non-controlling interests 10,303 9,396
========================================== ===== ========== =========
128,681 90,862
========================================== ===== ========== =========
Earnings per share attributable to
the owners of the parent during the
year
(expressed in pence per share) 9
------------------------------------------ ----- ---------- ---------
Basic earnings per share 56.1p 38.6p
------------------------------------------ ----- ---------- ---------
Diluted earnings per share 54.7p 37.8p
------------------------------------------ ----- ---------- ---------
Consolidated statement of comprehensive income
for the year ended 31 December 2017
2017 2016
Notes GBP'000 GBP'000
============================================ ===== ======== ========
Profit for the year 128,681 90,862
============================================ ===== ======== ========
Other comprehensive income/(expense)
-------------------------------------------- ----- -------- --------
Items that will not be reclassified
to profit or loss
-------------------------------------------- ----- ======== ========
Remeasurement of post-employment benefit
obligations 31 17,985 (71,642)
-------------------------------------------- ----- -------- --------
Taxation thereon (2,599) 11,850
-------------------------------------------- ----- ======== ========
Total items that will not be reclassified
to profit or loss 15,386 (59,792)
-------------------------------------------- ----- -------- --------
Items that may be reclassified subsequently
to profit or loss
-------------------------------------------- ----- -------- --------
Fair value gains net of tax:
-------------------------------------------- ----- ======== ========
- available-for-sale financial assets 86 42
-------------------------------------------- ----- -------- --------
- available-for-sale financial assets
reclassified to the income statement - (181)
-------------------------------------------- ----- -------- --------
- cash flow hedges 63,657 (41,487)
-------------------------------------------- ----- -------- --------
Currency translation differences (36,829) 105,369
-------------------------------------------- ----- ======== ========
Total items that may be reclassified
subsequently to profit or loss 26,914 63,743
============================================ ===== ======== ========
Other comprehensive income net of
tax 42,300 3,951
============================================ ===== ======== ========
Total comprehensive income for the
year 170,981 94,813
============================================ ===== ======== ========
Attributable to:
-------------------------------------------- ----- -------- --------
Owners of the parent 162,550 80,889
-------------------------------------------- ----- -------- --------
Non-controlling interests 8,431 13,924
============================================ ===== ======== ========
170,981 94,813
============================================ ===== ======== ========
Consolidated balance sheet
as at 31 December 2017
2017 2016
Notes GBP'000 GBP'000
======================================= ===== ============ ============
NET ASSETS
--------------------------------------- ----- ------------ ------------
Non-current assets
--------------------------------------- ----- ------------ ------------
Goodwill 11 577,778 543,013
--------------------------------------- ----- ------------ ------------
Other intangible assets 12 108,954 101,963
--------------------------------------- ----- ------------ ------------
Property, plant and equipment 13 68,645 64,330
--------------------------------------- ----- ------------ ------------
Investments in associates 14 53,055 50,928
--------------------------------------- ----- ------------ ------------
Available-for-sale financial assets 15,20 16,858 23,805
--------------------------------------- ----- ------------ ------------
Derivative financial instruments 16,20 82,569 117,043
--------------------------------------- ----- ------------ ------------
Retirement benefit surpluses 31 92 509
--------------------------------------- ----- ------------ ------------
Deferred tax assets 22 54,266 70,088
======================================= ===== ============ ============
962,217 971,679
======================================= ===== ============ ============
Current assets
--------------------------------------- ----- ------------ ------------
Trade and other receivables 17 610,506 588,640
--------------------------------------- ----- ------------ ------------
Derivative financial instruments 16,20 5,545 7,930
--------------------------------------- ----- ------------ ------------
Available-for-sale financial assets 15,20 115,080 116,933
--------------------------------------- ----- ------------ ------------
Held-for-sale financial assets 15,20 189 -
--------------------------------------- ----- ------------ ------------
Cash and cash equivalents 18,20 1,015,087 939,945
======================================= ===== ============ ============
1,746,407 1,653,448
======================================= ===== ============ ============
Current liabilities
Borrowings 20,21 (19,226) (54,729)
Trade and other payables 19 (1,256,074) (1,200,397)
--------------------------------------- ----- ------------ ------------
Derivative financial instruments 16,20 (10,265) (33,136)
--------------------------------------- ----- ------------ ------------
Current tax liabilities (10,290) (5,119)
--------------------------------------- ----- ------------ ------------
Provisions for liabilities and charges 23 (6,865) (8,826)
======================================= ===== ============ ============
(1,302,720) (1,302,207)
======================================= ===== ============ ============
Net current assets 443,687 351,241
======================================= ===== ============ ============
Non-current liabilities
--------------------------------------- ----- ------------ ------------
Borrowings 20,21 (690,872) (633,103)
Trade and other payables 19 (49,475) (57,385)
------------
Derivative financial instruments 16,20 (85,516) (69,652)
--------------------------------------- ----- ------------ ------------
Deferred tax liabilities 22 (11,411) (11,378)
--------------------------------------- ----- ------------ ------------
Retirement benefit obligations 31 (169,376) (198,921)
--------------------------------------- ----- ------------ ------------
Provisions for liabilities and charges 23 (1,549) (1,571)
======================================= ===== ============ ============
(1,008,199) (972,010)
======================================= ===== ============ ============
397,705 350,910
======================================= ===== ============ ============
TOTAL EQUITY
--------------------------------------- ----- ------------ ------------
Capital and reserves attributable
to the owners of the parent
--------------------------------------- ----- ------------ ------------
Ordinary shares 24 11,008 11,008
--------------------------------------- ----- ------------ ------------
Share premium 24,26 104,111 104,111
--------------------------------------- ----- ------------ ------------
Fair value and hedging reserves 26 9,290 (54,453)
--------------------------------------- ----- ------------ ------------
Exchange reserves 26 48,604 83,561
--------------------------------------- ----- ------------ ------------
Retained earnings 204,781 183,919
======================================= ===== ============ ============
Shareholders' equity 377,794 328,146
--------------------------------------- ----- ------------ ------------
Non-controlling interests 25 19,911 22,764
======================================= ===== ============ ============
397,705 350,910
======================================= ===== ============ ============
Consolidated statement of changes in equity
for the year ended 31 December 2017
Non-
Ordinary Other Retained Shareholders' controlling Total
shares reserves earnings equity interests equity
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Balance at 1 January
2017 11,008 133,219 183,919 328,146 22,764 350,910
---------------------------- -------- --------- --------- ---------------- ------------ ---------
Profit for the
year - - 118,378 118,378 10,303 128,681
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Other comprehensive
income/(expense)
for the year - 28,786 15,386 44,172 (1,872) 42,300
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Total comprehensive
income for the
year - 28,786 133,764 162,550 8,431 170,981
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Dividends 10 (71,593) (71,593) (12,004) (83,597)
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Amounts in respect
of share based
payments:
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
- reversal of amortisation
net of tax - - 29,784 29,784 - 29,784
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
- shares acquired - - (16,502) (16,502) - (16,502)
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Acquisitions 29 - - - - 176 176
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Disposals 30 - - - - 544 544
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Transactions with
non-controlling
interests - - (54,591) (54,591) - (54,591)
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Balance at 31 December
2017 11,008 162,005 204,781 377,794 19,911 397,705
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Non-
Ordinary Other Retained Shareholders' controlling Total
shares reserves earnings equity interests equity
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Balance at 1 January
2016 11,008 73,967 227,362 312,337 18,465 330,802
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Profit for the
year - - 81,466 81,466 9,396 90,862
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Other comprehensive
income/(expense)
for the year - 59,215 (59,792) (577) 4,528 3,951
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Total comprehensive
income for the
year - 59,215 21,674 80,889 13,924 94,813
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Dividends 10 - - (67,962) (67,962) (8,435) (76,397)
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Amounts in respect
of share based
payments:
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
- reversal of amortisation
net of tax - - 24,952 24,952 - 24,952
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
- shares acquired - - (17,809) (17,809) - (17,809)
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Acquisitions - - - - (1,159) (1,159)
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Disposals - - - - (31) (31)
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Transactions with
non-controlling
interests - - (4,298) (4,298) - (4,298)
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Issue of share
capital 24 - 37 - 37 - 37
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Balance at 31 December
2016 11,008 133,219 183,919 328,146 22,764 350,910
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Consolidated statement of cash flows
for the year ended 31 December 2017
2017 2016
Notes GBP'000 GBP'000
--------------------------------------------- ----- ---------- ----------
Cash flows from operating activities
--------------------------------------------- ----- ---------- ----------
Cash generated from operations 28 217,357 166,712
--------------------------------------------- ----- ---------- ----------
Interest paid (16,835) (17,403)
--------------------------------------------- ----- ---------- ----------
Interest received 9,973 6,639
--------------------------------------------- ----- ---------- ----------
Taxation paid (48,993) (46,241)
--------------------------------------------- ----- ---------- ----------
Increase in net insurance broking
payables 41,525 137,510
--------------------------------------------- ----- ---------- ----------
203,027 247,217
--------------------------------------------- ----- ---------- ----------
Dividend received from associates 1,084 935
--------------------------------------------- ----- ---------- ----------
Net cash generated from operating
activities 204,111 248,152
--------------------------------------------- ----- ---------- ----------
Cash flows from investing activities
--------------------------------------------- ----- ---------- ----------
Purchase of property, plant and equipment 13 (19,127) (9,556)
--------------------------------------------- ----- ---------- ----------
Purchase of other intangible assets 12 (38,676) (30,215)
--------------------------------------------- ----- ---------- ----------
Proceeds from disposal of property,
plant and equipment 1,049 928
--------------------------------------------- ----- ---------- ----------
Acquisition of businesses, net of
cash acquired 29 (44,322) (13,381)
--------------------------------------------- ----- ---------- ----------
Acquisition of associates (89) (3,013)
--------------------------------------------- ----- ---------- ----------
Proceeds from disposal of businesses,
net of cash disposed 30 1,557 15,141
--------------------------------------------- ----- ---------- ----------
Purchase of available-for-sale financial
assets 15 (115,258) (107,636)
--------------------------------------------- ----- ---------- ----------
Proceeds from disposal of available-for-sale
investments and deposits 15 121,855 20
--------------------------------------------- ----- ---------- ----------
Proceeds from disposal of available-for-sale
other investments 2,244 303
--------------------------------------------- ----- ---------- ----------
Net cash used in investing activities (90,767) (147,409)
--------------------------------------------- ----- ---------- ----------
Cash flows from financing activities
--------------------------------------------- ----- ---------- ----------
Dividends paid to owners of the parent (71,161) (66,388)
--------------------------------------------- ----- ---------- ----------
Purchase of shares (16,502) (17,809)
--------------------------------------------- ----- ---------- ----------
Proceeds from issuance of ordinary
shares 24 - 37
--------------------------------------------- ----- ---------- ----------
Proceeds from borrowings 110,064 355
--------------------------------------------- ----- ---------- ----------
Repayments of borrowings (28,232) (5,056)
--------------------------------------------- ----- ---------- ----------
Dividends paid to non-controlling
interests (12,004) (8,435)
--------------------------------------------- ----- ---------- ----------
Net cash used in financing activities (17,835) (97,296)
--------------------------------------------- ----- ---------- ----------
Net increase in cash and cash equivalents 95,509 3,447
--------------------------------------------- ----- ---------- ----------
Cash and cash equivalents at beginning
of year 939,945 901,087
--------------------------------------------- ----- ---------- ----------
Exchange (losses)/gains on cash and
cash equivalents (20,367) 35,411
--------------------------------------------- ----- ---------- ----------
Cash and cash equivalents at end of
year 18 1,015,087 939,945
--------------------------------------------- ----- ---------- ----------
SIGNIFICANT ACCOUNTING POLICIES (UNAUDITED)
for the year ended 31 December 2017
BASIS OF PREPARATION
Compliance with IFRS
The consolidated financial statements of the Group have been
prepared in accordance with International Financial Reporting
Standards as adopted by the European Union (IFRSs as adopted by the
EU) and interpretations issued by the IFRS Interpretations
Committee (IFRS IC) and the Companies Act 2006 applicable to
Companies reporting under IFRSs. The financial statements comply
with IFRS as issued by the International Accounting Standards Board
(IASB).
Historical cost convention
The consolidated financial statements have been prepared on a
going concern basis, under the historical cost convention, except
for the following: available-for-sale financial assets, certain
financial assets and liabilities (including derivative financial
instruments) which are measured at fair value; and defined benefit
pension plans where plan assets are measured at fair value.
STANDARDS, AMMENTS AND INTERPRETATIONS EFFECTIVE IN 2017
No new standards, amendments or interpretations, effective for
the first time for the financial year beginning on or after 1
January 2017 have had a material impact on the Group.
BASIS OF CONSOLIDATION
Subsidiaries
Subsidiaries are all entities (including structured entities)
over which the Group has control.
The Group controls an entity when the Group is exposed to, or
has rights to, variable returns from its involvement with the
entity and has the ability to affect those returns through its
power over the entity.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated from
the date that control ceases.
The Group uses the acquisition method of accounting to account
for business combinations. The consideration transferred for the
acquisition of a subsidiary is the fair values of the assets
transferred, the liabilities incurred and the equity interests
issued by the Group. The consideration transferred includes the
fair value of any asset or liability resulting from a contingent
consideration arrangement. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. On an acquisition-by-acquisition basis, the Group
recognises any non-controlling interest in the acquiree either at
fair value or at the non-controlling interest's proportionate share
of the acquiree's net assets.
Acquisition-related costs are expensed as incurred.
If a business combination is achieved in stages, the fair value
of the Group's previously held equity interest in the acquiree is
remeasured to fair value at the acquisition date through profit or
loss.
Any contingent consideration to be transferred by the Group is
recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognised in accordance with
IAS 39 either in profit or loss or as a charge to other
comprehensive income. Contingent consideration that is classified
as equity is not remeasured, and its subsequent settlement is
accounted for within equity.
The excess of the consideration transferred, the amount of any
non-controlling interest in the acquiree and the acquisition-date
fair value of any previous equity interest in the acquiree over the
fair value of the identifiable net assets acquired is recorded as
goodwill. If the total of consideration transferred,
non-controlling interest recognised and previously held interest
measured is less than the fair value of the net assets of the
subsidiary acquired in the case of a bargain purchase, the
difference is recognised directly in the income statement.
Inter-company transactions, balances, income and expenses on
transactions between Group companies are eliminated. Accounting
policies of subsidiaries have been changed where necessary to
ensure consistency with the policies adopted by the Group.
Transactions with non-controlling interests
Transactions with non-controlling interests that do not result
in loss of control are accounted for as equity transactions - that
is, as transactions with the owners in their capacity as
owners.
The difference between the fair value of any consideration paid
and the relevant share acquired of the carrying value of net assets
of the subsidiary is recorded in equity. Gains or losses on
disposals to non-controlling interests are also recorded in
equity.
Disposal of subsidiaries
When the Group ceases to have control, any retained interest in
the entity is re-measured to its fair value at the date when
control is lost, with the change in carrying amount recognised in
profit or loss.
The fair value is the initial carrying amount for the purposes
of subsequently accounting for the retained interest as an
associate, joint venture or financial asset. In addition, any
amounts previously recognised in other comprehensive income in
respect of that entity are accounted for as if the Group had
directly disposed of the related assets or liabilities.
This may mean that amounts previously recognised in other
comprehensive income are reclassified to profit or loss.
Associates
Associates are entities over which the Group has significant
influence but not control, generally accompanying a shareholding of
between 20% and 50% of the voting rights. Investments in associates
are accounted for using the equity method of accounting.
Under the equity method, the investment is initially recognised
at cost, and the carrying amount is increased or decreased to
recognise the investor's share of the profit or loss of the
investee after the date of acquisition.
The Group's investment in associates includes goodwill
identified on acquisition.
If the ownership interest in an associate is reduced but
significant influence is retained, only a proportionate share of
the amounts previously recognised in other comprehensive income is
reclassified to profit or loss where appropriate.
The Group's share of post-acquisition profit or loss is
recognised in the income statement, and its share of
post-acquisition movements in other comprehensive income is
recognised in other comprehensive income with a corresponding
adjustment to the carrying amount of the investment. When the
Group's share of losses in an associate equals or exceeds its
interest in the associate, including any other unsecured
receivables, the Group does not recognise further losses, unless it
has incurred legal or constructive obligations or made payments on
behalf of the associate.
Unrealised gains on transactions between the Group and its
associates are eliminated to the extent of the Group's interest in
the associates. Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment of the asset
transferred. Accounting policies of the associates have been
modified where necessary to ensure consistency with the policies
adopted by the Group.
SEGMENT REPORTING
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Chief Executive Officer.
FOREIGN CURRENCIES
Functional and presentation currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates ('the functional
currency').
The consolidated financial statements are presented in Sterling,
which is the Group's functional and presentational currency.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the income
statement, except when deferred in equity as qualifying cash flow
hedges and qualifying net investment hedges. Translation
differences on non-monetary items, such as equities held at fair
value through profit or loss, are reported as part of the fair
value gain or loss. Translation differences on non-monetary items,
such as equities classified as available-for-sale financial assets,
are included in other comprehensive income.
Group companies
The results and financial position of all the Group entities
(none of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentational
currency are translated into the presentational currency as
follows:
i) assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance
sheet;
ii) income and expenses for each income statement are translated
at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expenses are
translated at the rate on the dates of the transactions); and
iii) all resulting exchange differences are recognised in other
comprehensive income.
On consolidation exchange differences arising from the
translation of net investment in foreign entities, and of
borrowings and other currency instruments designated as hedges of
such investments, are taken to other comprehensive income. When a
foreign operation is sold, such exchange differences are
reclassified to the income statement as part of the gain or loss on
sale.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate. Exchange
differences arising are recognised in other comprehensive
income.
GOODWILL ARISING ON CONSOLIDATION
Goodwill represents the excess of the cost of an acquisition
over the fair value of the Group's share of the identifiable net
assets of the acquired subsidiary/associate at the date of
acquisition. Goodwill on acquisitions of subsidiaries is shown
separately on the Balance Sheet. Goodwill on acquisitions of
associates is included in investments in associates.
Goodwill is not amortised but it is tested for impairment
annually, or more frequently if events or changes in circumstances
indicate that it might be impaired, and is carried at cost less
accumulated impairment losses.
Gains and losses on the disposal of an entity include the
carrying amount of goodwill relating to the entity sold. Goodwill
is allocated to cash generating units, or groups of cash generating
units, for the purpose of impairment testing. Cash generating units
represent the lowest level of geographical and business segment
combinations that the Group uses for internal reporting
purposes.
OTHER INTANGIBLE ASSETS
Computer software
Acquired computer software licenses are capitalised on the basis
of the costs incurred to acquire them and bring them to use. These
costs are amortised over their estimated useful lives. Costs
associated with maintaining computer software programmes are
recognised as an expense as incurred.
Development costs that are directly associated with the
production of identifiable and unique software products controlled
by the Group, and that will generate economic benefits exceeding
costs beyond one year, are recognised as intangible assets. Direct
costs include the software development employee costs and an
appropriate portion of relevant overheads. Capitalised development
costs are amortised over their estimated useful lives from the
point when the asset is ready to use.
The rates of amortisation are between 14% and 100% per
annum.
Capitalised employment contract payments
The Group makes payments to certain key employees in recognition
of them signing a long-term employment contact, usually three to
five years. These payments are capitalised as intangible assets
since legal rights protect the expected benefits that the Group
will derive from the contracts.
The asset recognised is then amortised over the duration of the
underlying contract within salaries and associated expenses.
Other
For acquisitions completed after 1st January 2004, the business
acquired is reviewed to identify assets that meet the definition of
an intangible asset per IAS 38. Examples of such assets include
customer contracts, expectations of business renewal and contract
related customer relationships. These assets are valued on the
basis of the present value of future cash flows and are amortised
to the income statement over the life of the contract or their
estimated economic life. The current maximum estimated economic
life is fifteen years.
IMPAIRMENT OF ASSETS
Goodwill and other intangible assets that have an indefinite
useful life are not subject to amortisation and are tested annually
for impairment. Assets that are subject to amortisation are
reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which the asset's
carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset's fair value
less costs to sell and value-in-use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash flows (cash-generating units).
PROPERTY, PLANT AND EQUIPMENT
Assets are stated at their net book amount (historical cost less
accumulated depreciation). Cost includes the original purchase
price of the asset and the costs attributable to bringing the asset
to its working condition for its intended use.
Depreciation is calculated to write off the cost of such assets
over their estimated useful lives.
The principal rates of depreciation are as follows:
-- Freehold land and buildings - between 0% and 2% per annum.
-- Leasehold improvements - between 10% and 20% per annum or over the life of the lease.
-- Furniture and office equipment - between 10% and 20% per annum.
-- Computer hardware - between 20% and 100% per annum.
-- Motor vehicles - between 25% and 33 1/3% per annum.
The depreciation rates are reviewed on an annual basis.
FINANCIAL ASSETS
The Group classifies its financial assets as loans and
receivables and available-for-sale assets. The classification
depends upon the purpose for which the financial assets were
acquired. Management determines the classification of its financial
assets at initial recognition.
Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. They are included in current assets, except for maturities
greater than 12 months after the balance sheet date.
The Group's loans and receivables comprise trade and other
receivables and cash and cash equivalents in the balance sheet.
Loans and receivables are carried at amortised cost.
Available-for-sale financial assets
Available-for-sale financial assets are categorised into one of
two categories:
1) Investments and deposits consist mainly of fixed term
deposits, bonds and certificates of deposit. These investments are
held at fair value and are classified as current or non-current
assets depending on the maturity date.
2) Other investments include securities and other investments
held for strategic purposes. These investments are held at fair
value unless a fair value cannot be accurately determined in which
case they are carried at cost less any provision for
impairment.
Interest on deposits and interest-bearing investments is
credited in the income statement as it is earned.
Regular purchases and sales of financial assets are recognised
on the trade date - the date on which the Group commits to purchase
or sell the asset. Investments are initially recognised at fair
value plus transaction costs. Financial assets are derecognised
when the rights to receive cash flows have expired or have been
transferred and the Group has transferred substantially all risks
and rewards of ownership. Available-for-sale assets are
subsequently carried at fair value.
The fair values of quoted investments are determined based upon
current bid price.
When securities classified as available-for-sale are sold or
impaired, the accumulated fair value adjustments recognised in
equity are included in the income statement.
Interest on available-for-sale securities calculated using the
effective interest method is recognised in the income statement as
part of finance income. Dividends on available-for-sale equity
instruments are recognised in the income statement as part of
finance income when the Group's right to receive payments is
established.
Held-for-sale financial assets
Non-current assets are classified as held-for-sale if their
carrying amount will be recovered through a sale transaction rather
than through continuing use. This condition is regarded as met only
when the sale is highly probable and the asset is available for
sale in its immediate condition.
Immediately before classification as held for sale, the assets
are remeasured in accordance with the Group's accounting policies.
Thereafter, the assets (or disposal group) are recognised at the
lower of their carrying amount and fair value less costs to sell.
Assets classified as held-for-sale are not depreciated. Impairment
losses on initial classification as held for sale and subsequent
gains or losses on remeasurement are included in the income
statement.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount
reported in the balance sheet when there is a legally enforceable
right to offset the recognised amounts and there is an intention to
settle on a net basis or realise the asset and settle the liability
simultaneously. The legally enforceable right must not be
contingent on future events and must be enforceable in the normal
course of business and in the event of default, insolvency or
bankruptcy of the company or the counterparty.
INSURANCE BROKING RECEIVABLES AND PAYABLES
Insurance brokers act as agents in placing the insurable risks
of their clients with insurers and, as such, are not liable as
principals for amounts arising from such transactions. In
recognition of this relationship, debtors from insurance broking
transactions are not included as an asset of the Group. Other than
the receivable for fees and commissions earned on a transaction, no
recognition of the insurance transaction occurs until the Group
receives cash in respect of premiums or claims, at which time a
corresponding liability is established in favour of the insurer or
the client.
In certain circumstances, the Group advances premiums, refunds
or claims to insurance underwriters or clients prior to
collection.
These advances are reflected in the consolidated balance sheet
as part of trade receivables.
TRADE RECEIVABLES
Trade receivables are recognised initially at fair value and
subsequently at amortised cost, less provision for impairment.
A provision for impairment of trade receivables is established
when there is objective evidence that the Group will not be able to
collect all amounts due according to the original terms of the
receivables. Significant financial difficulties of the debtor,
dispute, default or delinquency in payments are considered
indicators that the receivable is impaired.
The carrying amount of the asset is reduced through the use of
an allowance account, and the amount of the loss is recognised in
the income statement.
