We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for real-time alerts, custom portfolio, and market movers
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Jardine Lloyd | LSE:JLT | London | Ordinary Share | GB0005203376 | ORD 5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1,914.00 | 1,914.00 | 1,916.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMJLT
RNS Number : 9957X
Jardine Lloyd Thompson Group PLC
28 February 2017
28 FEBRUARY 2017
Jardine Lloyd Thompson Group plc
PRELIMINARY RESULTS
FOR THE YEARED 31 DECEMBER 2016 (UNAUDITED)
Jardine Lloyd Thompson Group plc ("JLT" or "the Group") announces its preliminary results for the year ended 31 December 2016.
Despite challenging trading and economic conditions, JLT demonstrated the fundamental strength and resilience of its global franchise in delivering a good performance.
Financial Highlights
-- Revenue growth of 9% to GBP1,261.3m -- Organic revenue growth of 2% -- 3% in JLT Specialty -- 4% in JLT Re -- 3% in International Employee Benefits -- Positive impact of foreign exchange movements
-- Underlying* profit before tax of GBP172.6m, up 1%, reflecting US Specialty investment as planned **
-- Underlying profit before tax, excluding the US investment, up 5% to GBP199.6m -- Reported profit before tax down 13% to GBP134.9m -- Underlying profit margin down 80 bps to 15.4% -- Underlying profit margin, excluding the US investment, down by 30 bps to 18.1% -- Reported diluted EPS down 21% from 48.0p*** to 37.8p -- Underlying diluted EPS down 2% from 52.2p*** to 51.4p
-- Final cash dividend of 20.6p bringing total dividend for 2016 to 32.2p, up 5%, reflecting the Board's confidence in the Group's underlying trading performance
* Underlying results exclude exceptional items of GBP37.7m
** Net investment in US Specialty in 2016 was GBP27.0m (2015: GBP20.5m)
*** 2015 comparatives revised
BUSINESS Highlights
-- Successfully completed turnaround of UK Employee Benefits business, which is now set for a return to growth in revenues and profits; second half revenues of GBP85.1m exceeded those in the same period last year (H2 2015: GBP82.4m).
-- Build-out of US Specialty continued, delivering US$56m of revenues and on track to deliver profits in 2019. The peak of the investment programme was reached in 2016. The recent acquisition of Construction Risk Partners completes JLT's global Construction capability.
-- Disposed of non-core Thistle UK business, which made an operating loss of GBP3.6m in 2016 in the parts which were divested.
Dominic Burke, Group Chief Executive, commented:
"JLT has delivered a good set of financial results in 2016, particularly when set against the continued, challenging trading environment. The Group entered 2017 in good shape, with momentum and confidence that JLT is well-positioned to deliver organic revenue growth more in line with historical rates. I am proud of the achievements and progress we made in 2016 across all of our businesses. The resilience we showed last year positions us very well for further growth."
Enquiries
Jardine Lloyd Thompson Group plc
Dominic Burke Chief Executive 020 7528 4948
Charles Rozes Finance Director 020 7528 4375
Paul Dransfield Head of Investor Relations 020 7528 4933
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.
PRELIMINARY STATEMENT
JLT delivered a good set of financial results in 2016, when set against the continued challenging trading environment, which persisted throughout the year. This included the sustained softness in both the insurance and reinsurance rating environments, depressed commodity prices and lacklustre global GDP growth.
The weakness of sterling from June 2016 was a positive factor in the Group's results; the estimated impact of GBP22.2m at underlying profit before tax level provided a helpful offset to the challenging trading environment.
The Group entered 2017 with momentum intact and confidence that JLT is well positioned to deliver organic revenue growth and to grow earnings across the Group's businesses.
Total revenues increased by 9%, or 3% at constant rates of exchange ("CRE"), to GBP1.26bn with overall organic revenue growth of 2%, consistent with that of 2015, once again impacted by the decline in revenues in the UK and Ireland Employee Benefits ("UK EB") business.
Hot Features
Premium
Total Revenue Trading Margin Underlying
Trading Profit
GBPm 2016 Growth CRE Organic 2015 2016 CRE 2015 2016 CRE 2015
Risk &
Insurance
Specialty
Businesses 765.3 10% 4% 3% 693.0 16% 16% 19% 126.1 113.0 128.5
JLT Re 195.6 13% 4% 4% 173.6 21% 19% 19% 40.5 34.8 32.4
-------- ------- ----- -------- -------- ------ ------ ------ ------ ------ ------
960.9 11% 4% 3% 866.6 17% 16% 19% 166.6 147.8 160.9
Employee
Benefits
UK & Ireland 160.0 (4%) (5%) (8%) 167.4 8% 7% 8% 12.3 11.9 12.8
International
EB 140.4 16% 5% 3% 121.1 26% 26% 25% 37.2 33.1 30.8
-------- ------- ----- -------- -------- ------ ------ ------ ------ ------ ------
300.4 4% (1%) (3%) 288.5 16% 16% 15% 49.5 45.0 43.6
Group* 1,261.3 9% 3% 2% 1,155.1 15.4% 14.4% 16.2% 193.7 170.2 187.5
Notes:
- CRE: Constant rates of exchange are calculated by translating 2016 results at 2015 exchange rates.
- Organic growth is based on total revenue excluding the effect of currency, acquisitions, disposals and investment income.
- Underlying results exclude exceptional items.
* Trading profit figures include central costs.
JLT's Risk & Insurance businesses delivered revenue growth of 11% to GBP960.9m, of which 3% was organic. The rate of organic revenue growth was higher in JLT Re at 4%. The Group's emerging markets businesses in Latin America and Asia saw good organic revenue growth, as did the US Specialty business.
Risk and Insurance trading margins contracted, primarily as a result of the US Specialty investment programme, but JLT Specialty maintained its trading margin and JLT Re grew to 21% (2015:19%).
The full year results of the Employee Benefits businesses were impacted by the disappointing performance of the UK and Ireland business in the first half. The profits of UK EB rebounded in the second half of the year as anticipated and this provides confidence that the business is now firmly set for a return to growth.
The Group's International Employee Benefits operations saw headline revenue growth of 16%, which was primarily driven by foreign exchange, while organic revenue growth was 3%. The trading margin rose 100 bps to 26%.
GBPm 2016 2015
Underlying trading profit 193.7 187.5
Underlying share of associates 1.0 5.5
Net finance costs (22.1) (22.9)
------- -------
Underlying profit before
taxation 172.6 170.1
Exceptional items (37.7) (15.1)
------- -------
Profit before taxation 134.9 155.0
Underlying tax expense (52.3) (47.5)
Tax on exceptional items 8.3 5.9
Non-controlling interests (9.4) (10.3)
------- -------
Profit after taxation and
non-controlling interests 81.5 103.1
------- -------
Underlying profit after
taxation and non-controlling
interests 110.9 112.3
------- -------
Diluted earnings per share 37.8p 48.0p
Underlying diluted earnings
per share 51.4p 52.2p
Total dividend per share 32.2p 30.6p
Restated following revision to the calculation
The Group's underlying trading profit increased by 3% to GBP193.7m; at CRE it decreased by 9%. Underlying profit before tax increased by 1% to GBP172.6m. The trading profit margin reduced from 16.2% to 15.4%.
Excluding the US Specialty net investment of GBP27m, the Group's underlying profit before tax would have increased by 5% and the trading profit margin would have been broadly maintained at 18.1%, compared to 18.4% for 2015