When a trade receivable is uncollectible, it is written off
against the allowance account for trade receivables.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash in hand, deposits held at
call with banks and other short-term highly liquid investments with
original maturities of three months or less. Bank overdrafts are
shown within borrowings in current liabilities on the balance
sheet.
Whilst held in the Group's non-statutory trust accounts under
appropriate client money regulation, fiduciary funds held are
controlled by the Group and economic benefits are derived from
them. As such these funds are recognised as an asset on the Group's
balance sheet.
TRADE PAYABLES
Trade payables are initially recognised at fair value and
subsequently measured at amortised cost except for contingent
considerations, which is always measured at fair value based on the
underlying criteria of each transaction.
BORROWINGS
Borrowings are classified as current liabilities unless the
Group has an unconditional right to defer settlement of the
liability for at least 12 months after the balance sheet date.
Borrowings are recognised initially at fair value, net of
transaction costs incurred. They are subsequently stated at
amortised cost using the effective interest rate method.
DEFERRED INCOME TAX
The charge for taxation is based on the result for the year at
current rates of tax and takes into account deferred tax.
Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the
consolidated financial statements. However, if the deferred income
tax arises from initial recognition of an asset or liability in a
transaction other than a business combination that at the time of
the transaction affects neither accounting nor taxable profit or
loss, it is not recognised. Deferred income tax is determined using
tax rates (and laws) that have been enacted or substantively
enacted by the balance sheet date and are expected to apply when
the related deferred income tax asset is realised or the deferred
income tax liability is settled.
Deferred income tax is charged or credited to equity in respect
of any items, which is itself either charged or credited directly
to equity.
Any subsequent recognition of the deferred gain or loss in the
consolidated income statement is accompanied by the corresponding
deferred income tax.
Deferred income tax assets are recognised to the extent that it
is probable that future taxable profit will be available against
which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising
on investments in subsidiaries and associates, except where the
Group controls the timing of the reversal of the temporary
difference and it is probable that the temporary difference will
not reverse in the foreseeable future.
EMPLOYEE BENEFITS
Pension obligations
The Group operates a number of defined benefit pension schemes,
and a number of employees are members of defined contribution
pension schemes.
Full actuarial valuations of the Group's defined benefit schemes
are carried out at least every three years.
A qualified actuary updates these valuations to 31 December each
year. For the purposes of these annual updates, scheme assets are
included at market value and scheme liabilities are measured on an
actuarial basis using the projected unit credit method; these
liabilities are discounted at the current rate of return of a high
quality corporate bond of equivalent currency and term. The defined
benefit surplus or deficit is calculated as the present value of
defined benefit obligations less the fair value of the plan assets
and is included on the Group's balance sheet. Surpluses are
included only to the extent that they are recoverable through
reduced contributions in the future or through refunds from the
schemes. The net interest on the defined benefit surplus/deficit is
included within finance costs. Actuarial gains and losses,
including differences between the expected and actual return on
scheme assets, are recognised through the consolidated statement of
comprehensive income.
A defined contribution plan is a pension plan under which the
Group pays fixed contributions into a separate entity. The Group
has no legal or constructive obligations to pay further
contributions if the fund does not hold sufficient assets to pay
all employees the benefits relating to employee service in the
current and prior periods.
The costs of the Group's defined contribution pension schemes
are charged to the income statement in the period in which they
fall due.
Share-based compensation
The Group operates a number of equity-settled, share-based
compensation plans. The fair value of the employee services
received in exchange for the grant of the options is recognised as
an expense.
The total amount to be expensed over the vesting period is
determined by reference to the fair value of the options granted,
excluding the impact of any non-market vesting conditions (for
example, profitability and sales growth targets). Non-market
vesting conditions are included in assumptions about the number of
options that are expected to become exercisable. At each balance
sheet date, the entity revises its estimates of the number of
options that are expected to become exercisable. It recognises the
impact of the revision of original estimates, if any, in the income
statement, and a corresponding adjustment to equity.
The proceeds received net of any directly attributable
transaction costs are credited to share capital (at nominal value)
and share premium (excess over nominal value) when the options are
exercised.
PROVISIONS FOR LIABILITIES AND CHARGES
A provision is recognised where there is a present obligation,
whether legal or constructive, as a result of a past event for
which it is probable that a transfer of economic benefits will be
required to settle the obligation and a reasonable estimate can be
made of the amount of the obligation. Where appropriate the Group
discounts provisions to their present value. The unwinding of the
provision discounting is included as an interest expense within
finance costs in the income statement.
REVENUE
Fees and commissions
Fees and commissions are derived from three principal
sources:
Insurance broking
Income relating to insurance broking is accounted for at the
later of policy inception date or when the policy placement has
been completed and confirmed.
Where there is an expectation of future servicing requirements
an element of income relating to the policy is deferred to cover
the associated contractual obligation.
Employee benefits
Income relating to employee benefits services includes fees and
commissions. Fees are charged on a time-cost or fixed-fee basis and
are recognised in line with the performance of the underlying
service. Commission is recognised upon confirmation of the
underlying policy or product.
Other services
Fees and other income receivable are recognised in the period to
which they relate and when they can be measured with reasonable
certainty.
Investment income
Investment income arises from the holding of cash and
investments relating to fiduciary funds and is recognised on an
accruals basis.
EXCEPTIONAL ITEMS
Exceptional items are separately identified to provide greater
understanding of the Group's underlying performance. Items
classified as exceptional items may include, but are not limited
to: gains or losses arising from the sale of businesses and
investments; closure costs for businesses; restructuring costs;
professional fees in respect of acquisitions; post acquisition
integration costs; post acquisition adjustments to balance sheet
items; and other credits and charges of a non-recurring nature that
require inclusion in order to provide additional insight into the
underlying business performance. Items of a non-recurring and
material nature are charged or credited to operating profit and are
classified to the appropriate income statement headings.
To assist in the analysis and understanding of the underlying
trading position of the Group these items are summarised within the
operating profit.
LEASES
Assets held under leasing agreements, which transfer
substantially all the risks and rewards of ownership to the Group,
are included in property, plant and equipment. The capital elements
of the related lease obligations are included in liabilities. The
interest elements of the lease obligations are charged to the
income statement over the period of the lease term.
The property, plant and equipment acquired under finance leases
is depreciated over the shorter of the useful life of the asset and
the lease term.
Leases in which a significant portion of the risks and rewards
of ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases (net of any incentives
received from the lessor) are charged to the income statement on a
straight-line basis over the period of the lease.
DERIVATIVE FINANCIAL INSTRUMENTS
The Group only enters into derivative financial instruments in
order to hedge underlying financial and commercial exposures.
Derivative financial instruments are initially recognised at
fair value on the date a derivative contract is entered into and
are subsequently re-measured at their fair value.
The method of recognising the resulting gain or loss is
dependent on the nature of the item being hedged.
The Group designates derivatives as either a hedge of the fair
value of a recognised asset or liability (fair value hedge), a
hedge of a forecasted transaction or of the foreign currency risk
on a firm commitment (cash flow hedge), or a hedge of a net
investment in a foreign entity (net investment hedges).
Changes in the fair value of derivatives that are designated and
qualify as fair value hedges and that are highly effective, are
recorded in the income statement, along with any changes in the
fair value of the hedged asset or liability that is attributable to
the hedged risk.
Changes in the fair value of derivatives that are designated and
qualify as cash flow hedges and that are highly effective, are
recognised in equity. Where the forecasted transaction or firm
commitment results in the recognition of a non-financial asset or
of a non-financial liability, the gains and losses previously
deferred in equity are transferred from equity and included in the
initial measurement of the cost of the asset or liability.
Otherwise, amounts deferred in equity are transferred to the
consolidated income statement and classified as income or expense
in the same periods during which the hedged firm commitment or
forecasted transaction affects the income statement.
The gain or loss relating to the ineffective portion is
recognised immediately in the income statement.
When a hedging instrument expires or is sold, any cumulative
gain or loss existing in equity at that time remains in the hedging
reserves and is reclassified to the income statement when a hedge
no longer meets the criteria for hedge accounting or when the
committed or forecasted transaction ultimately occurs. When a
committed or forecasted transaction is no longer expected to occur,
the cumulative gain or loss that was reported in equity is
immediately recognised in the income statement.
DIVID DISTRIBUTION
Dividends proposed or declared after the balance sheet date are
not recognised as a liability at the balance sheet date. Final
dividends are recognised as a charge to equity once approved and
interim dividends are charged once paid.
FINANCIAL AND CAPITAL RISK MANAGEMENT
The Group's exposure to financial risks and its financial and
capital management policies are available n the Finance Director's
Review and the Risk Management Report in the 2017 Annual
Report.
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
Estimates and judgments used in preparing the financial
statements are continually evaluated and are based on historical
experience and other factors, including expectations of future
events that are believed to be reasonable. The resulting accounting
estimates will, by definition, seldom equal the related actual
results.
The estimates and assumptions that have a significant effect on
the carrying amounts of assets and liabilities are discussed
below.
a) Fair value estimation
The fair value of financial instruments traded in active markets
(such as available-for-sale) is based upon quoted market prices at
the balance sheet date. The quoted market price used for financial
assets held by the Group is the current bid price.
The carrying value less impairment provision of trade
receivables and payables are assumed to approximate their fair
values. The fair values of financial liabilities are estimated by
discounting the future contractual cash flows at the current market
interest rate that is available to the Group for similar financial
instruments.
The fair value of acquired intangible assets is estimated based
upon the present value of modelled related expected future cash
flows.
Judgement may be applied in the determination of the growth
rates, discount rates and the expected cash flows.
b) Impairment of assets
The Group tests annually whether goodwill and other assets that
have indefinite useful lives suffered any impairment. Other assets
are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset
exceeds its recoverable amount.
The recoverable amount of an asset or a cash generating unit is
determined based on value-in-use calculations prepared on the basis
of management's assumptions and estimates. This determination
requires significant judgment. In making this judgment, the Group
evaluates, among other factors, the duration and extent to which
the fair value of an investment is less than its cost; and the
financial health of and near-term business outlook for the
investment, including factors such as industry and sector
performance, changes in regional economies and operational and
financing cash flow.
c) Income taxes
The Group is subject to income taxes in numerous jurisdictions.
Significant judgement is required in determining the worldwide
provision for income taxes. There are many transactions and
calculations for which the ultimate tax determination is uncertain
during the ordinary course of business. Where the final tax outcome
of these matters is different from the amounts that were initially
recorded, such differences will impact the income tax and deferred
tax provisions in the period in which such determination is
made.
d) Pension obligations
The present value of pension obligations depends on a number of
factors that are determined on an actuarial basis using a number of
assumptions.
The assumption used in determining the net cost or income for
pension obligations is a discount rate based upon high quality
corporate bonds.
Any changes in the assumptions may impact the carrying amount of
pension obligations, the charge in the income statement, or
statement of comprehensive income.
The Group determines the appropriate discount rate at the end of
each year. This is the interest rate that should be used to
determine the present value of estimated future cash outflows
expected to be required to settle the pension obligations.
In determining the appropriate discount rate, the Group
considers the interest rates of high-quality corporate bonds that
are denominated in the currency in which the benefits will be paid,
and that have terms to maturity approximating the terms of the
related pension liability. Other key assumptions for pension
obligations are based in part on current market conditions. As well
as the discount rate, the inflation rates and life expectancy are
also key assumptions.
To set the price inflation assumptions the Group considers
market expectations of inflation at the appropriate durations.
Adjustments are made to these rates where necessary to reflect an
inflation risk premium.
In determining the life expectancy assumptions the Group
considers the mortality assumptions used by the Trustees of the
pension schemes in their latest actuarial valuations and also
mortality guidance laid out by legislation. This enables the Group
to determine a best estimate of life expectancy that is appropriate
for accounting purposes.
e) Litigation and other provisions
During the ordinary course of business the Group can be subject
to claims for errors and omissions made in connection with its
broking activities.
A balance sheet provision is established in respect of such
claims when it is probable that the liability has been incurred and
the amount of the liability can be reasonably estimated.
The Group analyses its litigation exposures based on available
information, including external legal consultation where
appropriate, to assess its potential liability.
The outcome of the currently pending and future proceedings
cannot be predicted with certainty. Thus, an adverse decision in a
current or future lawsuit could result in additional costs that are
not covered, either wholly or partially, under insurance policies
and are in excess of the presently established provisions. It is
possible therefore that the financial position, results of
operations or cash flows of the Group could be materially affected
by the unfavourable outcome of litigation.
FUTURE DEVELOPMENTS
The following standards have been published but are not
mandatory for 31 December 2017 reporting period and the Group has
not adopted them early.
IFRS 9, ('Financial instruments')
IFRS 9 addresses the classification, measurement and recognition
of financial assets and financial liabilities. The standard is
effective for annual periods beginning on or after 1 January 2018.
It replaces the guidance in IAS 39 that relates to the
classification and measurement of financial instruments. IFRS 9
retains but simplifies the mixed measurement model and establishes
three primary measurement categories for financial assets:
amortised cost, fair value through other comprehensive income (OCI)
and fair value through profit or loss.
The basis of classification depends on the entity's business
model and the contractual cash flow characteristics of the
financial asset. Investments in equity instruments are required to
be measured at fair value through profit or loss with the
irrevocable option at inception to present changes in fair value in
OCI not recycling. The Group does not expect any material change in
the measurement of its financial assets and liabilities.
There is now a new expected credit losses model that replaces
the incurred loss impairment model used in IAS 39. Under IFRS 9, it
is not necessary for a credit event to have occurred before credit
losses are recognised. The new impairment model will mainly affect
the Group's trade receivables and contract assets. The Group
expects to apply the simplified approach to recognise lifetime
expected credit losses for its trade receivables and contract
assets. The impact on 2017 opening retained earnings and on the
2017 results is not expected to be material.
For financial liabilities there were no changes to
classification and measurement except for the recognition of
changes in own credit risk in OCI, for liabilities designated at
fair value through profit or loss unless such presentation would
create or enlarge an accounting mismatch in profit or loss.
On initial application of IFRS 9, an entity may elect, as its
accounting policy to continue to apply the hedge accounting
requirements of IAS 39 instead of the hedge accounting requirements
of the new standard. IFRS 9 relaxes the requirements for hedge
effectiveness by replacing the bright line hedge effectiveness
tests. It requires an economic relationship between the hedged item
and hedging instrument and for the 'hedged ratio' to be the same as
the one management actually use for risk management purposes.
Contemporaneous documentation is still required but is different to
that currently prepared under IAS 39. The changes to the hedge
accounting requirements are not expected to have a material impact
on the Group.
IFRS 15, ('Revenue from contracts with customers')
IFRS 15 addresses revenue recognition for customer contracts,
with particular focus on aligning revenue recognition with the
separate and distinct performance obligations to the customer. The
standard replaces IAS 18 ('Revenue') and IAS 11 ('Construction
Contracts') and related interpretations. IFRS 15 includes
prescriptive guidance to deal with specific scenarios and requires
more extensive disclosures.
IFRS 15 is effective for annual periods beginning on or after 1
January 2018. The Group will report its financial results on this
basis for the half year period ending 30 June 2018, and full year
period ending 31 December 2018, as well as restated comparative
results for these periods.
The new standard requires that revenue is only recognised when
the performance obligation has been satisfied and the customer
obtains control of the asset. Under existing accounting policies,
the primary trigger for revenue recognition in the Group's Risk and
Insurance business is the later of policy inception date, or the
date on which the placement is completed and confirmed to the
customer. This remains the same under the new standard. In certain
service agreements this will defer the recognition of revenue
compared to the Group's current policy, but the Group will
recognise a fulfilment cost asset for work performed where such
cost is expected to be recovered.
The Group defers some elements of revenue currently, primarily
to reflect anticipated claims handling activity. This will continue
under the new standard, but will be re-measured. In addition, the
Group will now recognise a deferral against cancellation, which
under the Group's current policy is recognised at the point of
cancellation. The Group will also defer revenue in respect of other
performance obligations that are separate and distinct, which is
not expected to be significant.
The new standard introduces the recognition of those costs that
are directly attributable to obtaining the contract, where these
are expected to be recovered. This is a new requirement for the
Group and will create the recognition of a new set of assets, which
will then be amortised to match the recognition of revenue. Under
the Group's current policy these costs have been expensed as
incurred.
The Balance Sheet will introduce new classifications being
contract assets and liabilities.
Work continues on the refinement of the Group's policy, but it
is expected that the change will result in a reduction of the
Group's 2017 opening retained earnings in the range of GBP33 to
GBP37 million, a reduction in the 2017 profit before tax of
approximately GBP4.5 million and a reduction in profit after tax of
approximately GBP3.5 million. Cash flows will be unaltered.
IFRS 16 - Leases
IFRS 16 requires lessees to recognise a lease liability
reflecting future lease payments and a 'right-of-use asset' for
virtually all lease contracts. This differs from IAS 17 'Leases'
where a distinction between a finance lease (on balance sheet) and
an operating lease (off balance sheet) was required.
The standard is effective for annual periods beginning on or
after 1 January 2019 and earlier application is permitted. The
Group is in the process of assessing IFRS 16's full impact.
notes to the financial statements
for the year ended 31 December 2017
1. Alternative income statement
The format of the consolidated income statement conforms to the
requirements of IFRS. The alternative income statement set out
below, which is provided by way of additional information, has been
prepared on a basis that conforms more closely to the approach
adopted by the Group in assessing its performance. The statement
provides a reconciliation between the underlying results used by
the Group to assess performance and the IFRS income statement.
Year ended 31 December
2017
--------------------------------- -----------------------------------
Underlying Exceptional
profit items Total
GBP'000 GBP'000 GBP'000
--------------------------------- ---------- ----------- ----------
Fees and commissions 1,378,554 - 1,378,554
--------------------------------- ---------- ----------- ----------
Investment income 7,474 - 7,474
--------------------------------- ---------- ----------- ----------
Salaries and associated expenses (860,054) (1,135) (861,189)
--------------------------------- ---------- ----------- ----------
Premises (70,590) (35) (70,625)
--------------------------------- ---------- ----------- ----------
Other operating costs (208,587) (5,275) (213,862)
--------------------------------- ---------- ----------- ----------
Depreciation, amortisation and
impairment charges (33,054) (3,437) (36,491)
--------------------------------- ---------- ----------- ----------
Trading profit 213,743 (9,882) 203,861
--------------------------------- ---------- ----------- ----------
Finance costs - net (24,349) - (24,349)
--------------------------------- ---------- ----------- ----------
Share of results of associates 2,149 - 2,149
--------------------------------- ---------- ----------- ----------
Profit before taxation 191,543 (9,882) 181,661
--------------------------------- ---------- ----------- ----------
Year ended 31 December
2016
--------------------------------- ---------------------------------
Exceptional
profit items Total
GBP'000 GBP'000 GBP'000
--------------------------------- --------- ----------- ---------
Fees and commissions 1,256,556 - 1,256,556
--------------------------------- --------- ----------- ---------
Investment income 4,730 - 4,730
--------------------------------- --------- ----------- ---------
Salaries and associated expenses (784,664) (9,699) (794,363)
--------------------------------- --------- ----------- ---------
Premises (64,307) (2,542) (66,849)
--------------------------------- --------- ----------- ---------
Other operating costs (184,173) (25,345) (209,518)
--------------------------------- --------- ----------- ---------
Depreciation, amortisation and
impairment charges (34,470) (481) (34,951)
--------------------------------- --------- ----------- ---------
Trading profit 193,672 (38,067) 155,605
--------------------------------- --------- ----------- ---------
Finance costs - net (22,078) - (22,078)
--------------------------------- --------- ----------- ---------
Share of results of associates 975 378 1,353
--------------------------------- --------- ----------- ---------
Profit before taxation 172,569 (37,689) 134,880
--------------------------------- --------- ----------- ---------
2. Segment information
Management has determined its operating segments based on the
analysis used to make strategic decisions.
Business segment analysis
The Group is organised on a worldwide basis into three main
segments: Risk & Insurance, Employee Benefits and Head Office
& Other operations. These segments are consistent with the
internal reporting structure of the Group.
The Risk & Insurance segment comprises JLT's global
specialist and reinsurance broking activities.
The Employee Benefits segment consists of pension
administration, outsourcing and employee benefits consultancy,
healthcare and wealth management activities. Certain Risk &
Insurance and Employee Benefits operating segments have been
disclosed within the reporting segments given their individual
size. The Head Office & Other segment consists mainly of
holding companies, central administration functions, the Group's
captive insurance companies and the Group's investments in
associates.
Following the disposal of Thistle in 2016, the majority of what
was classified as JLT Insurance Services, plus Northern Europe
which was previously in JLT Europe, Middle East and Africa, both
included in Other Risk & Insurance in the 2016 financial year,
now together with JLT Specialty, form the business group JLT
Europe. Prior period numbers have been restated to reflect this
change.
JLT Re principal locations include North America, the United
Kingdom and Asia.
Segment results
Management assesses the performance of the operating segments
based upon a measure of underlying trading profit. Segment results
include the net income or expense derived from the trading
activities of the segment together with the investment income
earned on fiduciary funds. Interest income on the Group's own funds
and finance costs are excluded since the trading activities of the
Group's primary segments are not of a financial nature. Income tax
expense and the charge in respect of non-controlling interests are
excluded from the segmental allocation.
Segment assets and liabilities
Assets and liabilities are not allocated to individual segments
and are therefore all reported within Head Office & Other.
Investments in associates
The Group owns the following stakes in its principal associates:
20% of GrECo, which operates mainly in Austria and Eastern Europe;
25% of MAG JLT, which operates mainly in Italy and 25% of
March-JLT, which operates mainly in Spain. The investment and the
Group's share of the net results of these associates are included
in the Head Office & Other segment, together with the
investment and results of the Group's other associates, Sterling Re
Intermediaro de Reaseguro SA de CV, JLT Insurance Management Malta,
JLT Energy (France) SAS and JLT Independent Insurance Brokers
Private Ltd.
Subject to local regulations, the Group agreed to the disposal
of its Mexican associate, Sterling Re Intermediaro de Reaseguro SA
de CV, in December 2017.
Other segment items
Capital expenditure comprises additions to property, plant and
equipment and other intangible assets.
Risk & Insurance Employee Benefits
--------------------------------------------------- ---------------------------
JLT Other
Australia Risk UK Other Head
Year ended JLT JLT & New JLT & & Employee Office
31 December Europe Re Zealand USA Insurance Ireland Asia Benefits & Other Total
2017 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Fees and
commissions 395,766 215,579 123,986 73,866 249,190 171,983 89,668 58,516 - 1,378,554
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Investment
income 3,529 1,489 1,712 11 651 1 17 64 - 7,474
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Total revenue 399,295 217,068 125,698 73,877 249,841 171,984 89,685 58,580 - 1,386,028
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Underlying
trading
profit/(loss) 90,615 42,436 35,465 (16,361) 45,727 17,216 25,084 7,722 (34,161) 213,743
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Operating
profit/(loss) 84,625 42,058 36,085 (25,999) 48,939 20,391 24,360 7,333 (33,931) 203,861
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Finance costs
- net - - - - - - - - (24,349) (24,349)
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Share of
results of
associates - - - - - - - - 2,149 2,149
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Profit/(loss)
before taxation 84,625 42,058 36,085 (25,999) 48,939 20,391 24,360 7,333 (56,131) 181,661
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Income tax
expense - - - - - - - - (52,980) (52,980)
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Non-controlling
interests - - - - - - - - (10,303) (10,303)
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Net
profit/(loss)
attributable
to the owners
of the parent 84,625 42,058 36,085 (25,999) 48,939 20,391 24,360 7,333 (119,414) 118,378
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Segment assets 2,655,569 2,655,569
---------------- -------- -------- --------- --------- --------- -------- ------- --------
Investments
in associates 53,055 53,055
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Total assets 2,708,624 2,708,624
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Segment
liabilities (2,310,919) (2,310,919)
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Total
liabilities (2,310,919) (2,310,919)
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Other segment
items:
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Capital
expenditure 5,449 4,196 2,487 3,344 6,036 17,278 2,668 181 16,164 57,803
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Depreciation,
amortisation
and impairment
charges
(including
amounts in
salaries
and associated
expenses) (10,466) (4,302) (2,107) (4,637) (5,906) (7,843) (1,835) (1,561) (13,463) (52,120)
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Risk & Insurance Employee Benefits
--------------------------------------------------- ---------------------------
JLT Other
Australia Risk UK Other Head
Year ended JLT JLT & New JLT & & Employee Office
31 December Europe Re Zealand USA Insurance Ireland Asia Benefits & Other Total
2016 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Fees and
commissions 391,918 195,065 115,950 41,313 211,993 160,016 87,260 53,041 - 1,256,556
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Investment
income 1,861 541 1,702 - 552 2 17 55 - 4,730
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Total revenue 393,779 195,606 117,652 41,313 212,545 160,018 87,277 53,096 - 1,261,286
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Underlying
trading
profit/(loss) 79,743 40,521 34,137 (26,981) 39,158 12,315 27,130 10,029 (22,380) 193,672
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Operating
profit/(loss) 60,945 40,589 34,135 (26,981) 41,373 (2,390) 23,290 9,851 (25,207) 155,605
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Finance costs
- net - - - - - - - - (22,078) (22,078)
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Share of
results of
associates - - - - - - - - 1,353 1,353
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Profit/(loss)
before taxation 60,945 40,589 34,135 (26,981) 41,373 (2,390) 23,290 9,851 (45,932) 134,880
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Income tax
expense - - - - - - - - (44,018) (44,018)
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Non-controlling
interests - - - - - - - - (9,396) (9,396)
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Net
profit/(loss)
attributable
to the owners
of the parent 60,945 40,589 34,135 (26,981) 41,373 (2,390) 23,290 9,851 (99,346) 81,466
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Segment assets 2,574,199 2,574,199
---------------- -------- -------- --------- --------- --------- -------- ------- --------
Investments
in associates 50,928 50,928
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Total assets 2,625,127 2,625,127
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Segment
liabilities (2,274,217) (2,274,217)
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Total
liabilities (2,274,217) (2,274,217)
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Other segment
items:
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Capital
expenditure 3,693 7,406 2,821 3,204 5,464 11,338 314 391 5,140 39,771
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Depreciation,
amortisation
and impairment
charges
(including
amounts in
salaries
and associated
expenses) (11,169) (3,141) (2,274) (3,434) (5,621) (7,583) (1,262) (1,109) (14,310) (49,903)
---------------- -------- -------- --------- --------- --------- -------- ------- -------- ------------ ------------
Geographical segment analysis
Although the Group's two business segments are managed on a
worldwide basis, they operate in five principal geographical areas
of the world.
The United Kingdom is the home country of the parent company
Jardine Lloyd Thompson Group plc.
The Risk & Insurance segment operates in the United Kingdom,
the Group's home country. In the Americas, the Risk & Insurance
segment operates in Argentina, Bermuda, the Caribbean, Brazil,
Canada, Colombia, Peru, Chile, and the United States. The
Australian segment includes operations in Australia and New
Zealand. In Europe, it operates in the Republic of Ireland, Sweden,
Finland, Norway, Denmark, Germany, Guernsey, Belgium, France, The
Netherlands, Spain, Switzerland and Russia. The Asian segment
includes operations in Singapore, Hong Kong, Taiwan, Indonesia,
Japan, Thailand, South Korea, Philippines, Malaysia, China,
Vietnam, Dubai, Qatar, Bahrain and Turkey. In Rest of the World, it
operates in South Africa.
The Employee Benefits segment operates in the United Kingdom. In
the Americas, the Employee Benefits segment operates in Brazil,
Canada, Colombia and Peru. The Australian segment includes
operations in Australia and New Zealand. In Europe, it operates in
the Republic of Ireland and Switzerland. The Asian segment includes
operations in Singapore, Hong Kong, Taiwan, Indonesia, Japan,
Thailand, South Korea, Philippines, Malaysia, China and Vietnam. In
Rest of the World, it operates in South Africa.
The Head Office & Other activities segment is mainly based
in the United Kingdom with minor operations in the Americas, Europe
and Asia.
The Group's captive operations are included in the United
Kingdom segment.
Fees and commissions are disclosed by (1) the country in which
the office is located and (2) the country in which the customer is
located.
Segment non-current assets, segment assets and segment
liabilities are disclosed based on the country in which they are
located or occur. Interest bearing assets (eg cash & cash
equivalents and investments & deposits) relating to the Group's
own funds, held-for-sale financial assets and deferred tax assets
are excluded from segment assets. Interest bearing liabilities (eg
borrowings) and current and deferred tax liabilities are excluded
from segment liabilities. Items excluded from segmental allocation
are referred to as "unallocated".
Fees and Fees and Segment
commissions commissions non-current Segment Segment
(1) (2) assets assets liabilities
--------------------------- ------------ ------------ ------------ ---------- ------------
Year ended 31
December 2017 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ------------ ------------ ------------ ---------- ------------
UK 608,958 358,430 368,698 1,360,077 (974,822)
--------------------------- ------------ ------------ ------------ ---------- ------------
Americas 337,336 463,558 237,430 513,779 (288,038)
--------------------------- ------------ ------------ ------------ ---------- ------------
Australia 157,297 172,930 48,552 141,071 (93,302)
--------------------------- ------------ ------------ ------------ ---------- ------------
Asia 218,740 221,575 44,289 228,317 (165,319)
--------------------------- ------------ ------------ ------------ ---------- ------------
Europe 47,878 117,887 49,169 132,277 (45,906)
--------------------------- ------------ ------------ ------------ ---------- ------------
Rest of the
World 8,345 44,174 7,239 9,382 (2,741)
--------------------------- ------------ ------------ ------------ ---------- ------------
1,378,554 1,378,554 755,377 2,384,903 (1,570,128)
--------------------------- ------------ ------------ ------------ ---------- ------------
Investments
in associates 53,055 -
--------------------------- ------------ ------------ ------------ ---------- ------------
Unallocated
assets/(liabilities) 270,666 (740,791)
--------------------------- ------------ ------------ ------------ ---------- ------------
Total assets/(liabilities) 2,708,624 (2,310,919)
--------------------------- ------------ ------------ ------------ ---------- ------------
Fees and Fees and Segment
commissions commissions non-current Segment Segment
(1) (2) assets assets liabilities
--------------------------- ------------ ------------ ------------ ---------- ------------
Year ended 31
December 2016 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ------------ ------------ ------------ ---------- ------------
UK 600,837 360,840 356,861 1,427,263 (1,045,964)
--------------------------- ------------ ------------ ------------ ---------- ------------
Americas 259,226 375,886 223,614 462,989 (233,192)
--------------------------- ------------ ------------ ------------ ---------- ------------
Australia 146,958 158,821 49,651 141,369 (88,657)
--------------------------- ------------ ------------ ------------ ---------- ------------
Asia 204,504 199,823 46,660 218,807 (152,245)
--------------------------- ------------ ------------ ------------ ---------- ------------
Europe 37,717 107,668 24,711 38,386 (37,531)
--------------------------- ------------ ------------ ------------ ---------- ------------
Rest of the
World 7,314 53,518 7,809 9,699 (3,641)
--------------------------- ------------ ------------ ------------ ---------- ------------
1,256,556 1,256,556 709,306 2,298,513 (1,561,230)
--------------------------- ------------ ------------ ------------ ---------- ------------
Investments
in associates 50,928 -
--------------------------- ------------ ------------ ------------ ---------- ------------
Unallocated
assets/(liabilities) 275,686 (712,987)
--------------------------- ------------ ------------ ------------ ---------- ------------
Total assets/(liabilities) 2,625,127 (2,274,217)
--------------------------- ------------ ------------ ------------ ---------- ------------
3. Operating profit
The following items have been charged/(credited) in arriving at
operating profit:
2017 2016
GBP'000 GBP'000
-------------------------------------------------- -------- ---------
Foreign exchange losses/(gains):
-------------------------------------------------- -------- ---------
- fees and commissions 25,899 22,056
-------------------------------------------------- -------- ---------
- other operating costs 185 (10,838)
-------------------------------------------------- -------- ---------
26,084 11,218
-------------------------------------------------- -------- ---------
Amortisation of other intangible
assets:
-------------------------------------------------- -------- ---------
- software costs 17,360 19,813
-------------------------------------------------- -------- ---------
- other intangible assets 2,966 2,131
-------------------------------------------------- -------- ---------
Impairment of goodwill (included
in exceptional items below) 1,099 481
-------------------------------------------------- -------- ---------
Depreciation on property, plant and
equipment:
-------------------------------------------------- -------- ---------
- owned assets 12,370 12,291
-------------------------------------------------- -------- ---------
- leased assets under finance leases 358 235
-------------------------------------------------- -------- ---------
Impairment of available-for-sale
other investments (included in exceptional
items below) 1,801 -
-------------------------------------------------- -------- ---------
Impairment of associates (included
in exceptional items below) 537 -
-------------------------------------------------- -------- ---------
Total depreciation, amortisation
and impairment charges 36,491 34,951
-------------------------------------------------- -------- ---------
Amortisation of capitalised employment
contract payments (included in salaries
and associated expenses) 15,629 14,952
-------------------------------------------------- -------- ---------
Losses/(gains) on disposal of property,
plant and equipment 90 (10)
-------------------------------------------------- -------- ---------
Operating lease rentals payable:
-------------------------------------------------- -------- ---------
- minimum lease payments:
-------------------------------------------------- -------- ---------
- land and buildings 46,816 41,233
-------------------------------------------------- -------- ---------
- furniture, equipment and motor
vehicles 1,443 792
-------------------------------------------------- -------- ---------
- computer equipment and software 486 543
-------------------------------------------------- -------- ---------
- sub-leases receipts:
-------------------------------------------------- -------- ---------
- land and buildings (443) (426)
-------------------------------------------------- -------- ---------
48,302 42,142
-------------------------------------------------- -------- ---------
Fair value gains on derivative financial
instruments (401) (87)
-------------------------------------------------- -------- ---------
(Gains)/losses on disposal of available-for-sale
other investments (2,101) 8
-------------------------------------------------- -------- ---------
Exceptional items:
-------------------------------------------------- -------- ---------
Acquisition and integration costs
of which:
-------------------------------------------------- -------- ---------
- included in salaries and associated
expenses 751 228
-------------------------------------------------- -------- ---------
- included in premises 7 70
-------------------------------------------------- -------- ---------
- included in other operating costs 1,847 248
-------------------------------------------------- -------- ---------
2,605 546
-------------------------------------------------- -------- ---------
Restructuring costs of which:
-------------------------------------------------- -------- ---------
- included in salaries and associated
expenses - 9,355
-------------------------------------------------- -------- ---------
- included in premises - 1,689
-------------------------------------------------- -------- ---------
- included in other operating costs - 2,856
-------------------------------------------------- -------- ---------
- 13,900
-------------------------------------------------- -------- ---------
Net (gains)/losses on disposal of
businesses of which:
-------------------------------------------------- -------- ---------
- included in salaries and associated
expenses 384 116
-------------------------------------------------- -------- ---------
- included in premises 28 783
-------------------------------------------------- -------- ---------
- included in other operating costs (719) 391
-------------------------------------------------- -------- ---------
- included in depreciation, amortisation
and impairment charges - 370
-------------------------------------------------- -------- ---------
(307) 1,660
-------------------------------------------------- -------- ---------
Net (gains)/losses on disposal of
investment and associates of which:
-------------------------------------------------- -------- ---------
- included in other operating costs (2,065) -
-------------------------------------------------- -------- ---------
- included in depreciation, amortisation
and impairment charges 537 -
-------------------------------------------------- -------- ---------
(1,528) -
-------------------------------------------------- -------- ---------
Revision in considerations recognised
in prior years:
-------------------------------------------------- -------- ---------
- included in other operating costs (419) -
-------------------------------------------------- -------- ---------
- included in depreciation, amortisation
and impairment charges 1,801 -
-------------------------------------------------- -------- ---------
1,382 -
-------------------------------------------------- -------- ---------
Impairment of goodwill (included
in depreciation, amortisation and
impairment charges) 1,099 111
-------------------------------------------------- -------- ---------
Included in other operating costs:
-------------------------------------------------- -------- ---------
Net litigation costs 9,067 21,114
-------------------------------------------------- -------- ---------
Costs associated with regulatory
reviews 1,659 488
-------------------------------------------------- -------- ---------
Net gains on release of deferred
and contingent considerations (2,958) (324)
-------------------------------------------------- -------- ---------
Fair value (gains)/losses on put
options (1,137) 699
-------------------------------------------------- -------- ---------
Pension curtailment gain - (127)
-------------------------------------------------- -------- ---------
Total exceptional items included
within operating profit 9,882 38,067
-------------------------------------------------- -------- ---------
Profit on sale of associates' subsidiary
- included in share of results of
associates - (378)
-------------------------------------------------- -------- ---------
Total exceptional items 9,882 37,689
-------------------------------------------------- -------- ---------
We identified that the foreign exchange gain on fees and
commissions of GBP5,841,000 disclosed in 2016 should have been a
loss of GBP22,056,000. This does not result in a change to the
consolidated income statement.
4. Investment income
2017 2016
GBP'000 GBP'000
-------------------------------------- -------- --------
Interest receivable - fiduciary funds 7,474 4,730
-------------------------------------- -------- --------
Prior year investment income 4,730 3,689
-------------------------------------- -------- --------
Effect of:
-------------------------------------- -------- --------
- average cash balance variance 100 (190)
-------------------------------------- -------- --------
- interest yield variance 2,268 799
-------------------------------------- -------- --------
- foreign exchange variance 376 432
-------------------------------------- -------- --------
7,474 4,730
-------------------------------------- -------- --------
The Group's investment income arises from its holdings of cash
and investments relating to fiduciary funds. Equivalent average
cash and investment balances during the year amounted to GBP801
million (2016: GBP797 million) denominated principally in US
dollars (57%), Sterling (13%) and Australian dollars (12%). The
average return for 2017 was 0.93% (2016: 0.60%). Based upon average
invested balances each 1% movement in the average achieved rate of
return would impact anticipated interest income by approximately
GBP8 million.
5. Finance income and costs
2017 2016
GBP'000 GBP'000
------------------------------------------ --------- ---------
Interest receivable - own funds 2,607 1,938
------------------------------------------ --------- ---------
Investment income from available-for-sale
other investments 371 209
------------------------------------------ --------- ---------
Interest expense:
------------------------------------------ --------- ---------
- bank and other borrowings (16,667) (17,434)
------------------------------------------ --------- ---------
- finance leases (71) (57)
------------------------------------------ --------- ---------
- interest in respect of liability
discounting (5,141) (1,862)
------------------------------------------ --------- ---------
Pension financing:
------------------------------------------ --------- ---------
- expected return on retirement benefits
scheme assets 15,020 19,065
------------------------------------------ --------- ---------
- interest on retirement benefits
scheme liabilities (20,468) (23,937)
------------------------------------------ --------- ---------
Net pension financing expense (5,448) (4,872)
------------------------------------------ --------- ---------
Finance costs - net (24,349) (22,078)
------------------------------------------ --------- ---------
Finance costs (27,327) (24,225)
------------------------------------------
Finance income 2,978 2,147
------------------------------------------ --------- ---------
Finance costs - net (24,349) (22,078)
------------------------------------------ --------- ---------
Interest Rate Risk
The Group has both interest bearing assets, explained in note 4,
and interest bearing liabilities that give rise to net exposures to
changes in interest rates, primarily in US dollars and Sterling.
Where appropriate, the Group uses interest rate swaps to hedge or
match these interest rate exposures. The Group's policy is to
continue to manage net interest rate exposures arising from the
Group's cash (including fiduciary funds) and borrowings. Each 1%
movement in the average achieved interest rate impacts interest
expense by approximately GBP5.9 million based on average net
borrowings in 2017.
6. Employee information
2017 2016
GBP'000 GBP'000
------------------------------------ -------- --------
a) Salaries and associated expenses
------------------------------------ -------- --------
Wages and salaries 671,356 619,422
------------------------------------ -------- --------
Social security costs 58,589 51,881
------------------------------------ -------- --------
Pension costs 43,541 41,385
------------------------------------ -------- --------
Equity settled share-based payments
- incentive schemes (LTIP, SESS,
ESOS) 26,804 25,174
-------- --------
Other staff costs 60,899 56,501
------------------------------------ -------- --------
861,189 794,363
------------------------------------ -------- --------
2017 2016
---------------------------------- ------- ------
b) Analysis of employees
----------------------------------
Monthly average number of persons
employed by the Group during the
year
---------------------------------- ------- ------
Geographical segment:
---------------------------------- ------- ------
- UK 3,618 3,878
----------------------------------
- Americas 2,001 1,813
---------------------------------- ------- ------
- Australasia 1,115 1,130
---------------------------------- ------- ------
- Asia 3,413 3,292
---------------------------------- ------- ------
- Europe 291 253
---------------------------------- ------- ------
- Rest of the world 137 133
---------------------------------- ------- ------
10,575 10,499
---------------------------------- ------- ------
Business segment:
---------------------------------- ------- ------
- Risk & Insurance 6,254 6,174
---------------------------------- ------- ------
- Employee Benefits 3,428 3,475
---------------------------------- ------- ------
- Head Office & Other 893 850
---------------------------------- ------- ------
10,575 10,499
---------------------------------- ------- ------
2017 2016
GBP'000 GBP'000
--------------------------------- -------- --------
c) Key management compensation
--------------------------------- -------- --------
Salaries and short-term employee
benefits 17,280 13,792
--------------------------------- -------- --------
Post employment benefits 414 406
--------------------------------- -------- --------
Other long-term benefits 448 333
--------------------------------- -------- --------
Share-based payments 2,702 2,812
--------------------------------- -------- --------
20,844 17,343
--------------------------------- -------- --------
Key management personnel are defined as persons having authority
and responsibility for planning, directing and controlling the
activities
of the Group directly or indirectly, including any director of
the Group. This represents the Group Board of Directors and the
Group Executive
Committee only.
The Group's equity-settled share-based payments comprise the JLT
Long Term Incentive Plan (2004/2013), Senior Executive Share Scheme
and the Executive Share Option Scheme.
JLT Long Term Incentive Plan (2013)
The Group operates the Long Term Incentive Plan (LTIP) for
Executive Directors and persons discharging managerial
responsibility (PDMRs).
The scheme was renewed in 2013. Awards under the scheme are
granted in the form of nil-priced options and are satisfied using
market-purchased shares. The awards vest in full or in part
depending on satisfaction of performance conditions. The awards
have a 3 year performance period and have a 10 year life from the
date of grant. Options attract discretionary dividend equivalents
(DDEs) that are rolled up and paid, in cash, on vesting. DDEs are
paid to option holders only on the options that have vested.
Forfeited or lapsed options are not eligible to DDEs and the DDEs
that have accrued on the balance sheet are released to equity at
the
date of forfeiture.
Senior Executive Share Scheme
The Group operates a Senior Executive Share Scheme for senior
management and employees. Awards under the scheme are granted in
the form
of nil-priced options and are satisfied using market-purchased
shares. The majority of awards have no specific performance
criteria attached, other than the requirement that employees remain
in employment with the Group. Certain awards have been granted with
specific performance targets defined for the individual executives.
In general these require targets for revenue and profit growth to
be met over the vesting period. The awards
have a 10 year life from the date of grant. Options granted
prior to 1 January 2014 attract unconditional DDEs throughout the
vesting period, this means that DDEs are paid to the option holders
as and when dividends are paid to ordinary shareholders, there is
no clawback on the dividends
in the event of a forfeiture of the options. The options granted
post 1 January 2014 attract DDEs that are rolled up and paid in
cash, on vesting.
The Group amended the plan rules on the 8 June 2016. From that
date, all vested options are no longer eligible to DDEs.
Executive Share Option Scheme
Options were granted at a fixed price (usually market price) and
are exercisable after the vesting period (usually 3 years). Options
are satisfied by
the issue of new shares or market-purchased shares. Some options
carry performance conditions where they are only exercisable when
earnings
per share is in excess of RPI for the three consecutive
financial accounting periods preceding the date of exercise. The
awards have a 10 year life from the date of grant. This scheme is
now closed for new grants and options were last granted under this
scheme on 29 September 2006.
Fair value of awards
Under IFRS 2 the fair value of awards granted during the year,
calculated using a Black-Scholes model, is set out below:
Black-Scholes model
assumptions
------ ------------- --------- ------------ ----------------------------------------------------
Share Risk Fair
price free value
Exercise on grant Dividend Interest of one
price Performance date Volatility yield Maturity rate award
pence period pence % % years % pence
------ ------------- --------- ------------ --------- ---------- -------- -------- --------- ---------
JLT Long Term
Incentive Plan
(2013)/
Senior Executive
Share Scheme
--------------------- --------- ------------ --------- ---------- -------- -------- --------- ---------
2 -
2017 05 April - 2017-20 1,133.00 22.02 - 3 0.23 1,133.00
------ ------------- --------- ------------ --------- ---------- -------- -------- --------- ---------
1 -
2017 12 April - 2017-20 1,128.00 22.04 - 3 0.18 1,128.00
------ ------------- --------- ------------ --------- ---------- -------- -------- --------- ---------
1 -
2017 29 September - 2017-21 1,224.00 20.53 - 4 0.59 1,224.00
------ ------------- --------- ------------ --------- ---------- -------- -------- --------- ---------
The option holders who have awards under the JLT Long Term
Incentive Plan (2004/2013) and the Senior Executive Share Scheme
also receive payments equating to the dividends payable on their
shares (subject to meeting the performance criteria). Assuming that
the dividend yield is zero
and that the options are issued with no cost to the employees,
then the fair value will equal the share price at date of
grant.
The volatility has been calculated based on the historical share
price of the Company, using a 3 year term.
All options granted under the share option schemes are
conditional upon the employees remaining in the Group's employment
during the vesting period of the option, the actual period varies
according to the scheme in which the employee participates. In
calculating the cost of options granted,
a factor is included to take account of anticipated lapse rates.
For Executive Share Option this is 20%. For the JLT Long Term
Incentive Plan (2004/2013) and the Senior Executive Share Scheme it
is nil as both are issued with no cost to the employee.
Movement in number of
options
------------- ---------------------------------------------------------------- --------- ------------ ------------
Options Options Weighted Options
outstanding outstanding average exercisable
at 1 at 31 exercise at 31 Remaining
Jan Dec (sale) Dec contractual
17 Granted Lapsed Exercised 17 price 17 life
number number number number number (p) number (years)
------------- ------------ ---------- ---------- ------------ ------------ --------- ------------ ------------
JLT Long Term
Incentive
Plan
(2013) 1,986,535 766,800 (314,462) (194,921) 2,243,952 1,125.41 - 8.31
------------- ------------ ---------- ---------- ------------ ------------ --------- ------------ ------------
Senior
Executive
Share Scheme 7,926,992 2,218,630 (140,938) (2,414,935) 7,589,749 1,134.97 504,046 7.91
------------- ------------ ---------- ---------- ------------ ------------ --------- ------------ ------------
Total 9,913,527 2,985,430 (455,400) (2,609,856) 9,833,701 1,134.25 504,046 8.00
------------- ------------ ---------- ---------- ------------ ------------ --------- ------------ ------------
Movement in number of
options
---------------- ------------------------------------------------------------- --------- ------------ ------------
Options Options Weighted Options
outstanding outstanding average exercisable
at 1 at 31 exercise at 31 Remaining
Jan Dec (sale) Dec contractual
16 Granted Lapsed Exercised 16 price 16 life
number number number number number (p) number (years)
---------------- ------------ --------- --------- ----------- ------------ --------- ------------ ------------
JLT Long Term
Incentive Plan
(2004/2013) 1,927,782 925,700 (492,737) (374,210) 1,986,535 873.22 - 8.42
---------------- ------------ --------- --------- ----------- ------------ --------- ------------ ------------
Senior Executive
Share Scheme 7,167,782 2,527,139 (128,558) (1,639,371) 7,926,992 882.69 681,113 7.96
---------------- ------------ --------- --------- ----------- ------------ --------- ------------ ------------
Executive Share
Option Scheme 64,800 - (18,800) (46,000) - 963.70 - -
---------------- ------------ --------- --------- ----------- ------------ --------- ------------ ------------
Total 9,160,364 3,452,839 (640,095) (2,059,581) 9,913,527 882.78 681,113 8.05
---------------- ------------ --------- --------- ----------- ------------ --------- ------------ ------------
7. Services provided by the Company's auditor and its
associates
During the year the Group (including its overseas subsidiaries)
obtained the following services from the Group's auditor and its
associates:
2017 2016
GBP'000 GBP'000
------------------------------------------- -------- --------
Fees payable to the Group's auditor
for the audit of the parent Company
and consolidated financial statements 211 200
-------------------------------------------
Fees payable to the Group's auditor
and its associates for other services:
------------------------------------------- -------- --------
- the audit of the Company's subsidiaries 3,176 2,449
------------------------------------------- -------- --------
- audit related assurance services 274 254
------------------------------------------- -------- --------
- tax compliance services 160 130
------------------------------------------- -------- --------
- tax advisory services 91 46
------------------------------------------- -------- --------
- other assurance services - 190
------------------------------------------- -------- --------
- other non-audit services 435 135
------------------------------------------- -------- --------
4,347 3,404
------------------------------------------- -------- --------
In addition to the above, fees payable to the Company's auditor
and its associates for audit services supplied to the Company's
associated pension schemes amounted to nil (2016: GBP18,700).
The Audit & Risk Committee has a policy on the use of the
external auditors for non-audit services to ensure that the
auditor's independence is maintained and that appropriate approvals
are sought for non-audit services depending upon their nature and
value. Each year a limit is set on the
total fees that can be paid to the external auditor in relation
to non-audit services. As in prior years, the limit set by the
Audit & Risk Committee of GBP1 million remained applicable in
the year.
The audit fees increased as a result of the imminent
implementation of IFRS 9 & 15, as referred to in the
Significant Accounting Policies and certain component auditor scope
changes.
8. Income tax expense
2017 2016
GBP'000 GBP'000
-------------------------------------- -------- --------
Current tax expense
--------------------------------------
Current year 57,609 51,499
-------------------------------------- -------- --------
Adjustments in respect of prior years (2,568) (7,129)
-------------------------------------- -------- --------
55,041 44,370
-------------------------------------- -------- --------
Deferred tax (credit)/expense
-------------------------------------- -------- --------
Origination and reversal of temporary
differences (3,569) (4,912)
-------------------------------------- -------- --------
Reduction in tax rate 174 240
-------------------------------------- -------- --------
Adjustments in respect of prior years 1,334 4,320
-------------------------------------- -------- --------
(2,061) (352)
-------------------------------------- -------- --------
Total income tax expense 52,980 44,018
-------------------------------------- -------- --------
The total income tax expense in the income statement of
GBP52,980,000 (2016: GBP44,018,000) includes a tax credit on
exceptional items of GBP422,000 (2016: GBP8,245,000). There were no
non-recurring tax credits in the year.
The headline rate of UK corporation tax is currently 19%, this
will reduce to 17% from 1 April 2020. As at 31 December 2017, the
rate reduction to 17% from April 2020 has been enacted. The impact
of the rate reduction to 17% has been incorporated into the income
tax charge for the year ended 31 December 2017, taking into
consideration when temporary differences are expected to
reverse.
The tax on the Group's profit before tax differs from the
theoretical amount that would arise using the tax rate of the home
country of the Company
as follows:
2017 2016
GBP'000 GBP'000
------------------------------------------- -------- --------
Profit before taxation 181,661 134,880
------------------------------------------- -------- --------
Tax calculated at UK Corporation Tax
rate of 19.25% (2016: 20%) 34,970 26,976
------------------------------------------- -------- --------
Non-deductible expenses 4,387 4,214
------------------------------------------- -------- --------
Non recognition of tax losses 3,657 4,538
------------------------------------------- -------- --------
Other* (1,192) (595)
------------------------------------------- -------- --------
Adjustments in respect of prior years (1,234) (2,809)
------------------------------------------- -------- --------
Effect of difference between UK and non-UK
tax rates 12,632 11,725
------------------------------------------- -------- --------
Effect of reduction in tax rate 174 240
------------------------------------------- -------- --------
Tax on associates (414) (271)
------------------------------------------- -------- --------
Total income tax expense 52,980 44,018
------------------------------------------- -------- --------
* Other includes the non-taxable gain on disposal of
subsidiaries
9. Earnings per share
Basic earnings per share (EPS) is calculated by dividing the
profit attributable to shareholders by the sum of the weighted
average number of ordinary shares in issue during the year and the
vested share options eligible to discretionary dividends
equivalents, excluding unallocated shares held by the Trustees of
the Employees' Share Ownership Plan Trust which are treated as
treasury shares. The profit attributable to shareholders is the
profit attributable to the owners of the parent adjusted for the
dividends equivalents and undistributed earnings attributable to
the unvested share options carrying unconditional dividends
equivalents rights.
Diluted EPS is calculated by adjusting the weighted average
number of ordinary shares in issue to take account for the
potential dilutive effect
of outstanding share options.
Basic and diluted EPS are also calculated based on underlying
earnings attributable to shareholders, which exclude any
exceptional items.
A reconciliation of earnings is set out below:
2017 2016
No. of No. of
shares shares
------------------------------------ ------------ -----------
Weighted average number of shares 211,009,657 210,455,334
Effect of outstanding share options 5,588,334 5,210,752
------------------------------------ ------------ -----------
Adjusted weighted average number of
shares 216,597,991 215,666,086
------------------------------------ ------------ -----------
2017
------------------------------------------------------------
GBP'000 GBP'000 GBP'000 Pence Pence
------------- ---------- ---------- ---------- ---------
Adjusted
earnings Diluted
for basic Basic earnings
earnings earnings per
Earnings Adjustments(2) per share per share share
------------------------------ ------------------------- ---------- ---------- ---------
Underlying profit after
taxation and non-controlling
interests(1) 126,710 (84) 126,626 60.0 58.5
------------------------------ ------------- ---------- ---------- ---------
Exceptional items before
tax (9,882)
------------------------------ ------------- ---------- ---------- ---------
Taxation thereon 422
------------------------------ ------------- ---------- ---------- ---------
Non-controlling interests 1,128
------------------------------ ------------- ---------- ---------- ---------
(8,332) 5 (8,327) (3.9) (3.8)
------------------------------ ------------- ---------- ---------- ---------- ---------
Profit attributable to
the owners of the parent 118,378 (79) 118,299 56.1 54.7
------------------------------ ------------- ---------- ---------- ---------- ---------
2016
------------------------------ --------------------------------------------------------------
GBP'000 GBP'000 GBP'000 Pence Pence
------------------------------ ------------- ---------- --------- ----------- -----------
Adjusted
earnings
for
basic
earnings Basic Diluted
per earnings earnings
Earnings Adjustments(2) share per share per share
------------------------------ ------------------------- --------- ----------- -----------
Underlying profit after
taxation and non-controlling
interests(1) 110,910 (175) 110,735 52.6 51.4
------------------------------ ------------- ---------- ----------- -----------
Exceptional items before
tax (37,689)
------------------------------ ------------- ---------- ----------- -----------
Taxation thereon 8,245
------------------------------ ------------- ---------- ----------- -----------
(29,444) 45 (29,399) (14.0) (13.6)
------------------------------ ------------- ---------- --------- ----------- -----------
Profit attributable
to the owners of the
parent 81,466 (130) 81,336 38.6 37.8
------------------------------ ------------- ---------- --------- ----------- -----------
(1) Underlying excludes exceptional items
(2) Adjustments related to the dividends and undistributed
earnings on unvested share options carrying unconditional dividends
equivalent rights.
10. Dividends
2017 2016
GBP'000 GBP'000
------------------------------------- -------- --------
Final dividend in respect of 2016 of
20.6p per share (2015: 19.5p) 45,087 42,713
------------------------------------- -------- --------
Less: adjustment* (352) (200)
------------------------------------- -------- --------
44,735 42,513
------------------------------------- -------- --------
Interim dividend in respect of 2017
of 12.2p per share (2016: 11.6p) 26,858 25,449
------------------------------------- -------- --------
71,593 67,962
------------------------------------- -------- --------
*Adjustment relating to dividend equivalents accrued in respect
of various performance related share awards and long-term incentive
plans not currently anticipated to fully vest.
A final dividend in respect of 2017 of 21.8p per share (2016:
20.6p) amounting to a total of GBP47,700,000 (2016: GBP45,100,000)
is proposed by the Board. The dividend proposed will not be
accounted for until it has been approved at the Annual General
Meeting on 1 May 2018.
11. Goodwill
Gross Impairment Net carrying
Amount Losses Amount
GBP'000 GBP'000 GBP'000
----------------------- --------- ---------- ------------
At 31 December 2017
----------------------- --------- ---------- ------------
Opening net book value 548,117 (5,104) 543,013
----------------------- --------- ---------- ------------
Exchange differences (17,942) 282 (17,660)
----------------------- --------- ---------- ------------
Impairment - (1,099) (1,099)
----------------------- --------- ---------- ------------
Acquisitions 53,524 - 53,524
----------------------- --------- ---------- ------------
Closing net book value 583,699 (5,921) 577,778
----------------------- --------- ---------- ------------
At 31 December 2016
----------------------- --------- ---------- ------------
Opening net book value 500,434 (4,268) 496,166
----------------------- --------- ---------- ------------
Exchange differences 47,380 (355) 47,025
----------------------- --------- ---------- ------------
Impairment - (481) (481)
----------------------- --------- ---------- ------------
Acquisitions 17,854 - 17,854
----------------------- --------- ---------- ------------
Disposals (17,551) - (17,551)
----------------------- --------- ---------- ------------
Closing net book value 548,117 (5,104) 543,013
----------------------- --------- ---------- ------------
Impairment tests for goodwill
Goodwill is allocated to the Group's cash generating units
(CGUs) identified according to country of operation and business
segment. A summary
of the goodwill allocation is presented below.
The recoverable amount of a CGU is determined based on
value-in-use calculations. These calculations use cash flow
projections based on financial budgets approved by management
covering a five year period and are discounted using the weighted
average cost of capital. Cash flows beyond
the five year period are extrapolated using the estimated growth
rates stated below:
Key assumptions
------------------------------- ------------ -----------------
Growth Discount
Net carrying rate rate
amount (1) (2)
------------------------------- ------------ ------- --------
GBP'000 % %
------------------------------- ------------ ------- --------
At 31 December 2017
------------------------------- ------------ ------- --------
JLT Re 179,774 1.83% 6.13%
------------------------------- ------------ ------- --------
JLT Europe 145,913 1.75% 5.54%
------------------------------- ------------ ------- --------
UK & Ireland Employee Benefits 80,486 1.75% 5.51%
------------------------------- ------------ ------- --------
JLT USA 46,794 1.68% 8.96%
------------------------------- ------------ ------- --------
Latin America 40,668 3.73% 10.59%
------------------------------- ------------ ------- --------
Australia & New Zealand 37,708 2.65% 7.65%
------------------------------- ------------ ------- --------
Asia 28,252 2.79% 4.45%
------------------------------- ------------ ------- --------
Other 18,183 2.59% 5.95%
------------------------------- ------------ ------- --------
577,778 2.31% 5.73%
------------------------------- ------------ ------- --------
At 31 December 2016
------------------------------- ------------ ------- --------
JLT Re 188,236 2.10% 7.06%
------------------------------- ------------ ------- --------
JLT Europe 126,088 2.01% 6.05%
------------------------------- ------------ ------- --------
UK & Ireland Employee Benefits 80,336 2.00% 6.05%
------------------------------- ------------ ------- --------
JLT USA 18,346 2.34% 9.66%
------------------------------- ------------ ------- --------
Latin America 42,262 3.39% 11.16%
------------------------------- ------------ ------- --------
Australia & New Zealand 38,455 2.50% 8.26%
------------------------------- ------------ ------- --------
Asia 29,912 2.41% 6.48%
------------------------------- ------------ ------- --------
Other 19,379 3.08% 7.86%
------------------------------- ------------ ------- --------
543,013 2.28% 6.98%
------------------------------- ------------ ------- --------
1) Average growth rate used to extrapolate cash flows beyond
five years.
2) Pre-tax discount rate applied to the cash flow
projections.
The key assumptions used in value-in-use calculations were:
The budgeted trading profit growth: Management determines
budgeted trading profit based on past experience and its
expectation for market development.
The budgeted investment income growth is based on past
experience and long-term interest rates projections.
The discount rates used are pre-tax and reflect specific risks
relating to the relevant segment and country of operation.
The weighted average growth rates used are consistent with
long-term economic forecasts in the countries of operation.
The value-in-use is compared to an adjusted goodwill. The
adjusted goodwill is the goodwill grossed up to reflect a 100%
ownership by the Group.
The key sensitivity analysis are:
A decrease of 1% in the growth rate resulted in a reduction of
30% in the excess between the value in use and the adjusted
carrying
value of goodwill.
An increase of 2% in the discount rate resulted in a reduction
of 50% in the excess between the value in use and the adjusted
carrying
value of goodwill.
A combined decrease of 1% in the growth rate and an increase of
2% in the discount rate resulted in a reduction of 58% in the
excess between
the value in use and the adjusted carrying value of
goodwill.
12. Other intangible assets
Capitalised
employment
Computer contract
software payments Other Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ---------- ----------- --------- ----------
At 31 December 2017
------------------------- ---------- ----------- --------- ----------
Opening net book value 60,059 19,334 22,570 101,963
------------------------- ---------- ----------- --------- ----------
Exchange differences (501) (548) (611) (1,660)
------------------------- ---------- ----------- --------- ----------
Reclassification - 451 (451) -
------------------------- ---------- ----------- --------- ----------
Additions 22,543 15,381 752 38,676
------------------------- ---------- ----------- --------- ----------
Companies acquired 14 - 6,390 6,404
------------------------- ---------- ----------- --------- ----------
Companies disposed (474) - - (474)
------------------------- ---------- ----------- --------- ----------
Amortisation charge (17,360) (15,629) (2,966) (35,955)
------------------------- ---------- ----------- --------- ----------
Closing net book value 64,281 18,989 25,684 108,954
------------------------- ---------- ----------- --------- ----------
At 31 December 2017
------------------------- ---------- ----------- --------- ----------
Cost 167,882 60,602 39,353 267,837
------------------------- ---------- ----------- --------- ----------
Accumulated amortisation
and impairment (103,601) (41,613) (13,669) (158,883)
------------------------- ---------- ----------- --------- ----------
Closing net book value 64,281 18,989 25,684 108,954
------------------------- ---------- ----------- --------- ----------
At 31 December 2016
------------------------- ---------- ----------- --------- ----------
Opening net book value 61,883 25,902 16,538 104,323
------------------------- ---------- ----------- --------- ----------
Exchange differences 1,234 1,157 1,783 4,174
------------------------- ---------- ----------- --------- ----------
Reclassification - (455) 455 -
------------------------- ---------- ----------- --------- ----------
Additions 20,342 7,682 2,191 30,215
------------------------- ---------- ----------- --------- ----------
Companies acquired 3 - 3,921 3,924
------------------------- ---------- ----------- --------- ----------
Companies disposed (3,590) - (187) (3,777)
------------------------- ---------- ----------- --------- ----------
Amortisation charge (19,813) (14,952) (2,131) (36,896)
------------------------- ---------- ----------- --------- ----------
Closing net book value 60,059 19,334 22,570 101,963
------------------------- ---------- ----------- --------- ----------
At 31 December 2016
------------------------- ---------- ----------- --------- ----------
Cost 175,155 61,424 33,573 270,152
------------------------- ---------- ----------- --------- ----------
Accumulated amortisation
and impairment (115,096) (42,090) (11,003) (168,189)
------------------------- ---------- ----------- --------- ----------
Closing net book value 60,059 19,334 22,570 101,963
------------------------- ---------- ----------- --------- ----------
At 31 December 2015
------------------------- ---------- ----------- --------- ----------
Cost 159,357 54,892 25,846 240,095
------------------------- ---------- ----------- --------- ----------
Accumulated amortisation
and impairment (97,474) (28,990) (9,308) (135,772)
------------------------- ---------- ----------- --------- ----------
Closing net book value 61,883 25,902 16,538 104,323
------------------------- ---------- ----------- --------- ----------
Additions to computer software during 2017 include GBP19,863,000
of capitalised costs in respect of internal developments (2016:
GBP18,097,000).
13. Property, plant and equipment
Land & Leasehold Furniture Motor
buildings improvements & equipment vehicles Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ---------- ------------- ------------ --------- ----------
At 31 December
2017
--------------------- ---------- ------------- ------------ --------- ----------
Opening net
book value 20 47,156 15,017 2,137 64,330
--------------------- ---------- ------------- ------------ --------- ----------
Exchange differences (1) (860) (542) (58) (1,461)
--------------------- ---------- ------------- ------------ --------- ----------
Additions - 7,623 10,677 827 19,127
--------------------- ---------- ------------- ------------ --------- ----------
Companies acquired - 60 356 122 538
--------------------- ---------- ------------- ------------ --------- ----------
Companies disposed - - (22) - (22)
--------------------- ---------- ------------- ------------ --------- ----------
Disposals - (415) (165) (559) (1,139)
--------------------- ---------- ------------- ------------ --------- ----------
Depreciation
charge - (6,075) (5,846) (807) (12,728)
--------------------- ---------- ------------- ------------ --------- ----------
Closing net
book value 19 47,489 19,475 1,662 68,645
--------------------- ---------- ------------- ------------ --------- ----------
At 31 December
2017
--------------------- ---------- ------------- ------------ --------- ----------
Cost 70 81,705 61,004 5,523 148,302
--------------------- ---------- ------------- ------------ --------- ----------
Accumulated
depreciation (51) (34,216) (41,529) (3,861) (79,657)
--------------------- ---------- ------------- ------------ --------- ----------
Closing net
book value 19 47,489 19,475 1,662 68,645
--------------------- ---------- ------------- ------------ --------- ----------
At 31 December
2016
--------------------- ---------- ------------- ------------ --------- ----------
Opening net
book value 18 46,035 14,618 2,496 63,167
--------------------- ---------- ------------- ------------ --------- ----------
Exchange differences 2 3,094 2,112 359 5,567
--------------------- ---------- ------------- ------------ --------- ----------
Additions - 4,667 3,955 934 9,556
--------------------- ---------- ------------- ------------ --------- ----------
Companies acquired - 66 116 69 251
--------------------- ---------- ------------- ------------ --------- ----------
Companies disposed - (377) (121) (269) (767)
--------------------- ---------- ------------- ------------ --------- ----------
Disposals - (168) (303) (447) (918)
--------------------- ---------- ------------- ------------ --------- ----------
Depreciation
charge - (6,161) (5,360) (1,005) (12,526)
--------------------- ---------- ------------- ------------ --------- ----------
Closing net
book value 20 47,156 15,017 2,137 64,330
--------------------- ---------- ------------- ------------ --------- ----------
At 31 December
2016
--------------------- ---------- ------------- ------------ --------- ----------
Cost 74 93,572 95,805 5,936 195,387
--------------------- ---------- ------------- ------------ --------- ----------
Accumulated
depreciation (54) (46,416) (80,788) (3,799) (131,057)
--------------------- ---------- ------------- ------------ --------- ----------
Closing net
book value 20 47,156 15,017 2,137 64,330
--------------------- ---------- ------------- ------------ --------- ----------
At 31 December
2015
--------------------- ---------- ------------- ------------ --------- ----------
Cost 63 88,093 88,076 5,769 182,001
--------------------- ---------- ------------- ------------ --------- ----------
Accumulated
depreciation (45) (42,058) (73,458) (3,273) (118,834)
--------------------- ---------- ------------- ------------ --------- ----------
Closing net
book value 18 46,035 14,618 2,496 63,167
--------------------- ---------- ------------- ------------ --------- ----------
The net book value of property, plant and equipment held under
finance leases is as follows:
2017 2016
GBP'000 GBP'000
---------------------------------------- -------- --------
Furniture, equipment and motor vehicles 405 777
---------------------------------------- -------- --------
14. Investments in associates
None of the associates are considered individually material to
the Group. A reconciliation of the summarised financial information
of the associates
is presented in aggregate below.
2017 2016
GBP'000 GBP'000
------------------------------------ -------- --------
Opening net assets 39,327 35,072
------------------------------------ -------- --------
Profit for the year 10,454 1,330
------------------------------------ -------- --------
Other comprehensive income 62 -
------------------------------------ -------- --------
Dividends (5,349) (4,592)
------------------------------------ -------- --------
Change in non-controlling interests (1,490) -
------------------------------------ -------- --------
Capital increase - 2,854
------------------------------------ -------- --------
Exchange differences 1,181 4,663
------------------------------------ -------- --------
Closing net assets 44,185 39,327
------------------------------------ -------- --------
Carrying value 53,055 50,928
------------------------------------ -------- --------
Subject to local regulations, the Group disposed of its Mexican
associate, Sterling Re Intermediaro de Reaseguro SA de CV, in
December 2017.
There are no contingent liabilities relating to the Group's
interest in any of its associates.
15. Available-for-sale and held-for-sale financial assets
Available-for-sale financial assets are categorised into one of
two categories:
Investments and deposits, consist mainly of fixed term deposits,
bonds and certificates of deposit. These investments are held at
fair value
and are classified between current and non-current assets
according to the maturity date.
Other investments include securities and other investments held
for strategic purposes and some debt instruments. The
investments
are held at fair value unless a fair value cannot be accurately
determined in which case they are held at cost less any provision
for impairment.
On 20 December 2017, the Group disposed of its 35.5% stake in
its Mexican associate, Sterling Re Intermediaro de Reaseguro, SA de
CV.
The disposal is subject to certain conditions to be satisfied in
the early part of 2018. The carrying value of the associate was
reduced to GBP189,000 which resulted in an impairment charge of
GBP537,000. The balance was then reclassified to held-for-sale
financial assets. Together with costs on disposal, the net loss was
GBP640,000.
On 20 December 2017, the Group disposed of its investment in
Lorant, Martinez, Salas y Compañia, Agentes de Seguros y de
Fianzas, S.A. de C.V.. Together with costs on disposal of
GBP22,000, the net gain was GBP2,168,000.
Other Investments
investments & deposits Total
------------------------------- ------------ ----------- ----------
GBP'000 GBP'000 GBP'000
------------------------------- ------------ ----------- ----------
At 1 January 2017 13,079 127,659 140,738
------------------------------- ------------ ----------- ----------
Exchange differences (498) (176) (674)
------------------------------- ------------ ----------- ----------
Additions - 115,258 115,258
------------------------------- ------------ ----------- ----------
Disposals/maturities (54) (121,855) (121,909)
------------------------------- ------------ ----------- ----------
Revaluation deficit (included
within equity) 58 45 103
------------------------------- ------------ ----------- ----------
Interest income 312 - 312
------------------------------- ------------ ----------- ----------
Amounts written off (1,890) - (1,890)
------------------------------- ------------ ----------- ----------
At 31 December 2017 11,007 120,931 131,938
------------------------------- ------------ ----------- ----------
Analysis of available-for-sale
financial assets
------------------------------- ------------ ----------- ----------
Current - 115,080 115,080
------------------------------- ------------ ----------- ----------
Non-current 11,007 5,851 16,858
------------------------------- ------------ ----------- ----------
At 31 December 2017 11,007 120,931 131,938
------------------------------- ------------ ----------- ----------
Analysis of available-for-sale
investments & deposits
------------------------------- ------------ ----------- ----------
Fiduciary funds 120,637
------------------------------- ------------ ----------- ----------
Own funds 294
------------------------------- ------------ ----------- ----------
At 31 December 2017 120,931
------------------------------- ------------ ----------- ----------
At 1 January 2016 6,436 9,049 15,485
------------------------------- ------------ ----------- ----------
Exchange differences 984 10,983 11,967
------------------------------- ------------ ----------- ----------
Additions - 107,636 107,636
------------------------------- ------------ ----------- ----------
Companies disposed 6,301 - 6,301
------------------------------- ------------ ----------- ----------
Disposals/maturities (311) (20) (331)
------------------------------- ------------ ----------- ----------
Revaluation deficit (included
within equity) - 11 11
------------------------------- ------------ ----------- ----------
Amounts written off (331) - (331)
------------------------------- ------------ ----------- ----------
At 31 December 2016 13,079 127,659 140,738
------------------------------- ------------ ----------- ----------
Analysis of available-for-sale
financial assets
------------------------------- ------------ ----------- ----------
Current - 116,933 116,933
------------------------------- ------------ ----------- ----------
Non-current 13,079 10,726 23,805
------------------------------- ------------ ----------- ----------
At 31 December 2016 13,079 127,659 140,738
------------------------------- ------------ ----------- ----------
Analysis of available-for-sale
investments & deposits
------------------------------- --------
Fiduciary funds 127,358
-------------------------------- --------
Own funds 301
-------------------------------- --------
At 31 December 2016 127,659
-------------------------------- --------
The credit quality of available-for-sale investments and
deposits is assessed by reference to external credit ratings, where
available, and other current and historical credit data including
counterparty default rates. This is summarised as follows:
2017 2016
------ -------- -------
GBP'000 GBP'000
------ -------- -------
AA 38,265 49,621
------ -------- -------
AA/A 37,828 37,297
------ -------- -------
A 24,074 19,932
------ -------- -------
BBB 19,319 20,809
------ -------- -------
Other 1,445 -
------ -------- -------
Total 120,931 127,659
------ -------- -------
16. Derivative financial instruments
At 31 December At 31 December
2017 2016
------------------------------ --------------------- ---------------------
Assets Liabilities Assets Liabilities
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ -------- ----------- -------- -----------
Interest rate swaps - fair
value hedges 14,366 (6,772) 32,740 (3,477)
------------------------------ -------- ----------- -------- -----------
Forward foreign exchange
contracts - cash flow hedges 73,748 (12,565) 92,233 (69,674)
------------------------------ -------- ----------- -------- -----------
Redemption liabilities -
option contracts - (76,444) - (29,637)
------------------------------ -------- ----------- -------- -----------
Total 88,114 (95,781) 124,973 (102,788)
------------------------------ -------- ----------- -------- -----------
Current 5,545 (10,265) 7,930 (33,136)
------------------------------ -------- ----------- -------- -----------
Non-current 82,569 (85,516) 117,043 (69,652)
------------------------------ -------- ----------- -------- -----------
Total 88,114 (95,781) 124,973 (102,788)
------------------------------ -------- ----------- -------- -----------
The credit quality of counterparties with whom derivative
financial assets are held is assessed by reference to external
credit ratings, where available, and other current and historical
credit data including counterparty default rates. This is
summarised as follows:
2017 2016
GBP'000 GBP'000
------ -------- --------
AA 43,249 73,169
------ -------- --------
AA/A 12,591 9,374
------ -------- --------
BBB 32,274 42,430
------ -------- --------
Total 88,114 124,973
------ -------- --------
Maturity analysis
The table below analyses the Group's derivative financial
instruments, which will be settled on a gross basis, into relevant
maturity groupings based upon the remaining period at the balance
sheet date to contractual maturity. The amounts disclosed are the
contractual undiscounted cash flows.
Less Less
than than
1 year 1 year
At 31 December 2017 GBP'000 GBP'000
----------------------------------- ---------- ----------
Forward foreign exchange contracts
----------------------------------- ---------- ----------
Outflow (419,163) (687,604)
----------------------------------- ---------- ----------
Inflow 412,414 746,287
----------------------------------- ---------- ----------
Less Less
than than
1 year 1 year
At 31 December 2016 GBP'000 GBP'000
----------------------------------- ---------- ----------
Forward foreign exchange contracts
----------------------------------- ---------- ----------
Outflow (477,260) (719,936)
----------------------------------- ---------- ----------
Inflow 443,578 755,747
----------------------------------- ---------- ----------
The Group's treasury policies are approved by the Board and are
implemented by a centralised treasury department. The treasury
department operates within a framework of policies and procedures
that establish specific guidelines to manage currency risk,
liquidity risk and interest rate risk and the use of counterparties
and financial instruments to manage these risks. The treasury
department is subject to periodic review by internal audit.
The Group uses various derivative instruments including forward
foreign exchange contracts, interest rate swaps and, from time to
time, foreign currency collars and options to manage the risks
arising from variations in currency and interest rates. Derivative
instruments purchased are primarily denominated in the currencies
of the Group's main markets.
Where forward foreign exchange contracts have been entered into
to manage currency risk, they are designated as hedges of currency
risk on specific future cash flows, and qualify as highly probable
transactions for which hedge accounting is applied. The Group
anticipates that hedge accounting requirements will continue to be
met on its foreign currency and interest rate hedging activities
and that no material ineffectiveness will arise which will result
in gains or losses being recognised through the income
statement.
The fair value of financial derivatives based upon market values
as at 31 December 2017 and designated as effective cash flow hedges
was a net asset of GBP61.2 million and has been deferred in equity
(2016: net asset of GBP22.6 million). Gains and losses arising on
derivative instruments outstanding as at 31 December 2017 will be
released to the income statement at various dates up to:
i) 38 months in respect of cash flow hedges on currency
denominated UK earnings.
ii) 12 years in respect of specific hedges on USD denominated
long-term debt drawn under the Group's USD private placement
programme.
iii) 8 years in respect of interest rate hedges on Sterling
denominated long term debt drawn under the Group's private
placement programme.
No material amounts were transferred to the income statement
during the year in respect of the fair value
of financial derivatives.
Transactions maturing within 12 months of the balance sheet date
are classified in current maturities. Transactions maturing in a
period in excess of 12 months of the balance sheet date are
classified in non-current maturities.
a) Forward foreign exchange contracts
The Group's major currency transaction exposure arises in USD
and the Group continues to adopt a prudent approach in actively
managing this exposure. As at 31 December 2017 the Group had
outstanding foreign exchange contracts, principally in USD,
amounting to a principal value of GBP1,158,701,000 (2016:
GBP1,199,325,000).
As a guide, each USD 1 cent movement in the achieved rate
(taking into account the hedges in place) currently translates into
a change of approximately GBP1.8 million in revenue, with a
corresponding impact on trading profit equal to approximately 70%
of the revenue change.
b) Interest rate swaps
The Group uses interest rate hedges, principally interest rate
swaps, to mitigate the impact of changes in interest rates. The
notional principal amount of outstanding cross currency interest
rate swaps as at 31 December 2017 was USD458,000,000 and
GBP75,000,000 (2016: USD500,000,000 and GBP75,000,000). A net gain
of GBP7.6 million (2016: net gain GBP29.3 million) on these
instruments was offset by a fair value loss of GBP7.6 million
(2016: loss GBP29.3 million) on the private placement loans, both
of which were recognised in the income statement in the year.
c) Redemption liabilities
The redemption liabilities represent the valuation of the put
options provided in the shareholders agreements of JLT Specialty
Insurance Services Inc., JLT Sigorta ve Reasurans Brokerligi Ltd
Sirketi, JLT SCK Corretora e Administradora de Seguros Ltda and
Construction Risk Partners LLC. Fair value of these liabilities
resulted in a gain of GBP1.1 million which was recognised in the
income statement in the year.
The redemption liability increased in the year following the
recognition of put option liabilities. These are detailed as
follows:
a) options provided in the operating agreement of CRP Holding
Company LLC for GBP47,941,000.
b) options in respect of new shareholders in JLT Specialty
Insurance Services Inc. for GBP284,000.
The recognition of those liabilities resulted in a reduction in
equity, related to transactions with non-controlling interest of
GBP48,225,000.
d) Price risk
The Group does not have a material exposure
to commodity price risk.
The maximum exposure to credit risk at the reporting
date is the fair value of the derivatives on the balance
sheet.
17. Trade and other receivables
2017 2016
GBP'000 GBP'000
---------------------------------------- --------- ---------
Trade receivables 438,178 440,941
---------------------------------------- --------- ---------
Less: provision for impairment of trade
receivables (18,175) (20,961)
---------------------------------------- --------- ---------
Trade receivables - net 420,003 419,980
---------------------------------------- --------- ---------
Other receivables 163,336 143,703
---------------------------------------- --------- ---------
Prepayments 27,167 24,957
---------------------------------------- --------- ---------
610,506 588,640
---------------------------------------- --------- ---------
As at 31 December 2017, the Group had exposures to individual
trade counterparties within trade receivables. In accordance with
Group policy, Group operating companies continually monitor
exposures against credit limits and concentrations of risk. No
individual trade counterparty credit exposure is considered
significant in the ordinary course of trading activity. Management
does not expect any significant losses from non-payment by trade
counterparties that have not been provided for.
Movements on the Group's provision for impairment of trade
receivables are as follows:
2017 2016
GBP'000 GBP'000
----------------------------------- --------- ---------
At 1 January (20,961) (15,018)
----------------------------------- --------- ---------
Currency translation adjustments 1,038 (1,483)
----------------------------------- --------- ---------
Companies acquired (102) (243)
----------------------------------- --------- ---------
Provisions for impairment of trade
receivables (4,402) (8,355)
----------------------------------- --------- ---------
Receivables written off during the
year as uncollectible 2,160 2,980
----------------------------------- --------- ---------
Unused amounts reversed 4,092 1,158
----------------------------------- --------- ---------
At 31 December (18,175) (20,961)
----------------------------------- --------- ---------
The creation and release of provisions for impaired trade
receivables have been included in 'Other operating costs' in the
income statement.
The other classes within trade and other receivables do not
contain impaired assets. The maximum exposure to credit risk at the
reporting
date is the carrying value of each class of receivables
mentioned above. The Group does not hold any collateral as
security.
The following table sets out details of the age of trade
receivables that are not overdue as well as an analysis of overdue
amounts impaired
and provided for.
Provision
Trade for Net trade
receivables impairment receivables
At 31 December 2017 GBP'000 GBP'000 GBP'000
-------------------------------- ------------ ----------- ------------
Not overdue 309,691 - 309,691
-------------------------------- ------------ ----------- ------------
Past due not more than three
months 88,220 (53) 88,167
-------------------------------- ------------ ----------- ------------
Past due more than three months
and not more than six months 21,668 (2,514) 19,154
-------------------------------- ------------ ----------- ------------
Past due more than six months
and not more than one year 7,916 (4,925) 2,991
-------------------------------- ------------ ----------- ------------
Past due more than one year 10,683 (10,683) -
-------------------------------- ------------ ----------- ------------
438,178 (18,175) 420,003
-------------------------------- ------------ ----------- ------------
Provision
Trade for Net trade
receivables impairment receivables
At 31 December 2016 GBP'000 GBP'000 GBP'000
-------------------------------- ------------ ----------- ------------
Not overdue 324,227 - 324,227
-------------------------------- ------------ ----------- ------------
Past due not more than three
months 75,419 (805) 74,614
-------------------------------- ------------ ----------- ------------
Past due more than three months
and not more than six months 16,797 (2,377) 14,420
-------------------------------- ------------ ----------- ------------
Past due more than six months
and not more than one year 12,684 (5,965) 6,719
-------------------------------- ------------ ----------- ------------
Past due more than one year 11,814 (11,814) -
-------------------------------- ------------ ----------- ------------
440,941 (20,961) 419,980
-------------------------------- ------------ ----------- ------------
18. Cash and cash equivalents
2017 2016
GBP'000 GBP'000
------------------------- ---------- --------
Cash at bank and in hand 563,691 514,474
------------------------- ---------- --------
Short-term bank deposits 451,396 425,471
------------------------- ---------- --------
1,015,087 939,945
------------------------- ---------- --------
Fiduciary funds 811,247 748,628
------------------------- ---------- --------
Own funds 203,840 191,317
------------------------- ---------- --------
1,015,087 939,945
------------------------- ---------- --------
Fiduciary funds represent client money held in the form of
premiums due to underwriters, claims paid by insurers and due to
policyholders,
and funds held to defray commissions and other income. Fiduciary
funds are not available for general corporate purposes.
The credit quality of cash at bank and in hand and short-term
deposits is assessed by reference to external credit ratings where
available
and other current and historical credit data including
counterparty default rates. This is summarised as follows:
2017 2016
GBP'000 GBP'000
------------- ---------------------- ------------------
AAA 12,739 10,685
------------- ---------------------- ------------------
AA 373,163 318,613
------------- ---------------------- ------------------
AA/A 129,869 125,247
------------- ---------------------- ------------------
A 129,577 146,111
------------- ---------------------- ------------------
BBB 346,761 322,953
------------- ---------------------- ------------------
Other 22,978 16,336
------------- ---------------------- ------------------
Total 1,015,087 939,945
------------- ---------------------- ------------------
The effective interest rate in respect of short-term
deposits was 1.20% (2016: 0.94%). These deposits
have an average maturity of 14 days
(2016: 16 days).
19. Trade and other payables
2017 2016
Current GBP'000 GBP'000
-------------------------------------- ---------- ----------
Insurance payables 931,884 875,986
-------------------------------------- ---------- ----------
Social security and other taxes 20,706 18,735
-------------------------------------- ---------- ----------
Other payables 89,165 108,185
-------------------------------------- ---------- ----------
Accruals and deferred income 208,321 191,180
-------------------------------------- ---------- ----------
Deferred and contingent consideration 5,998 6,311
-------------------------------------- ---------- ----------
1,256,074 1,200,397
-------------------------------------- ---------- ----------
2017 2016
------------------------------------------------- -------- -------
Non-current GBP'000 GBP'000
------------------------------------------------- -------- -------
Other payables 35,352 36,199
------------------------------------------------- -------- -------
Deferred and contingent consideration 14,123 21,186
------------------------------------------------- -------- -------
49,475 57,385
------------------------------------------------- -------- -------
We have reclassified GBP53,772,000 of accruals
from other payables to accruals and deferred
income in 2016. In 2017, the rent free accrual
within other payables and deferred and contingent
consideration has been split between current
and non-current liabilities. The trade and
other payables include GBP147,675,000 of non-financial
liabilities (2016: GBP134,587,000).
----------------------------------------------------------- -------
20. Financial instruments by category
The accounting policies for financial instruments have been
applied to the line items below:
Derivatives
used
Loans for Available-
At 31 December 2017 and receivables hedging for-sale Total
--------------------------------- ---------------- ----------- ---------- ----------
Assets per balance sheet GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- ---------------- ----------- ---------- ----------
Available-for-sale financial
assets - - 131,938 131,938
--------------------------------- ---------------- ----------- ---------- ----------
Held-for-sale financial
assets - - 189 189
--------------------------------- ---------------- ----------- ---------- ----------
Derivative financial instruments - 88,114 - 88,114
--------------------------------- ---------------- ----------- ---------- ----------
Trade and other receivables
(a) 583,339 - - 583,339
--------------------------------- ---------------- ----------- ---------- ----------
Cash and cash equivalents 1,015,087 - - 1,015,087
--------------------------------- ---------------- ----------- ---------- ----------
Total 1,598,426 88,114 132,127 1,818,667
--------------------------------- ---------------- ----------- ---------- ----------
Derivatives
used Other
for financial
hedging liabilities Total
--------------------------------- ----------- ------------ ------------
Liabilities per balance
sheet GBP'000 GBP'000 GBP'000
--------------------------------- ----------- ------------ ------------
Borrowings - (710,098) (710,098)
---------------------------------- ----------- ------------ ------------
Trade and other payables
(b) - (1,157,874) (1,157,874)
---------------------------------- ----------- ------------ ------------
Redemption liabilities
- option contracts (76,444) - (76,444)
---------------------------------- ----------- ------------ ------------
Derivative financial instruments (19,337) - (19,337)
---------------------------------- ----------- ------------ ------------
Total (95,781) (1,867,972) (1,963,753)
---------------------------------- ----------- ------------ ------------
Derivatives
used
Loans for Available-
At 31 December 2016 and receivables hedging for-sale Total
--------------------------------- ---------------- ----------- ---------- ----------
Assets per balance sheet GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- ---------------- ----------- ---------- ----------
Available-for-sale financial
assets - - 140,738 140,738
--------------------------------- ---------------- ----------- ---------- ----------
Derivative financial instruments - 124,973 - 124,973
--------------------------------- ---------------- ----------- ---------- ----------
Trade and other receivables
(a) 563,683 - - 563,683
--------------------------------- ---------------- ----------- ---------- ----------
Cash and cash equivalents 939,945 - - 939,945
--------------------------------- ---------------- ----------- ---------- ----------
Total 1,503,628 124,973 140,738 1,769,339
--------------------------------- ---------------- ----------- ---------- ----------
Derivatives
used Other
for financial
hedging liabilities Total
--------------------------------- ----------- ------------ ------------
Liabilities per balance
sheet GBP'000 GBP'000 GBP'000
--------------------------------- ----------- ------------ ------------
Borrowings - (687,832) (687,832)
---------------------------------- ----------- ------------ ------------
Trade and other payables
(b) - (1,123,195) (1,123,195)
---------------------------------- ----------- ------------ ------------
Redemption liabilities
- option contracts (29,637) - (29,637)
---------------------------------- ----------- ------------ ------------
Derivative financial instruments (73,151) - (73,151)
---------------------------------- ----------- ------------ ------------
Total (102,788) (1,811,027) (1,913,815)
---------------------------------- ----------- ------------ ------------
(a) Prepayments are excluded from the trade and other
receivables balance, as this analysis is required only for
financial instruments.
(b) Non-financial liabilities are excluded from the trade and
other payables balance, as this analysis is required only for
financial instruments.
The following table presents the Group's financial assets and
liabilities that are measured at fair value at 31 December
2017.
Level Level Level
1 2 3 Total
------------------------------- -------- --------- --------- ----------
At 31 December 2017 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- -------- --------- --------- ----------
Assets
------------------------------- -------- --------- --------- ----------
Derivatives used for hedging - 88,114 - 88,114
------------------------------- -------- --------- --------- ----------
Available-for-sale financial
assets
------------------------------- -------- --------- --------- ----------
- equity securities - - 963 963
------------------------------- -------- --------- --------- ----------
- debt investments - - 10,044 10,044
------------------------------- -------- --------- --------- ----------
- fixed deposits 120,931 - - 120,931
------------------------------- -------- --------- --------- ----------
Held-for-sale financial assets - - 189 189
------------------------------- -------- --------- --------- ----------
Total 120,931 88,114 11,196 220,241
------------------------------- -------- --------- --------- ----------
Liabilities
------------------------------- -------- --------- --------- ----------
Contingent consideration - - (13,280) (13,280)
------------------------------- -------- --------- --------- ----------
Redemption liabilities -
option contracts - - (76,444) (76,444)
------------------------------- -------- --------- --------- ----------
Derivatives used for hedging - (19,337) - (19,337)
------------------------------- -------- --------- --------- ----------
Total - (19,337) (89,724) (109,061)
------------------------------- -------- --------- --------- ----------
Level Level Level
1 2 3 Total
At 31 December 2016 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- --------- --------- ----------
Assets
----------------------------- -------- --------- --------- ----------
Derivatives used for hedging - 124,973 - 124,973
----------------------------- -------- --------- --------- ----------
Available-for-sale financial
assets
----------------------------- -------- --------- --------- ----------
- equity securities - - 1,115 1,115
----------------------------- -------- --------- --------- ----------
- debt investments - - 11,964 11,964
----------------------------- -------- --------- --------- ----------
- fixed deposits 127,659 - - 127,659
----------------------------- -------- --------- --------- ----------
Total 127,659 124,973 13,079 265,711
----------------------------- -------- --------- --------- ----------
Liabilities
----------------------------- -------- --------- --------- ----------
Contingent consideration - - (18,898) (18,898)
----------------------------- -------- --------- --------- ----------
Redemption liabilities -
option contracts - - (29,637) (29,637)
----------------------------- -------- --------- --------- ----------
Derivatives used for hedging - (73,151) - (73,151)
----------------------------- -------- --------- --------- ----------
Total - (73,151) (48,535) (121,686)
----------------------------- -------- --------- --------- ----------
Apart from where disclosed, there are no differences between the
fair value and the carrying value of financial assets and
liabilities.
Instruments included in level 1 are financial instruments traded
in active markets for which the fair value is based upon quoted
market prices at the balance sheet date. A market is regarded as
active if quoted prices are readily and regularly available from an
exchange, dealer, broker, industry group, pricing service, or
regulatory agency and those prices represent actual and regularly
occurring market transactions on an arm's-length basis.
Instruments included in level 2 are financial instruments that
are not traded in an active market (for example, over-the-counter
derivatives) and for which the fair value is determined by using
internal and external models. These models maximise the use of
observable market data where it is available and rely as little as
possible on entity specific estimates. If all significant inputs
required to measure the fair value of an instrument are observable,
the instrument is included in level 2. Level 2 includes derivatives
used for hedging, which are valued using a discounted cash flow
methodology incorporating observable market forward foreign
exchange and interest rates.
During the year there were no transfers between level 1 and
level 2. There were no changes in valuation techniques during the
year.
Instruments included in level 3 are financial instruments for
which one or more of the significant inputs is not based on
observable market data. In respect of deferred and contingent
consideration and redemption liabilities - option contracts,
unobservable inputs include management's assessment of the expected
future performance of relevant acquired businesses and are valued
using a discounted cash flow methodology.
A 1% movement in the discount rate applied in the calculation of
the redemption liability in respect of Construction Risk Partners
LLC,
the largest item within the redemption liability, would result
in a change of the overall redemption liability of 6%.
A reconciliation of the movements in level 3 is provided
below:
Assets Liabilities
Level Level
3 3
GBP'000 GBP'000
---------------------------------- -------- -----------
At 1 January 2017 13,079 (48,535)
------------------------------------ -------- -----------
Exchange differences (498) 5,645
------------------------------------ -------- -----------
Companies acquired - (49,757)
------------------------------------ -------- -----------
Utilised in the year (54) 3,969
------------------------------------ -------- -----------
Reclassification from associates
to held-for-sale 189 -
---------------------------------- -------- -----------
Revaluation gain (included
within equity) 58 -
---------------------------------- -------- -----------
Charged to income statement (1,578) (1,046)
------------------------------------ -------- -----------
At 31 December 2017 11,196 (89,724)
------------------------------------ -------- -----------
Of the GBP1,046,000 charged to the income statement,
GBP4,967,000 is charged to net finance costs and
GBP3,921,000 is credited to other operating costs
-----------------------------------------------------------
21. Borrowings
----------------------------------------------
2017 2016
GBP'000 GBP'000
-------------------------- -------- --------
Current
-------------------------- -------- --------
Bank overdraft 19,055 18,223
-------------------------- -------- --------
Unsecured loan notes - 35,980
-------------------------- -------- --------
Bank borrowings - 243
-------------------------- -------- --------
Finance lease liabilities 171 283
-------------------------- -------- --------
19,226 54,729
-------------------------- -------- --------
Non-current
-------------------------- -------- --------
Unsecured loan notes 420,472 471,975
-------------------------- -------- --------
Bank borrowing 270,142 160,629
-------------------------- -------- --------
Finance lease liabilities 258 499
-------------------------- -------- --------
690,872 633,103
-------------------------- -------- --------
Total borrowings 710,098 687,832
-------------------------- -------- --------
The borrowings include secured liabilities (finance leases) of
GBP429,000 (2016: GBP782,000).
The exposure of the borrowings of the Group to interest rate
changes and the periods in which the borrowings re-price are as
follows:
6 months 6-12 1-5 Over Fixed
or less months years 5 years rate Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- -------- -------- -------- -------- --------
At 31 December
2017 660,339 - - - 49,759 710,098
--------------- -------- -------- -------- -------- -------- --------
At 31 December
2016 632,035 243 - - 55,554 687,832
--------------- -------- -------- -------- -------- -------- --------
The effective interest rates at the balance sheet date were as
follows:
2017 2016
GBP'000 GBP'000
----------------------------------------- -------- --------
Bank overdraft - -
----------------------------------------- -------- --------
Unsecured loan notes - private placement 2.61% 2.69%
----------------------------------------- -------- --------
Bank borrowings 1.54% 1.34%
----------------------------------------- -------- --------
Finance lease liabilities 5.06% 9.96%
----------------------------------------- -------- --------
During 2017 and 2016 there was no interest charge
on bank overdrafts. Interest is charged only to
the extent that overdraft balances exceed the deposits
held with the bank.
-------------------------------------------------------------
Maturity of non-current borrowings (excluding finance
lease liabilities):
------------------------------------------------------------
2017 2016
GBP'000 GBP'000
--------------------------------- ------------ -----------
Between 1 and 2 years - -
--------------------------------- ------------ -----------
Between 2 and 3 years 61,816 2
--------------------------------- ------------ -----------
Between 3 and 4 years - 67,386
--------------------------------- ------------ -----------
Between 4 and 5 years 300,962 160,626
--------------------------------- ------------ -----------
Over 5 years 327,836 404,590
--------------------------------- ------------ -----------
690,614 632,604
--------------------------------- ------------ -----------
Finance lease liabilities - minimum lease payments:
2017 2016
GBP'000 GBP'000
------------------------------------------- -------- --------
No later than 1 year 193 337
------------------------------------------- -------- --------
Later than 1 year and no later than
2 years 93 268
------------------------------------------- -------- --------
Later than 2 years and no later than
3 years 54 173
------------------------------------------- -------- --------
Later than 3 years and no later than
4 years 48 78
------------------------------------------- -------- --------
Later than 4 years and no later than
5 years 36 32
------------------------------------------- -------- --------
Later than 5 years 52 -
------------------------------------------- -------- --------
476 888
------------------------------------------- -------- --------
Future finance charges on finance leases (47) (106)
------------------------------------------- -------- --------
Present value of finance lease liabilities 429 782
------------------------------------------- -------- --------
The present value of finance lease liabilities is as
follows:
2017 2016
GBP'000 GBP'000
------------------------------------- -------- --------
No later than 1 year 171 283
------------------------------------- -------- --------
Later than 1 year and no later than
2 years 85 233
------------------------------------- -------- --------
Later than 2 years and no later than
3 years 47 161
------------------------------------- -------- --------
Later than 3 years and no later than
4 years 43 74
------------------------------------- -------- --------
Later than 4 years and no later than
5 years 33 31
------------------------------------- -------- --------
Later than 5 years 50 -
------------------------------------- -------- --------
429 782
------------------------------------- -------- --------
Lease liabilities are effectively secured as the rights to the
leased assets revert to the lessor in the event of default.
The carrying amount of the Group's borrowings are
denominated in the following currencies:
------------------------------------------------------
2017 2016
GBP'000 GBP'000
-------------------------- ------------ ------------
Sterling 372,866 264,657
-------------------------- ------------ ------------
US Dollar 335,829 422,148
-------------------------- ------------ ------------
Other currencies 1,403 1,027
-------------------------- ------------ ------------
710,098 687,832
-------------------------- ------------ ------------
Borrowing facilities
The Group has undrawn committed borrowing facilities of:
2017 2016
GBP'000 GBP'000
---------------------------- -------- --------
Floating rate
---------------------------- -------- --------
- expiring beyond one year 229,000 337,000
---------------------------- -------- --------
Facilities expiring beyond one year relate to:
a) The committed unsecured GBP500 million revolving credit
facilities in the name of JIB Group Limited which matures in
February 2022. As at the balance sheet date, drawings under the
revolving credit facilities are subject to a margin and fees of 115
basis points above the relevant LIBOR interest rate and additional
commitment fees on the undrawn facility.
b) Senior unsecured loan notes totalling USD 83 million issued
by JIB Group Limited under the Group's 2010 private placement
programme with maturities of USD 42 million (GBP31.0 million) in
September 2020 with a coupon of 5.59% and USD 41 million (GBP30.3
million) in September 2022 with a coupon of 5.69%. Drawings under
the Group's private placement programme are swapped into Sterling
floating and are subject to an equivalent spread over LIBOR of
between 227 and 238 basis points.
c) Senior unsecured loan notes totalling USD 250 million issued
by JIB Group Limited under the Group's 2012 private placement
programme with maturities of USD 40 million (GBP29.5 million) in
January 2020 with a coupon of 3.21%, USD 140 million (GBP103.4
million) in January 2023 with a coupon of 3.78% and USD 70 million
(GBP51.7 million) in January 2025 with a coupon of 3.93%. The
proceeds of this placement have been swapped into Sterling at fixed
and LIBOR based floating rates and are subject to an equivalent
spread over LIBOR of between 205 and 220 basis points.
d) Senior unsecured loan notes totalling GBP75 million issued by
JIB Group Limited under the Group's April 2014 private placement
programme maturing in April 2026 with a coupon of 4.27%. The
proceeds of this placement have been swapped into LIBOR based
floating rates and are subject to an equivalent spread over LIBOR
of 150 basis points.
e) Senior unsecured loan notes totalling USD 125 million issued
by JIB Group Limited under the Group's October 2014 private
placement programme with maturities of USD 62.5 million (GBP46.1
million) in October 2026 with a coupon of 3.93% and USD 62.5
million (GBP46.1 million) in October 2029 with a coupon of 4.13%.
The proceeds of this private placement in October 2014 have been
swapped into Sterling at LIBOR based floating rates and are subject
to an equivalent spread over LIBOR of between 146 and 157 basis
points.
The terms and conditions of the Group's facilities include
common debt and interest cover covenants with which the Group
expects to continue
to comply.
Liquidity risk
Liquidity risk arises from an inability to maintain an optimal
cost of capital or meet the short term financial demands of the
business.
The Group has implemented the following steps to mitigate the
risk:
- Management reviews of business unit balance sheets and cash
flows
- Maintenance of committed credit facilities
- Compliance with regulatory minimum capital requirements and
regular stress testing
- Maintenance of a conservative funding profile.
22. Deferred income taxes
Deferred income tax assets and liabilities are offset when there
is a legally enforceable right to set off current tax assets
against current tax liabilities and when the deferred income taxes
relate to the same fiscal authority.
The following amounts, determined after appropriate offsetting,
are shown in the consolidated balance sheet.
Assets Liabilities Net
------------------ -------------------- ------------------
2017 2016 2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- -------- --------- --------- -------- --------
Property, plant and
equipment 2,095 1,555 (374) (554) 1,721 1,001
-----------------------------
Provisions 10,652 15,937 (990) (5,273) 9,662 10,664
-----------------------------
Losses 2,123 1,858 - - 2,123 1,858
----------------------------- --------
Deferred income 421 879 (5,770) (5,386) (5,349) (4,507)
----------------------------- --------
Other intangibles 3,740 3,052 (1,150) (616) 2,590 2,436
----------------------------- --------
Goodwill 560 298 (3,182) (3,046) (2,622) (2,748)
----------------------------- --------
Other 1,809 3,407 (1,660) (1,826) 149 1,581
----------------------------- --------
Pensions 27,709 32,532 (23) (131) 27,686 32,401
----------------------------- --------
Share based payments 8,785 4,858 - - 8,785 4,858
----------------------------- --------
Fair values - 11,166 (1,890) - (1,890) 11,166
----------------------------- -------- -------- --------- --------- -------- --------
Tax assets/(liabilities) 57,894 75,542 (15,039) (16,832) 42,855 58,710
----------------------------- --------
Set-off of tax (3,628) (5,454) 3,628 5,454 - -
----------------------------- -------- -------- --------- --------- -------- --------
Net tax assets/(liabilities) 54,266 70,088 (11,411) (11,378) 42,855 58,710
----------------------------- -------- -------- --------- --------- -------- --------
The majority of the deferred tax is not expected to reverse
within 12 months.
The reconciliation in movements of net tax assets is provided
below:
At 1 Credit/ Credit/ Acquisitions/ At 31
January Exchange (charge) (charge) disposals December
2017 differences to income to equity of sub 2017
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------- ------------ ---------- ---------- ------------- ---------
Accelerated tax
depreciation 1,001 (56) 779 - (3) 1,721
--------------------- -------- ------------ ---------- ---------- ------------- ---------
Provisions 10,664 (340) (662) - - 9,662
--------------------- -------- ------------ ---------- ---------- ------------- ---------
Losses 1,858 231 34 - - 2,123
--------------------- -------- ------------ ---------- ---------- ------------- ---------
Deferred income (4,507) (442) (407) - 7 (5,349)
--------------------- -------- ------------ ---------- ---------- ------------- ---------
Other intangibles 2,436 (62) 510 - (294) 2,590
--------------------- -------- ------------ ---------- ---------- ------------- ---------
Goodwill (2,748) 21 105 - - (2,622)
--------------------- -------- ------------ ---------- ---------- ------------- ---------
Other 1,581 (1,310) (122) - - 149
--------------------- -------- ------------ ---------- ---------- ------------- ---------
Pensions 32,401 11 916 (5,857) 215 27,686
--------------------- ---------
Share based payments 4,858 563 908 2,456 - 8,785
--------------------- -------- ------------ ---------- ---------- ------------- ---------
Fair values 11,166 - - (13,056) - (1,890)
--------------------- -------- ------------ ---------- ---------- ------------- ---------
Net tax assets 58,710 (1,384) 2,061 (16,457) (75) 42,855
--------------------- -------- ------------ ---------- ---------- ------------- ---------
The total current and deferred income tax charged to equity
during the year is as follows:
At 1 January Credit/(charge) At 31 December
2017 to equity 2017
GBP'000 GBP'000 GBP'000
--------------------- ------------ --------------- --------------
Pensions 46,201 (2,599) 43,602
--------------------- ------------ --------------- --------------
Share based payments 11,811 2,980 14,791
--------------------- ------------ --------------- --------------
Foreign Exchange - (2,929) (2,929)
--------------------- ------------ --------------- --------------
Fair values:
--------------------- ------------ --------------- --------------
- foreign exchange 13,180 (13,039) 141
- available-for-sale 169 (17) 152
13,349 (13,056) 293
71,361 (15,604) 55,757
Deferred tax assets are recognised to the extent that the
realisation of the related tax benefits through the future taxable
profits is considered probable. A deferred tax asset relating to
tax losses of GBP14,030,000 (2016: GBP14,340,000) has not been
recognised in the balance sheet in respect of certain of the
Group's operations, principally US, China, Singapore and Japan,
where it is considered likely that the losses will expire before
use or are unlikely to be realised in the short term. A deferred
tax asset relating to other deferred tax balances of GBP6,853,000
(2016: GBP7,473,000) has not been recognised in the balance sheet
in respect of certain of the Group's overseas operations,
principally the US, where it is considered that the asset is
unlikely to be realised in the short term. Following the recent US
tax reform the federal tax rate has reduced from 35% to 21%, the
non recognised deferred tax assets in relation to the US have been
calculated using the reduced rate of 21%.
Deferred tax liabilities have not been recognised on temporary
differences of GBP136 million (2016: GBP124 million) representing
the unremitted earnings of subsidiaries and joint ventures. Such
amounts are permanently reinvested. Deferred tax liabilities have
not been recognised on temporary differences of nil (2016: nil)
representing unremitted earnings of associates.
23. PROVISIONS FOR LIABILITIES AND CHARGES
Property
related Litigation
provisions provisions Other Total
GBP'000 GBP'000 GBP'000 GBP'000
----------- ----------- -------- ---------
At 1 January 2017 2,919 7,442 36 10,397
----------- ----------- -------- ---------
Exchange adjustment (57) (69) - (126)
----------- ----------- -------- ---------
Utilised in the year (970) (9,208) - (10,178)
----------- ----------- -------- ---------
(Credited)/charged to the income statement (124) 7,794 - 7,670
----------- ----------- -------- ---------
Interest charge 56 - - 56
----------- ----------- -------- ---------
Reclassification 250 (66) - 184
----------- ----------- -------- ---------
Companies acquired 30 381 - 411
----------- ----------- -------- ---------
At 31 December 2017 2,104 6,274 36 8,414
----------- ----------- -------- ---------
At 1 January 2016 1,300 18,223 114 19,637
------ --------- ----- ---------
Exchange differences 94 230 - 324
------ --------- ----- ---------
Utilised in the year (349) (16,328) - (16,677)
------ --------- ----- ---------
Charged/(credited) to the income statement 1,984 5,326 (78) 7,232
------ --------- ----- ---------
Companies disposed (110) (9) - (119)
At 31 December 2016 2,919 7,442 36 10,397
------ --------- ----- ---------
2017 2016
GBP'000 GBP'000
Analysis of total provisions
-------- --------
Current - to be utilised within one year 6,865 8,826
-------- --------
Non-current - to be utilised in more than one year 1,549 1,571
-------- --------
8,414 10,397
--------------------------------------------------- -------- --------
Property related provisions
The Group recognises a provision for onerous contracts when the
expected benefits to be derived from a contract are less than the
unavoidable costs of meeting the obligations under the contract.
Provision is made for the future rental cost of vacant property and
expected dilapidation expenses. In calculating the provision
required, account is taken of the duration of the lease and any
recovery of cost achievable from subletting. Property provisions
occur principally in the US and UK and relate to a variety of lease
commitments. The longest lease term expires in 2026.
Litigation provisions
At any point in time the Group can be involved in a variety of
litigation, regulatory and other government authorities
investigations and disputes around the world. A provision is
established in respect of such issues when it is probable that the
liability has been incurred and the amount of the liability can be
reasonably estimated. The Group analyses its litigation exposures
based on available information, including external legal
consultation where appropriate, to assess its potential liability.
Where appropriate the Group also provides for the cost of defending
or initiating such matters. However, the final outcome could differ
materially from the amount provided.
Where a litigation provision has been made it is stated gross of
any third party recovery. All such recoveries are included as
"Other receivables" within trade and other receivables. At 31
December 2017, in connection with certain litigation matters, the
Group's litigation provisions include an amount of GBP0.1million
(2016: GBP0.1million) to reflect this gross basis and the
corresponding insurance recovery has been included within trade and
other receivables. This presentation has had no effect on the
consolidated income statement for the year ended 31 December 2017
(2016: nil).
Other
Other provisions include provisions for clawback of commission
which arises on certain types of Employee Benefits contracts.
24. SHARE CAPITAL AND PREMIUM
Ordinary Share
Number shares premium Total
of shares GBP'000 GBP'000 GBP'000
------------ -------- -------- --------
Allotted, called up and fully paid
------------ -------- -------- --------
At 1 January 2016 220,171,007 11,008 104,074 115,082
----------------------------------- ------------ -------- -------- --------
Issued during the year 10,000 - 37 37
----------------------------------- ------------ -------- -------- --------
At 31 December 2016 220,181,007 11,008 104,111 115,119
----------------------------------- ------------ -------- -------- --------
Issued during the year - - - -
----------------------------------- ------------ -------- -------- --------
At 31 December 2017 220,181,007 11,008 104,111 115,119
----------------------------------- ------------ -------- -------- --------
Ordinary shares carry rights to dividends, voting and proceeds
on winding up and have a par value of GBP0.05.
During the year the Company issued nil (2016: 10,000) ordinary
shares for a consideration of nil (2016: GBP38,250) following
exercises by executives of options held under the Jardine Lloyd
Thompson Group plc Executive Share Option Scheme.
As at 31 December 2017, the Employee Benefit Trust holds
7,557,229 ordinary shares (2016: 8,715,895) acquired to settle
employee share based payments. Acquisitions of such shares are
booked directly to equity.
25. Non-controlling interests
The Group's total non-controlling interest for the year is
GBP19,911,000 of which GBP6,308,000 is attributed to JLT's Private
Client Services group of businesses (PCS). PCS is defined as a
material non-controlling interest to the Group. The non-controlling
interests in respect of other entities are not individually
material.
Set out below is the summarised financial information for
PCS.
Summarised Balance Sheet
2017 2016
GBP'000 GBP'000
Current
-------- --------
Assets 53,740 62,294
-------- --------
Liabilities (31,122) (34,218)
-------- --------
Total 22,618 28,076
-------- --------
Non-current
-------- --------
Assets 4,212 3,152
-------- --------
Liabilities (149) (316)
-------- --------
Total 4,063 2,836
-------- --------
Net assets 26,681 30,912
-------- --------
Summarised Statement of Comprehensive Income
2017 2016
GBP'000 GBP'000
Revenue 63,552 64,018
-------- --------
Profit for the year 16,498 20,663
-------- --------
Other comprehensive income - 550
-------- --------
Total comprehensive income for the year 16,498 21,213
-------- --------
Total comprehensive income attributable to non-controlling interests 4,116 5,166
-------- --------
Dividends paid to non-controlling interests 5,043 2,229
-------- --------
Summarised Statement of Cash Flows
2017 2016
GBP'000 GBP'000
Net cash generated from operating activities 20,092 19,897
Net cash used in investing activities (2,060) (291)
-------- --------
Net cash used in financing activities (20,083) (18,348)
-------- --------
Net (decrease)/increase in cash and cash equivalents (2,051) 1,258
-------- --------
The information above is the amount before inter-company
eliminations.
26. Other reserves
Share Fair value Exchange
premium and hedging reserves Total
GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2017 104,111 (54,453) 83,561 133,219
-------- ------------ --------- ---------
Fair value gains net of tax:
-------- ------------ --------- ---------
- available-for-sale financial assets - 86 - 86
-------- ------------ --------- ---------
- cash flow hedges - 63,657 - 63,657
-------- ------------ --------- ---------
Currency translation differences - - (34,957) (34,957)
-------- ------------ --------- ---------
Net gains/(losses) recognised directly in equity - 63,743 (34,957) 28,786
Issue of share capital - - - -
-------- ------------ --------- ---------
At 31 December 2017 104,111 9,290 48,604 162,005
-------- ------------ --------- ---------
Share Exchange
premium Fair value and hedging reserves Total
GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2016 104,074 (12,827) (17,280) 73,967
-------- ---------------------- --------- ---------
Fair value (losses)/gains net of tax:
-------- ---------------------- --------- ---------
- available-for-sale financial assets - 42 - 42
-------- ---------------------- --------- ---------
- available-for-sale reclassified to the income statement - (181) - (181)
-------- ---------------------- --------- ---------
- cash flow hedges - (41,487) - (41,487)
-------- ---------------------- --------- ---------
Currency translation differences - - 100,841 100,841
-------- ---------------------- --------- ---------
Net (losses)/gains recognised directly in equity - (41,626) 100,841 59,215
-------- ---------------------- --------- ---------
Issue of share capital 37 - - 37
-------- ---------------------- --------- ---------
At 31 December 2016 104,111 (54,453) 83,561 133,219
-------- ---------------------- --------- ---------
27. Qualifying Employee Share Ownership Trust
During the year, the Qualifying Employee Share Ownership Trust
(QUEST) allocated nil ordinary shares to employees in satisfaction
of options
that have been exercised under the Sharesave schemes (2016:
nil).
28. Cash generated from operations
2017 2016
GBP'000 GBP'000
Profit before taxation 181,661 134,880
---------
Investment and finance income (10,452) (6,877)
--------------------------------------------- --------- ---------
Interest payable on bank loans and
finance leases 16,738 17,491
--------------------------------------------- --------- ---------
Fair value gains on financial instruments (401) (87)
--------------------------------------------- --------- ---------
Net pension financing expenses 5,448 4,872
--------------------------------------------- --------- ---------
Unwinding of liability discounting 5,141 1,862
--------------------------------------------- --------- ---------
Depreciation 12,728 12,526
--------------------------------------------- --------- ---------
Amortisation of other intangible assets 35,955 36,896
--------------------------------------------- --------- ---------
Amortisation of share based payments 26,804 24,892
--------------------------------------------- --------- ---------
Share of results of associates' undertakings (2,149) (1,353)
--------------------------------------------- --------- ---------
Non cash exceptional items 893 5,294
--------------------------------------------- --------- ---------
(Gains)/losses on disposal of businesses (910) 1,660
--------------------------------------------- --------- ---------
Losses/(gains) on disposal of property,
plant and equipment 90 (10)
--------------------------------------------- --------- ---------
(Gains)/losses on disposal of fixed
asset investments (2,101) 8
--------------------------------------------- --------- ---------
Increase in trade and other receivables (19,655) (67,160)
--------------------------------------------- --------- ---------
(Decrease)/increase in trade and other
payables - excluding insurance broking
balances (12,436) 24,788
--------------------------------------------- --------- ---------
Decrease in provisions for liabilities
and charges (3,823) (12,440)
--------------------------------------------- --------- ---------
Decrease in retirement benefit obligation (16,174) (10,530)
--------- ---------
Net cash inflow from operations 217,357 166,712
--------- ---------
29. Business combinations
2016 Acquisitions
During the year, the process of finalising the provisional fair
values in respect of acquisitions carried out during 2016 has
resulted in the following changes:
Provisional fair value
reported at
Revised fair value acquired 31 Dec 2016 Change in fair value
GBP'000 GBP'000 GBP'000
AssetVal Pty Ltd 573 637 (64)
Stonehill Reinsurance Partners,
LLC 2,122 2,085 37
Risk & Reinsurance Solutions
Corporation 590 1,475 (885)
Others 181 186 (5)
---------------------------- ------------------------------ ---------------------
3,466 4,383 (917)
These changes in fair value affected the following balance sheet
classes:
Provisional
fair value
reported at Change in
Revised fair value acquired 31 Dec 2016 fair value
GBP'000 GBP'000 GBP'000
Property, plant and equipment 151 152 (1)
Other intangible assets 3,310 3,168 142
Trade and other receivables 862 1,089 (227)
--------------------------- ------------ -----------
Cash and cash equivalents
- own cash 1,051 1,121 (70)
- fiduciary cash 1,353 1,388 (35)
Insurance payables (1,353) (1,388) 35
Trade and other payables (1,380) (1,004) (376)
Current taxation (27) (27) -
Deferred taxation (410) (116) (294)
Non-controlling interests (91) - (91)
--------------------------- ------------ -----------
3,466 4,383 (917)
At At
31 Dec 2017 31 Dec 2016 Change
Goodwill calculation GBP'000 GBP'000 GBP'000
Purchase consideration
- cash paid 7,255 7,255 -
------------ ------------ --------
- contingent consideration 8,119 8,119 -
------------ ------------ --------
- deferred consideration 2,098 2,546 (448)
------------ ------------ --------
Total purchase consideration 17,472 17,920 (448)
Less: fair value of net assets acquired 3,466 4,383 (917)
------------ ------------ --------
Goodwill 14,006 13,537 469
At At
31 Dec 2017 31 Dec 2016 Change
GBP'000 GBP'000 GBP'000
Purchase consideration settled in cash 7,255 7,255 -
Cash and cash equivalents - own cash in subsidiaries acquired (1,051) (1,121) 70
------------ ------------ --------
6,204 6,134 70
-------------------------------------------------------------------- ------------ ------------ --------
Cash and cash equivalents - fiduciary cash in subsidiaries acquired (1,353) (1,388) 35
------------ ------------ --------
Cash outflow on acquisition 4,851 4,746 105
------------ ------------ --------
Current year acquisitions
During the year the following new business acquisitions and
additional investments were completed:
Percentage
Acquisition voting rights Cost
Notes date acquired GBP'000
Construction Risk Partners LLC (CRP) i Jan 2017 50.1% 38,650
Belgibo NV ii Aug 2017 100.0% 21,001
------ ------------ -------------- --------
Jan-
Acquisition of other new business completed during the year iii Dec 2017 100.0% 1,581
------ ------------ -------------- --------
Jan-
Additional investments in existing businesses iii Dec 2017 various 7,685
------ ------------ -------------- --------
68,917
i) Acquisition of Construction Risk Partners LLC (CRP)
On 27 January 2017, the Group completed the acquisition of CRP
Holding Company LLC, the holding company of Construction Risk
Partners LLC (CRP), one of the leading construction Risk and Surety
specialty brokers in the USA, providing risk consulting and broking
services. The acquired business contributed revenue of
GBP18,325,000 and net profit, including acquisition and integration
costs incurred to date, of GBP1,940,000 to the Group for the period
since acquisition. If the acquisition had taken place on 1 January
2017, we estimate the contribution to Group revenue would have been
GBP20,436,000 and net profit, including acquisition and integration
costs incurred to date, would have been GBP2,413,000.
Goodwill calculation GBP'000
Purchase consideration
- cash paid 38,650
-------
Total purchase consideration 38,650
Less: fair value of net assets acquired 7,244
-------
Goodwill 31,406
The assets and liabilities arising from the acquisition were as
follows:
Acquiree's
carrying
amount Fair value
GBP'000 GBP'000
Property, plant and equipment 374 374
Other intangible assets 2 3,234
Trade and other receivables 280 280
---------- ----------
Cash and cash equivalents
- own cash 8,717 8,717
- fiduciary cash 3,197 3,197
Insurance payables (3,197) (3,197)
Trade and other payables (4,120) (4,120)
Non-controlling interests - (1,241)
---------- ----------
5,253 7,244
GBP'000
Purchase consideration settled in cash 38,650
Cash and cash equivalents - own cash in subsidiary acquired (8,717)
--------
29,933
------------------------------------------------------------------ --------
Cash and cash equivalents - fiduciary cash in subsidiary acquired (3,197)
--------
Cash outflow on acquisition 26,736
--------
As at 31 December 2017, the process of reviewing the fair values
of assets acquired had not been completed, consequently the fair
values stated above are provisional.
Goodwill recognised is expected to be deductible for income tax
purposes.
ii) Acquisition of Belgibo NV
On 31 August 2017, the Group acquired Belgibo NV in Belgium, a
long established, highly regarded Specialty broker, with
market-leading expertise in Marine, Aviation and Credit &
Political risks. The acquired business contributed revenue of
GBP2,162,000 and net loss, including acquisition and integration
costs incurred to date, of GBP220,000 to the Group for the year
since acquisition. If the acquisition had taken place on 1 January
2017, we estimate the contribution to Group revenue would have been
GBP7,871,000 and net loss, including acquisition and integration
costs incurred to date, would have been GBP85,000.
Goodwill calculation GBP'000
---------------------------------------- -------
Purchase consideration
----------------------------------------
- cash paid 18,691
- contingent consideration 833
- deferred consideration 1,477
-------
Total purchase consideration 21,001
-----------------------------------------
Less: fair value of net assets acquired 775
Goodwill 20,226
----------------------------------------- -------
The assets and liabilities arising from the acquisition were as
follows:
Acquiree's Fair
carrying value
amount GBP'000
--------------------------------------- ---------- ---------
Property, plant and equipment 165 165
Other intangible assets 12 2,870
Trade and other receivables 1,291 1,291
Cash and cash equivalents
- fiduciary cash 11,211 11,211
---------- ---------
Insurance creditors (11,211) (11,211)
--------------------------------------- ---------- ---------
Trade and other payables (1,040) (1,040)
--------------------------------------- ---------- ---------
Current taxation (247) (247)
--------------------------------------- ---------- ---------
Deferred taxation 215 215
--------------------------------------- ---------- ---------
Borrowings (1,434) (1,434)
--------------------------------------- ---------- ---------
Provisions for liabilities and charges (411) (411)
--------------------------------------- ---------- ---------
Retirement benefit obligations (634) (634)
--------------------------------------- ---------- ---------
(2,083) 775
GBP'000
--------------------------------------- ---------
Purchase consideration settled in cash 18,691
---------------------------------------- ---------
Borrowings 1,434
---------------------------------------- ---------
20,125
Cash and cash equivalents - fiduciary
cash in subsidiary acquired (11,211)
---------------------------------------- ---------
Cash outflow on acquisition 8,914
----------------------------------------
As at 31 December 2017, the process of reviewing the fair values
of assets acquired had not been completed, consequently the fair
values stated above are provisional.
Deferred consideration of GBP1,477,000 is based upon net assets
shown in the completion accounts.
Contingent consideration of GBP833,000 is based upon expected
revenue of future years.
The maximum contingent consideration is capped at
EUR10,000,000.
None of the goodwill recognised is expected to be deductible for
income tax purposes.
30. Business disposals
On 31 May 2017, the Group disposed its shareholdings in Expacare
Limited.
Net assets and proceeds of disposal
Fair
value
GBP'000
------------------------------------- --------
Other intangible assets 8
Trade and other receivables 538
Cash and cash equivalents - own cash 235
Trade and other payables (239)
Current taxation (48)
Deferred taxation 3
Net assets at disposal 497
Gain on disposal 675
Proceeds on disposal 1,172
Total
GBP'000
Disposal consideration settled in cash 1,172
---------------------------------------- --------
Cash and cash equivalents - own cash
in subsidiary disposed (235)
---------------------------------------- --------
Cash inflow on disposal during the
year 937
----------------------------------------
Other disposals
During the year the Group completed other disposals, none of
which were individually significant.
Net assets and proceeds of disposal
Total
GBP'000
---------------------------------------------------------------
Property, plant and equipment 22
----------------------------------------------------------------
Other intangible assets 466
----------------------------------------------------------------
Trade and other receivables 1,741
----------------------------------------------------------------
Cash and cash equivalents
---------------------------------------------------------------
- own cash 35
Trade and other payables (67)
Current taxation (22)
----------------------------------------------------------------
Deferred taxation (5)
----------------------------------------------------------------
Non-controlling interests 544
----------------------------------------------------------------
Net assets at disposal 2,714
----------------------------------------------------------------
Exchange loss recycled from exchange
reserves (69)
----------------------------------------------------------------
Equity movement on transactions with non-controlling interests 163
Gain on disposals 235
----------------------------------------------------------------
Proceeds on disposals 3,043
----------------------------------------------------------------
Total
GBP'000
---------------------------------------------------------------
Deferred proceeds 2,388
----------------------------------------------------------------
Cash inflow on disposals during the
year 655
----------------------------------------------------------------
Total consideration 3,043
Total
GBP'000
Disposal consideration settled in cash 655
---------------------------------------- --------
Cash and cash equivalents - own cash
in subsidiaries disposed
--------------------------------------- --------
- own cash in subsidiary disposed (35)
--------
Cash inflow on disposals during the
year 620
----------------------------------------
Group summary of cash flows
Expacare Others Total
GBP'000 GBP'000 GBP'000
-------------------------------------------------------------------- --------- -------- --------
Disposal consideration
settled in cash 1,172 655 1,827
--------------------------------------------------------------------- --------- --------
Cash and cash equivalents - own cash in subsidiaries disposed
- own cash in subsidiary disposed (235) (35) (270)
--------- -------- --------
Cash inflow on disposals during the year 937 620 1,557
The gain on disposal of businesses in the year of GBP910,000 together with costs on disposal
of GBP603,000 result in a net gain on disposal of GBP307,000.
31. Retirement benefit obligations
The Group operates a number of pension schemes throughout the
world, the most significant of which are of the defined benefit
type and operate
on a funded basis. The principal pension schemes are the Jardine
Lloyd Thompson UK Pension Scheme, the JLT (USA) Incentive Savings
Plan, the JLT (USA) Employee Retirement Plan, the JLT (USA) Stable
Value Plan, the Pension Plan for Employees of Jardine Lloyd
Thompson Canada Inc and the Jardine Lloyd Thompson Ireland Limited
Pension Fund and the Belgibo DB and DC Plans.
The pension service costs accrued for the year are as
follows:
UK Schemes Overseas Schemes Total
2017 2016 2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Defined benefit schemes - - - 487 - 487
Defined contribution schemes 20,485 20,824 22,003 19,254 42,488 40,078
20,485 20,824 22,003 19,741 42,488 40,565
The Jardine Lloyd Thompson UK Pension Scheme has two sections:
one providing defined benefits and the other providing benefits on
a defined contribution basis. The assets of the scheme are held in
a trustee administered fund separate from the Company.
With effect from 1 December 2006 the defined benefit section of
the Scheme was amended to cease future benefits accruals. Under the
Scheme
as amended, a participant's normal retirement benefit will be
determined based on their service and compensation prior to 1
December 2006.
The latest finalised triennial actuarial funding valuation of
the Jardine Lloyd Thompson UK Pension Scheme was undertaken as at
31 March 2014, and showed a deficit of GBP134.2 million. The
company agreed with the Trustees that annual contributions of
GBP10.5 million would be paid each July for 14 years, from 2015 and
to 2018 to fund the scheme deficit. This valuation was updated to
31 December 2017 by a qualified actuary employed by the Group. An
updated triennial actuarial valuation as at 31 March 2017 is
currently being carried out but results are not yet available. The
weighted average duration of the defined benefit obligation is 18
years (2016: 18 years).
The principal overseas schemes are:
a) The JLT (USA) Incentive Savings Plan which is a defined
contribution scheme. Employees may contribute up to 50% of their
salary subject to an IRS maximum each year of USD 18,000 in 2017
and the Group contributes at a rate of 100% of each 1% contributed
by the employee up to a maximum employee contribution of 4%, up to
a maximum of USD 10,600. Employees aged over 50 may make "catch-up"
contributions subject to an IRS maximum each year of USD 6,000 in
2017.
b) The JLT (USA) Employee Retirement Plan which is a defined
benefit scheme. The latest actuarial valuation was undertaken at 1
January 2017
by independent actuaries. With effect from 31 July 2005 the plan
was amended to eliminate future benefit accruals. Under the plan as
amended, a participant's normal retirement benefit will be
determined based on their service and compensation prior to 31 July
2005. The average compensation and length of service will be
determined as at 31 July 2005.
The Group had made a settlement gain of GBP127,000 in 2016
relating to non-routine lump sum payments and it is disclosed under
the curtailment gain.
c) The JLT (USA) Stable Value Plan. The latest actuarial
valuation was undertaken as at 1 January 2017 by independent
actuaries. With effect from 31 March 2016 the Plan was amended to
eliminate future benefit accruals. Under the Plan as amended, a
participant's normal retirement benefit will be determined based on
their service and compensation prior to 31 March 2016. The average
compensation and length of service was determined as at 31 March
2016. The plan closed in 2016.
d) The Pension Plan for Employees of Jardine Lloyd Thompson
Canada Inc. has two sections: one providing defined benefits based
primarily on the 2007 pensionable salary and the other providing
benefits on a defined contribution basis. The JLT pension
contribution for the defined contribution plan ranges from 3% to
13% based on age and service. The company makes additional
contribution to defined contribution plans, not exceeding 2% of
pensionable earnings, if the member makes a matching voluntary
contributions. The Defined Benefit Pension Plan was amended on 1
January 2009 in order to close the plan to new entrants and
eliminate future benefit accruals from this date forward.
The JLT Canada Defined Pension Plan's last formal valuation was
undertaken as at 31 December 2016 by a qualified third party
actuary.
e) The Jardine Lloyd Thompson Ireland Limited Pension Fund,
which is a defined benefit pension scheme, has its assets held in a
separately administered fund. The contributions to it are agreed
between the Trustees and the Company, based on the advice of an
appropriately qualified independent actuary. The most recent
triennial actuarial valuation for funding purposes was carried out
by the appropriately qualified independent actuary as at 1 January
2014. With effect from 30 November 2008, the scheme was closed to
new entrants and future service accrual ceased. The company also
operates a defined contribution scheme, namely The Jardine Lloyd
Thompson 2004 Retirement Benefits Scheme, which is held and
administered under a separate trust. The most recent triennial
actuarial valuation for funding purposes was carried out by an
appropriately qualified independent actuary as at 1 January
2017.
f) The Belgibo DB and DC Plans has two sections: one pension
plan providing defined benefits based primarily on the pensionable
salary and two pension plans providing benefits on a defined
contribution basis, subject to certain guaranteed minimum asset
returns. The employer pension contribution for the defined
contribution plan ranges from 2% to 6% based on category and
service. The defined benefit scheme was amended on 1 January 2007
in order to close the plan to new entrants. The defined benefit
scheme's last formal valuation was undertaken as at 31 December
2017 by a qualified third party actuary.
The principal actuarial assumptions used were as follows:
UK US Irish
At 31 December 2017 Scheme Scheme Canadian Scheme Scheme US Stable Value Plan Belgian Schemes
Rate of increase in salaries n/a n/a n/a n/a n/a 2.50%
Rate of increase of pensions in
payment (a) 3.16% n/a 2.00% 3.00% n/a n/a
Discount rate (b) 2.45% 3.35% 3.30% 1.90% 3.05-3.20% 1.00-1.75%
Inflation rate 3.26% 2.00% 2.00% 1.50% 2.00% 2.00%
Revaluation rate for deferred
pensioners 2.26% n/a n/a 1.50% n/a n/a
Mortality - life expectancy at age
65 for male members: (c)
Aged 65 at 31 December (years) 21.7 21.1 22.0 22.8 22.0 20.4
UK US Irish
At 31 December 2016 Scheme Scheme Canadian Scheme Scheme US Stable Value Plan Belgian Schemes
Rate of increase in salaries n/a n/a n/a n/a n/a n/a
Rate of increase of pensions in
payment (a) 3.24% n/a 2.25% 3.00% n/a n/a
Discount rate (b) 2.80% 4.00% 3.90% 1.90% 3.35-3.40% n/a
Inflation rate 3.34% 2.00% 2.25% 1.50% 2.00% n/a
Revaluation rate for deferred
pensioners 2.34% n/a n/a 1.50% n/a n/a
Mortality - life expectancy at age
65 for male members: (c)
Aged 65 at 31 December (years) 21.8 21.3 22.0 22.8 21.3 n/a
a) In respect of the UK scheme, where there are inflation linked
benefits, the inflation increases are limited to a maximum of 5%
per annum (some are limited to 3% per annum).
b) In line with IAS 19 (Revised) the expected return on scheme
assets assumption is the same as the discount rate assumed for the
liabilities.
c) Mortality assumptions for the UK scheme are based on 105% of
the S2PxA tables, with improvements based on CMI 2016 tables with a
1.25% per annum long-term rate of improvement.
Mortality assumptions for the US Scheme and US Stable Value Plan
are based on the RP2014 Mortality Table with MP2017
projections.
Mortality assumptions for the Canadian Scheme are based on the
CPM-2014 Private Table with generational projection using scale
CPM-B.
Mortality assumptions for the Irish Scheme, assume that deaths
after retirement will be in accordance with standard mortality
tables 90% PxA92C=2004 with allowance for expected future mortality
improvements. There is assumed to be no pre-retirement
mortality.
Mortality assumptions for the Belgian Schemes are based on the
Belgian mortality table MR-3/FR-3.
The sensitivity of the defined benefit obligation to changes in
the weighted principal assumptions is:
Impact on defined benefit obligation
Change in Change to
assumptions obligation
Discount rate decrease of 0.1% increase of 2.0%
---------------
Inflation rate increase of 0.1% increase of 1.0%
---------------
Life expectancy increase of 1 year increase of 4.0%
---------------
The above sensitivity analysis is based on a change in an
assumption while holding all other assumptions constant. In
practice, this is unlikely
to occur, and changes in some of the assumptions may be
correlated. When calculating the sensitivity of the defined benefit
obligation to significant actuarial assumptions, the same method
(present value of the defined benefit obligation calculated with
the projected unit credit method at the end
of the reporting period) has been applied as when calculating
the pension liability recognised within the balance sheet. Note
this sensitivity is for defined benefit obligations only and does
not consider the impact that changes in assumptions may have on the
assets, in particular the assets
held in respect of the insured pensioners.
The methods and types of assumptions used in preparing the
sensitivity analysis did not change compared to the previous
year.
Defined benefit obligation
UK Schemes Overseas Schemes Total
2017 2016 2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Present value of funded obligations (652,028) (674,029) (72,553) (72,315) (724,581) (746,344)
Fair value of plan assets 495,616 489,533 59,681 58,399 555,297 547,932
Net liability recognised in the balance sheet (156,412) (184,496) (12,872) (13,916) (169,284) (198,412)
Reconciliation of net defined benefit liability
UK Schemes Overseas Schemes Total
2017 2016 2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening defined benefit liability (184,496) (118,947) (13,916) (11,440) (198,412) (130,387)
Exchange differences - - 1,049 (2,169) 1,049 (2,169)
Pension expense (5,346) (4,778) (1,155) (1,274) (6,501) (6,052)
Employer contributions 16,273 10,952 956 886 17,229 11,838
Assets acquired in a business combination - - (634) - (634) -
Total gain/(loss) recognised in reserves 17,157 (71,723) 828 81 17,985 (71,642)
Net liability recognised in the balance sheet (156,412) (184,496) (12,872) (13,916) (169,284) (198,412)
Reconciliation of defined benefit obligation
UK Schemes Overseas Schemes Total
2017 2016 2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening defined benefit obligation (674,029) (576,343) (72,315) (61,940) (746,344) (638,283)
Exchange differences - - 4,186 (11,626) 4,186 (11,626)
Service cost - - - (487) - (487)
Interest cost (18,063) (21,435) (2,405) (2,502) (20,468) (23,937)
Curtailment gain - - - 127 - 127
Settlement amount - - - 1,315 - 1,315
Loss on defined benefit obligation (18,002) (121,841) (3,722) (1,120) (21,724) (122,961)
Actual benefit payments 58,066 45,590 4,560 3,918 62,626 49,508
Liabilities assumed in a business combination - - (2,857) - (2,857) -
Closing defined benefit obligation (652,028) (674,029) (72,553) (72,315) (724,581) (746,344)
Reconciliation of fair value of assets
UK Schemes Overseas Schemes Total
2017 2016 2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening value of assets 489,533 457,396 58,399 50,500 547,932 507,896
Exchange differences - - (3,137) 9,457 (3,137) 9,457
Expected return on assets 13,119 17,034 1,901 2,031 15,020 19,065
Actuarial gain 35,159 50,118 4,550 1,201 39,709 51,319
Employer contributions 16,273 10,952 956 886 17,229 11,838
Actual benefit payments (58,066) (45,590) (4,560) (3,918) (62,626) (49,508)
Settlement amount - - - (1,315) - (1,315)
Expenses (402) (377) (651) (443) (1,053) (820)
Assets acquired in a business combination - - 2,223 - 2,223 -
Closing value of assets 495,616 489,533 59,681 58,399 555,297 547,932
The analysis of the fair value of the scheme assets is as
follows:
UK Schemes Overseas Schemes
Value Value Value Value
At 31 December 2017 GBP'000 % GBP'000 %
Equities 106,480 21% 33,406 56%
Equity-linked liability driven investments (LDI) 95,436 19% - -
Bonds - - 14,038 24%
Investment funds 85,993 17% - -
Qualifying insurance policies 204,992 42% - -
Other assets - - 6,367 10%
Cash 2,715 1% 5,870 10%
Total market value 495,616 100% 59,681 100%
UK Schemes Overseas Schemes
Value Value Value Value
At 31 December 2016 GBP'000 % GBP'000 %
Equities 186,674 38% 34,795 60%
Bonds - - 10,454 18%
Investment funds 95,360 19% - -
Qualifying insurance policies 205,719 42% - -
Other assets - - 3,827 6%
Cash 1,780 1% 9,323 16%
Total market value 489,533 100% 58,399 100%
Other assets include hedge funds and property. The schemes do
not hold cash as a strategic investment and cash balances at 31
December represent working balances.
Reconciliation of return on assets
UK Schemes Overseas Schemes Total
2017 2016 2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Expected return on assets 13,119 17,034 1,901 2,031 15,020 19,065
Actuarial gain 35,159 50,118 4,550 1,201 39,709 51,319
Actual return on assets 48,278 67,152 6,451 3,232 54,729 70,384
The amounts recognised in the consolidated income statement are
as follows:
UK Schemes Overseas Schemes Total
2017 2016 2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Service cost - - - (487) - (487)
Settlement and curtailment gain - - - 127 - 127
Expenses (402) (377) (651) (443) (1,053) (820)
Total (included within salaries and associated
expenses) (402) (377) (651) (803) (1,053) (1,180)
Interest cost (18,063) (21,435) (2,405) (2,502) (20,468) (23,937)
Expected return on assets 13,119 17,034 1,901 2,031 15,020 19,065
Total (included within finance costs) (4,944) (4,401) (504) (471) (5,448) (4,872)
Expenses before taxation (5,346) (4,778) (1,155) (1,274) (6,501) (6,052)
The amounts included in the consolidated statement of
comprehensive income are as follows:
UK Schemes Overseas Schemes Total
2017 2016 2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Actuarial loss on defined benefit obligation (18,002) (121,841) (3,722) (1,120) (21,724) (122,961)
Actuarial gain 35,159 50,118 4,550 1,201 39,709 51,319
Total actuarial gain/(loss) recognised 17,157 (71,723) 828 81 17,985 (71,642)
Cumulative actuarial loss recognised (260,005) (277,162) (31,928) (32,756) (291,933) (309,918)
The five year history of experience adjustments is as
follows:
UK Schemes
2017 2016 2015 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Defined benefit obligation at end of year (652,028) (674,029) (576,343) (641,759) (583,745)
Fair value of plan assets 495,616 489,533 457,396 479,139 458,727
Deficit in the schemes (156,412) (184,496) (118,947) (162,620) (125,018)
Difference between the actual and expected return on plan
assets
- amount (GBP'000) 35,159 50,118 (11,593) 16,437 (22,217)
- expressed as a percentage of the plan assets 7.09% 10.24% (2.53%) 3.43% (4.84%)
Experience (gain)/loss on plan liabilities
- amount (GBP'000) (5,793) (7,009) (8,840) 1,592 1,364
- expressed as a percentage of the present value of the plan
liabilities 0.89% 1.04% 1.53% (0.25%) (0.23%)
Overseas Schemes
2017 2016 2015 2014 2013
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Defined benefit obligation at end of year (72,553) (72,315) (61,940) (78,044) (60,566)
Fair value of plan assets 59,681 58,399 50,500 61,629 54,957
Deficit in the schemes (12,872) (13,916) (11,440) (16,415) (5,609)
Difference between the actual and expected return on plan assets
- amount (GBP'000) 4,550 1,201 (762) 2,450 6,863
- expressed as a percentage of the plan assets 7.62% 2.06% (1.51%) 3.98% 12.49%
Experience (gain)/loss on plan liabilities
- amount (GBP'000) 233 (4,450) (1,427) 1,265 377
- expressed as a percentage of the present value of the plan liabilities (0.32%) 6.15% 2.30% (1.62%) (0.62%)
Defined
The expected employer contributions in respect of the year ending 31 December 2018 are as benefit
follows: GBP'000
UK Scheme 10,500
US Scheme 991
Canadian Scheme 42
Irish Scheme 946
Belgian Schemes 42
Total expected contributions 12,521
32. Related-party transactions
Transactions with the Jardine Matheson Group
As at 22 February 2018 the Jardine Matheson Group owns 40.16% of
the Company's shares via its wholly-owned subsidiary JMH
Investments Limited. The remaining 59.84% of the shares are widely
held.
In the normal course of business a number of the Group's
subsidiaries undertake, on an arm's-length basis, a variety of
transactions with the Jardine Matheson Group (JMG) and its
associates (JMA).
The following transactions were carried out during the year:
2017 2016
JMG JMA Total JMG JMA Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income
Fees and commissions 4,673 2,245 6,918 3,999 1,941 5,940
Expenditure
Administrative expenses 1,420 - 1,420 1,598 - 1,598
Year-end balances arising from these transactions:
Trade and other receivables 1,199 366 1,565 962 642 1,604
Trade and other payables (17) - (17) (82) - (82)
1,182 366 1,548 880 642 1,522
Transactions with associates
The following transactions were carried out with associates
during the year:
2017 2016
GBP'000 GBP'000
Income
Fees and commissions 2,791 3,238
Finance income
Interest receivable - own funds 65 8
Expenditure
Administrative expenses 27 19
Year-end balances arising from these transactions:
Trade and other receivables 3,096 4,966
Trade and other payables - (1)
3,096 4,965
33. Commitments
Capital commitments
Capital expenditure contracted for 2018 at the balance sheet
date amounts to GBP1,916,000 (2017: GBP1,293,000).
Operating lease commitments - where a Group company is the
lessee
The future aggregate minimum lease payments under a
non-cancellable operating leases are as follows:
2017 2016
GBP'000 GBP'000
No later than 1 year 42,787 42,981
Later than 1 year and no later than 5 years 141,390 146,090
Later than 5 years 271,554 300,912
455,731 489,983
The Group leases various offices under non-cancellable operating
lease agreements. The principal lease term on the Group's
headquarters at The St Botolph Building is for 21 years from the
balance sheet date. Rents will be reviewed on 1 October 2018, and
every 5 years thereafter, and will be calculated by reference to
the prevailing market rate.
Sub-leases
Operating lease commitments - where a Group company is the
lessor
The future aggregate minimum lease payments under
non-cancellable operating sub-leases are as follows:
2017 2016
GBP'000 GBP'000
No later than 1 year 165 151
Later than 1 year and no later than 5 years 156 231
321 382
Legal and other loss contingencies
Jardine Lloyd Thompson Group plc and its subsidiaries are
subject to various claims, legal proceedings, investigations by
regulatory and other government authorities and disputes around the
world including alleged errors and omissions in connection with the
placement of insurance and reinsurance risks and consulting
services.
IFRS requires that liabilities for contingencies be recorded
when it is probable that a liability has been incurred before the
balance sheet date and
the amount can be reasonably estimated. Significant management
judgement is required to comply with this guidance. The Group
analyses its litigation exposure based on available information,
including external legal consultation where appropriate, to assess
its potential liability.
On the basis of present information, amounts already provided,
availability of insurance coverages and legal advice received, it
is the opinion
of management that the disposition or ultimate determination of
such claims will not have a material adverse effect on the
consolidated financial position of the Group. However, it is
possible that future results of operations or cash flows for any
annual period could be materially affected by
an unfavourable resolution of these matters.
As at 31 December 2017, the Group has contingent liabilities in
respect of guarantees and letters of credit given on behalf of
Group companies amounting to GBP14,385,000 (2016:
GBP12,024,000).
In the UK, the Group is working with the UK Financial Conduct
Authority following a market-wide thematic review of financial
advice provided to customers who were offered enhanced transfer
value products ('ETVs'). Pending the outcome of the UK Financial
Conduct Authority's review a provision has been created for the
estimated administration costs of completing the work for this
review. It is too early to determine whether any further liability
exists.
34. Subsequent events
On 14 February 2018 the Group acquired, subject to FCA approval,
100% of the issued share capital of Chartwell Healthcare Limited
for a maximum consideration of GBP7.1 million, payable in cash in
tranches from completion to 2020.
On 28 February 2018 the Group acquired 100% of the issued share
capital of International Risk Consultants Inc. for consideration of
USD 25.0 million, payable at completion.
35. Subsidiaries and associated companies
The following were the subsidiaries and associated undertakings
at 31 December 2017. Unless otherwise shown, the capital of each
company is wholly-owned, is in ordinary shares and the principal
country of operation is the country of
incorporation/registration.
% Holding Notes
Company (if less than 100%) Registered Office address
United Kingdom
Agnew Higgins Pickering & Company Limited BDO LLP, 55 Baker Street, London, W1U 7EU,
England
Aldgate Trustees Ltd The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
Aviary Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
Burke Ford Trustees (Leicester) Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
CPRM Limited Lochside House, 7 Lochside Avenue,
Edinburgh, EH12 9DJ, Scotland
Fly Fizzi Limited 33.00 Pyers Croft, Compton, Chichester, West
Sussex, PO18 9EX, England
GCube Underwriting Limited 155 Fenchurch Street, London, EC3M 6AL,
England
Gracechurch Trustees Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
Gresham Pension Trustees Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
Hayward Aviation Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
iimia (Holdings) Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
Independent Trustee Services Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JIB Group Holdings Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JIB Group Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JIB Overseas Holdings Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
The St Botolph Building, 138 Houndsditch,
JIB UK Holdings Limited London, EC3A 7AW, England 3
JIS (1974) Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Actuaries and Consultants Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Advisory Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Benefit Consultants Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Benefit Solutions Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Colombia Retail Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Colombia Wholesale Limited 94.37 The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Consultants & Actuaries Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Corporate Services Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT EB Holdings Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT EB Services Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Financial Consultants Ltd The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Insurance Group Holdings Ltd The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Investment Management Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT LATAM (Southern Cone) Wholesale Limited 53.00 The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Latin American Holdings Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Management Services Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Mexico Holdings Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Nominees Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Pension Trustees Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Pensions Administration Holdings Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Pensions Administration Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Peru Reinsurance Solutions Limited 80.07 The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Peru Retail Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Peru Wholesale Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Re Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Reinsurance Brokers Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Secretaries Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Specialty Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Trustees (Southern) Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Trustees Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT UK Investment Holdings Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Wealth Management Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
Leadenhall Independent Trustees Ltd The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
Lloyd & Partners Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
M.P. Bolshaw and Company Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
Marine, Aviation & General (London) Limited 25.00 10 Eastcheap, London, EC3M 1AJ, England 4
Pavilion Insurance Management Limited BDO LLP, 55 Baker Street, London, W1U 7EU,
England
Pavilion Insurance Network Limited BDO LLP, 55 Baker Street, London, W1U 7EU,
England
Pension Capital Strategies Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
Personal Pension Trustees Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
Pet Animal Welfare Scheme Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
Portland Pensions Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
Portsoken Trustees (No. 2) Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
Portsoken Trustees Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
Premier Pension Trustees Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
Profund Solutions Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
Renewable Energy Loss Adjusters Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
Angola
Jardines PF - Consultoria Em Gestao de Risco Rua Kuamme Knrumah Numero 31, Ingombota,
Lda Luanda, Angola 1
Anguilla
JLT Towner Insurance Management (Anguilla) Babrow's Commercial Complex, The Valley,
Limited AI-2640, Anguilla
Argentina
JLT Re Argentina Corredores de Reaseguros 53.00 Della Paolera 265, Torre Boston, 24th Floor
S.A. Retiro, C.A.B.A, Argentina
JLT Insurance Brokers S.A. 74.50 c/o Estudio Beccar Varela, Tucuman 1, 4th
Floor, Beunos Aires, Argentina
Australia
AssetVal Pty Ltd Grosvenor Place, Level 37, 225 George
Street, Sydney, NSW 2000, Australia
Australian Insurance Brokers Pty Ltd Grosvenor Place, Level 37, 225 George
Street, Sydney, NSW 2000, Australia
Broderick Piller Pty Ltd Grosvenor Place, Level 37, 225 George
Street, Sydney, NSW 2000, Australia
Echelon Australia Pty Limited Grosvenor Place, Level 37, 225 George
Street, Sydney, NSW 2000, Australia
Group Promoters Pty Limited Grosvenor Place, Level 37, 225 George
Street, Sydney, NSW 2000, Australia
Jardine Lloyd Thompson Australia Pty Limited Grosvenor Place, Level 37, 225 George
Street, Sydney, NSW 2000, Australia
JLT Group Services Pty Limited Grosvenor Place, Level 37, 225 George
Street, Sydney, NSW 2000, Australia
Jardine Lloyd Thompson Pty Limited Grosvenor Place, Level 37, 225 George
Street, Sydney, NSW 2000, Australia
JLT Re Pty Ltd Grosvenor Place, Level 37, 225 George
Street, Sydney, NSW 2000, Australia
Key Underwriting Pty Limited Grosvenor Place, Level 37, 225 George
Street, Sydney, NSW 2000, Australia
Premium Services Australia Pty Limited Grosvenor Place, Level 37, 225 George
Street, Sydney, NSW 2000, Australia
The Recovre Group Pty Ltd Grosvenor Place, Level 37, 225 George
Street, Sydney, NSW 2000, Australia
Risk Management Australia Pty Limited Grosvenor Place, Level 37, 225 George
Street, Sydney, NSW 2000, Australia
Local Government Insurance Brokers Pty Grosvenor Place, Level 37, 225 George
Limited Street, Sydney, NSW 2000, Australia
Austria
GrECo International Holding AG 20.00 1190 Vienna, Elmargasse 2-4, Postfach 299, 4
Vienna, Austria
Barbados
Isosceles Insurance (Barbados) Limited 90.91 1st Floor, Limegrove Centre, Holetown, St
James, Barbados
JLT Holdings (Barbados) Ltd 90.91 1st Floor, Limegrove Centre, Holetown, St
James, Barbados
JLT Insurance Management (Barbados) Ltd 90.91 1st Floor, Limegrove Centre, Holetown, St
James, Barbados
JLT Management (Barbados) Ltd 90.91 1st Floor, Limegrove Centre, Holetown, St
James, Barbados
JLT Trust Services (Barbados) Limited 90.91 1st Floor, Limegrove Centre, Holetown, St
James, Barbados
Belgium
Belgibo N.V. De Gerlachekaai 20, 2000 Antwerp, Belgium
CMC-Belgibo De Gerlachekaai 20, 2000 Antwerp, Belgium
Bermuda
Agnew Higgins Pickering & Co. (Bermuda) Ltd Clarendon House, 2 Church Street, Hamilton,
HM11, Bermuda
Eagle & Crown Limited Cedar House, 41 Cedar Avenue, Hamilton
HM12, Bermuda
Evolution Management Ltd Crawford House, 50 Cedar Avenue, Hamilton,
HM11, Bermuda
Isosceles Insurance Ltd 98.36 Crawford House, 50 Cedar Avenue, Hamilton, 3
HM11, Bermuda
JLT Holdings (Bermuda) Ltd. Crawford House, 50 Cedar Avenue, Hamilton,
HM11, Bermuda
JLT Bermuda Ltd Crawford House, 50 Cedar Avenue, Hamilton,
HM11, Bermuda
JLT Insurance Management (Bermuda) Limited Crawford House, 50 Cedar Avenue, Hamilton,
HM11, Bermuda
Sail Insurance Company Limited Cedar House, 41 Cedar Avenue, Hamilton
HM12, Bermuda
Secure Limited Jardine House, 33-35 Reid Street, Hamilton,
Bermuda
JLT Re Limited Cedar House, 41 Cedar Avenue, Hamilton
HM12, Bermuda
Brazil
JLT Brasil Holdings Participacoes Ltd 75.72 Avenida Beira Mar no. 200, 8 andar (parte), 1
Centro, Rio de Janeiro, Brazil
JLT do Brasil Corretagem de Seguros Ltda 75.72 Avenida Engenheiro Luis Carlos Berrini no. 1
105, Condomino Thera One, Sao Paulo, Brazil
JLT RE Brasil, Administracao e Corretagem de 75.72 Avenida Beira Mar no. 200, 8 andar (parte), 1
Resseguros Ltda Centro, Rio de Janeiro, Brazil
JLT SCK Affinity Administracao e Corretora 56.79 Ave. Presidente Wilson, 231, 1
de Seguros Ltda. 74.107.483/0001-64, Centro, Rio de Janeiro,
Brazil
JLT SCK Corretora e Administradora de 56.79 Ave. Presidente Wilson, 231, 1
Seguros 74.107.483/0001-64, Centro, Rio de Janeiro,
Brazil
Canada
Jardine Lloyd Thompson Canada Inc Suite 2900, 550 Burrard Street Vancouver BC
V6C 0A3, Canada
Cayman Islands
Colombian Insurance Broking Wholesale 74.50 Wallkers Corporate Ltd, Cayman Corporate
Limited Centre, 27 Hospital Road, George Town,
Grand Cayman,
KY1 9008, Cayman Islands
Chile
JLT Chile Corredores de Reaseguro Limitada 50.10 Costanera Sur 2730, Piso 14, Las Condes,
Santiago, Chile
Alta SA 50.10 Costanera Sur 2730, Piso 14, Las Condes,
Santiago, Chile
JLT Asesorias Ltda 50.10 Costanera Sur 2730, Piso 14, Las Condes,
Santiago, Chile
JLT Chile Holdings SpA Miraflores 222 piso 28 Santiago, Chile
JLT-Orbital Corredores de Seguros Limitada 50.10 Costanera Sur 2730, Piso 14, Las Condes,
Santiago, Chile
China
JLT Insurance Brokers Co., Limited The Pinnacle, 17 Zhu Jiang Road West,
Tianhe District, Guangzhou 510623, China
Colombia
JLT Affinity Colombia Solutions SAS 82.65 Carrera 7 # 71- 21 , Torre B, Bogota,
Colombia
Beneficios Integrales Oportunos SA 82.65 Calle 72 Ndeg 10 - 07 Of. 1004. Bogota,
Colombia
JLT Re Colombia, Corredores Colombianos de 94.34 Calle 742 No. 10-51 PH, Bogota, Colombia
Reaseguros
Jardine Lloyd Thompson Valencia y Iragorri 82.65 Calle 72 Ndeg 10 - 07 Of. 1004. Bogota,
Corredores de Seguros SA Colombia
Denmark
JLT Specialty Insurance Broker A/S Hellerupgardvej 18, 2900 Hellerup, Denmark
France
JLT France Holdings 94 Rue de la Victoire, 75009, Paris, France
JLT Specialty France 94 Rue de la Victoire, 75009, Paris, France
JLT Energy (France) SAS 35.40 18 Rue de Courcelles, 75008, Paris, France 4
JLT PLA 94 Rue de la Victoire, 75009, Paris, France
Germany
JLT Reinsurance Brokers GmbH Arnulfstrabe 19, 80335, Munchen, Germany
Guernsey
Isosceles PCC Limited Mill Court, La Charroterie, St Peter Port,
GY1 4ET, Guernsey
JLT Insurance Management (Guernsey) Limited Mill Court, La Charroterie, St Peter Port,
GY1 4ET, Guernsey
Hong Kong
JLT Agencies Limited 25th Floor Devon House, Taikoo Place, 979
King's Road, Quarry Bay,
Hong Kong
JLT Essential Holdings Limited 51.00 25th Floor Devon House, Taikoo Place, 979
King's Road, Quarry Bay,
Hong Kong
Jardine ShunTak Insurance Brokers Limited 50.00 25th Floor Devon House, Taikoo Place, 979
King's Road, Quarry Bay,
Hong Kong
Jardine Lloyd Thompson PCS Limited 75.00 20th Floor, Cityplaza Four, 12 Taikoo Wan
Road, Taikoo Shing, Island East, Hong Kong
Jardine Lloyd Thompson Limited 25th Floor Devon House, Taikoo Place, 979
King's Road, Quarry Bay,
Hong Kong
Lambert Brothers Holdings Limited 25th Floor Devon House, Taikoo Place, 979
King's Road, Quarry Bay,
Hong Kong
Lambert Brothers Insurance Brokers (Employee 25th Floor Devon House, Taikoo Place, 979
Benefits) Ltd King's Road, Quarry Bay,
Hong Kong
Lambert Brothers Insurance Brokers (Hong 25th Floor Devon House, Taikoo Place, 979
Kong) Ltd King's Road, Quarry Bay,
Hong Kong
JLT Insurance Agencies Limited 25th Floor Devon House, Taikoo Place, 979
King's Road, Quarry Bay,
Hong Kong
India
JLT Independent Insurance Brokers Private 49.00 Peninsula Corporate Park, Ganpat Rao Kadam 4
Limited Marg, Off, Senapati Bapat Marg, Mumbai,
400013,
India
JLT Vantage Risk and Benefit Consulting 49.00 C-6.2 Dr Herekar Park, Nehru Park, Pune, 4
Private Limited Maharashtra, 411004, India
Jardine Lloyd Thompson Insurance Consultants 92.61 E-2/16, 2nd Floor, White House, Ansari
Limited Road, Darya Ganj, New Dehli, 110002, India
Jardine Lloyd Thompson India Private Limited 1001-A, Supreme Business Park, Supreme
City, Hiranandani Gardens, Powai, Mumbai,
Maharashtra,
400076, India
Indonesia
PT Jardine Lloyd Thompson 80.00 World Trade Center, 10th Floor, Jl. Jendral
Sudirman Kav. 29-31, Jakarta 12920,
Indonesia
PT Nexus Asia Pacific World Trade Center, 10th Floor, Jl. Jendral
Sudirman Kav. 29-31, Jakarta 12920,
Indonesia
PT JLT Reinsurance Brokers 75.00 World Trade Center, 10th Floor, Jl. Jendral
Sudirman Kav. 29-31, Jakarta 12920,
Indonesia
Ireland
JLT Risk Management Limited Cherrywood Business Park, Loughlinstown,
Dublin 18, Ireland
Freedom Trust Services Limited Cherrywood Business Park, Loughlinstown,
Dublin 18, Ireland
JLT Intellectual Property Limited Cherrywood Business Park, Loughlinstown,
Dublin 18, Ireland
International Loss Control Services Limited Cherrywood Business Park, Loughlinstown,
Dublin 18, Ireland
Jardine Pension Trustees Ireland Limited Cherrywood Business Park, Loughlinstown,
Dublin 18, Ireland
Jardine Lloyd Thompson Ireland Holdings Cherrywood Business Park, Loughlinstown,
Limited Dublin 18, Ireland
Jardine Lloyd Thompson Ireland Unlimited Cherrywood Business Park, Loughlinstown,
Company Dublin 18, Ireland
JLT Financial Planning Limited Cherrywood Business Park, Loughlinstown,
Dublin 18, Ireland
JLT Insurance Brokers Ireland Limited Cherrywood Business Park, Loughlinstown,
Dublin 18, Ireland
JLT QFM Services Limited Cherrywood Business Park, Loughlinstown,
Dublin 18, Ireland
Italy
MAG JLT SpA 25.00 Francesco Crispi 74, Naples, Italy 4
Japan
JLT Holdings Japan Limited Halifax Bldg. 4F, 16-26 Roppoongi 3-chome,
Minato-ku, Tokyo, Japan
JLT Risk Services Japan Limited Halifax Bldg. 4F, 16-26 Roppoongi 3-chome,
Minato-ku, Tokyo, Japan
JLT Japan Limited Halifax Bldg. 4F, 16-26 Roppoongi 3-chome,
Minato-ku, Tokyo, Japan
Republic of Korea
Jardine Lloyd Thompson Korea Limited (Gongpyeong-dong), 16th Floor, 47,
Jongno-gu, Seoul, Republic of Korea
Malaysia
Echelon Claims Consultants Sdn Bhd Faber Imperial Court, 21A Jalan Sultan
Ismail, 50250, Kuala Lumpur, Malaysia
JLT Asia Shared Services Sdn Bhd Menara Shell, No 211 Jalan Tun Sambathan
50470 Kuala Lumpur, Malaysia
JLT Re Labuan Limited Saguking Commercial Building, Jalan
Patau-Patau 87000 Labuan FT, Malaysia
Jardine Lloyd Thompson Sdn Bhd 49.00 Faber Imperial Court, 21A Jalan Sultan
Ismail, 50250 Kuala Lumpur, Malaysia
Malta
JLT Insurance Management Malta Limited 34.00 Abate Rigord Street, Ta'Xbiex, XBX 1111, 4
Malta
Manoel Management Services Ltd 34.00 Abate Rigord Street, Ta'Xbiex, XBX 1111, 4
Malta
Mauritius
JI Holdings Limited c/o SGG Corporate Services (Mauritius) Ltd,
Les Cascades,
Edith Cavell Street, Port Louis, Republic
of Mauritius
Mexico
JLT Mexico, Intermediario de Reaseguro, S.A. Avenida Insurgentes Sur 1898, Piso 19,
de C.V. Colonia Florida, CP 01030
México City
Sterling Re Intermediario de Reaseguro, SA 35.50 Insurgentes, Colonia, Torre 01030, Mexico 4
de CV DF
Netherlands
JLT Netherlands BV Schouwburgplein 30-34, 3012 CL, Rotterdam,
Netherlands
JLT Asia Holdings BV Atrium Building, Strawinskylaan 3007, 1077
ZX Amsterdam, Netherlands
JMIB Holdings BV Atrium Building, Strawinskylaan 3007, 1077
ZX Amsterdam, Netherlands
New Zealand
Alpha Consultants Limited Level 5, Tower Centre, 45 Queen Street,
Auckland, New Zealand
Client Provide Limited 90.10 Level 5, Tower Centre, 45 Queen Street,
Auckland, New Zealand
Echelon New Zealand Limited Level 5, Tower Centre, 45 Queen Street,
Auckland, New Zealand
JLT Holdings (NZ) Limited Level 5, Tower Centre, 45 Queen Street,
Auckland, New Zealand
Jardine Lloyd Thompson Limited Level 5, Tower Centre, 45 Queen Street,
Auckland, New Zealand
Wellnz Limited 90.10 Level 5, Tower Centre, 45 Queen Street,
Auckland, New Zealand
Norway
JLT Norway AS Strandveien 13, 1366, Lysaker, Baerum,
Norway
Peru
JLT Corredores de Reaseguros SA 80.10 Avda Santa Maria 110-140, oficina 202.
Miraflores, Lima, Peru
JLT Peru Corredores de Seguros SA 91.62 Av, Santo Toribio 173, San Isidro, Lima,
Peru
Philippines
Jardine Lloyd Thompson Insurance and 111 Paseo de Roxas Building, Legaspi
Reinsurance Brokers, Inc. Village, Makati City 1229, Philippines
Russian Federation
Jardine IBR Limited Office 226, Building 14, 39 Leningradskiy
Prospect, Moscow, Russia
JLT (Insurance Brokers) Limited Office 226, Building 14, 39 Leningradskiy
Prospect, Moscow, Russia
Singapore
Anda Insurance Agencies Pte Ltd 239 Alexandra Road, Singapore 159930
Jardine Lloyd Thompson Private Limited 239 Alexandra Road, Singapore 159930
Jardine Lloyd Thompson Asia Pte Ltd 239 Alexandra Road, Singapore 159930
JLT Interactive Pte Ltd 239 Alexandra Road, Singapore 159930
JLTPCS Holdings Pte. Ltd 75.00 239 Alexandra Road, Singapore 159930
Jardine Lloyd Thompson PCS Pte Ltd 75.00 239 Alexandra Road, Singapore 159930
JLT Specialty Pte Ltd 239 Alexandra Road, Singapore 159930
JLT Singapore Holdings Pte Ltd 239 Alexandra Road, Singapore 159930
South Africa
Eikos Risk Applications (Pty) Ltd Block D, Nicol Main Office Park, 2 Burton
Road, Bryanston, 2191,
South Africa
JLT Employee Benefits SA (Pty) Ltd Block D, Nicol Main Office Park, 2 Burton
Road, Bryanston, 2191,
South Africa
Jardine Lloyd Thompson (Proprietary) Limited 63.00 Block D, Nicol Main Office Park, 2 Burton
Road, Bryanston, 2191,
South Africa
JLT Benefit Solutions SA (Pty) Ltd Block D, Nicol Main Office Park, 2 Burton
Road, Bryanston, 2191,
South Africa
JLT Employee Benefits Holding Company (Pty) Block D, Nicol Main Office Park, 2 Burton
LTD Road, Bryanston, 2191,
South Africa
Jardine Lloyd Thompson South Africa IB Block D, Nicol Main Office Park, 2 Burton
Holding Company (Proprietary) Limited Road, Bryanston, 2191,
South Africa
Spain
March-JLT, Correduria de Seguros y
Reaseguros, S.A. 25.00 Calle de Lagasca 88, Madrid, Spain 4
Sweden
JLT Re (Northern Europe) AB Jakobsbergsgatan 7, 11144 Stockholm, Sweden
JLT Risk Solutions AB 65.00 Jakobsbergsgatan 7, 11144 Stockholm, Sweden
Lavaretus Underwriting AB Jakobsbergsgatan 7, 11144 Stockholm, Sweden
Switzerland
Jardine Lloyd Thompson PCS SA 75.00 Rue de Chantepoulet 1-3, 1201, Geneva,
Switzerland
Taiwan
Jardine Lloyd Thompson Limited 13F, 50 Hsin Sheng S. Road, Sec 1, Taipei,
Taiwan
Thailand
Jardine Lloyd Thompson Limited 49.00 The 9th Towers, 31st Floor, Rama 9 Road,
Huay Khwang, Bangkok, 10310, Thailand
JLT Life Assurance Brokers Limited The 9th Towers, 31st Floor, Rama 9 Road,
Huay Khwang, Bangkok, 10310, Thailand
Turkey
JLT Sigorta ve Reasürans Brokerli i A. 75.20 Kavak Sok, Smart Plaza, No: 31/1 B Blok
. Kat: 4, 34805 Beykoz, Instanbul, Turkey
United Arab Emirates
Insure Direct (Brokers) LLC 49.00 Burj Al Salam , World Trade Centre
Roundabout, Sheikh Zayed Road, Dubai,
P.O.BOX 57006, UAE
Insure Direct - Jardine Lloyd Thompson 61.30 P.O. Box 9731, Dubai, UAE
Limited
Jardine Lloyd Thompson PCS (Dubai) Limited 75.00 Gate Village Building 10, Dubai
International Financial Centre, Dubai,
PO BOX 507288, UAE
United States
1763 Enterprises LLC Corporation Service Company, 2711
Centerville Road, Suite 400, Wilmington,
Delaware, 19808
Charter Risk Management Services LLC 35.70 141 Weston Street #1981, Hartford,
Connecticut 06144
Construction Risk Partners LLC 45.74 Campus View Plaza, 1250 Route 28, Suite
201, Branchburg NJ 08876
Core Risks Ltd. LLC Corporation Service Company, 2711
Centerville Road, Suite 400, Wilmington,
Delaware, 19808
CRP Holding Company LLC 45.74 Campus View Plaza, 1250 Route 28, Suite
201, Branchburg NJ 08876
GCube Insurance Services Inc CSC Lawyers Indorporating Service, 2710
Gateway Oaks Drive, Suite 150N, Sacramento,
CA95833
Isosceles Insurance Company Limited 148 College Street, Suite 204, Burlington,
Vermont 05401
Jardine Lloyd Thompson Capital Markets Inc. Corporation Service Company, 2711
Centerville Road, Suite 400, Wilmington,
Delaware, 19808
Jardine Lloyd Thompson Insurance Services, Corporation Service Company, 2711
Inc Centerville Road, Suite 400, Wilmington,
Delaware, 19808
JLT Facilities, Inc. Corporation Service Company, 2711
Centerville Road, Suite 400, Wilmington,
Delaware, 19808
JLT Aerospace (North America) Inc Corporation Service Company, 2711
Centerville Road, Suite 400, Wilmington,
Delaware, 19808
JLT Holdings Inc Corporation Service Company, 2711
Centerville Road, Suite 400, Wilmington,
Delaware, 19808
JLT Re Consultants Inc Corporation Service Company, 1201 Hays
Street, Tallahassee, FL 32301
JLT Re (North America) Inc Corporation Service Company, 2711
Centerville Road, Suite 400, Wilmington,
Delaware, 19808
JLT Re Solutions Inc Corporation Service Company, 2711
Centerville Road, Suite 400, Wilmington,
Delaware, 19808
JLT Specialty Insurance Services Inc 91.30 Corporation Service Company, 2711
Centerville Road, Suite 400, Wilmington,
Delaware, 19808
JLT Towner Insurance Management (USA) LLC 70.00 100 Main Street, Suite 2, Barre, VT 0541
Risk and Reinsurance Solutions Corporation 9150 S Dadeland Blvd, Suite 1008, Miami, FL
33156
Weston Preference LLC Corporation Service Company, 2711
Centerville Road, Suite 400, Wilmington,
Delaware, 19808
Worldlink Specialty Insurance Services Inc 22 Century Hill Drive, Suite 102, Latham,
NY 12110
Vietnam
Jardine Lloyd Thompson Limited 5th Floor, CJ Building, 6 Le Thanh Ton
Street, District 1, Ho Chi Minh City,
Vietnam
Virgin Islands, British
JIB Holdings (Pacific) Limited Skelton Building, Main Street, Road Town,
Tortola, British Virgin Islands
Notes
1 = Quotas;
2 = Preference shares;
3 = Ordinary and Preference shares;
4 = Associates as at 31 December 2017
Shares held in all companies are Ordinary shares unless where
stated.
The proportion of voting rights held corresponds to the
aggregate interest percentage held by the holding company and its
subsidiary undertakings.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAAAPAESPEEF
(END) Dow Jones Newswires
February 28, 2018 02:02 ET (07:02 GMT)
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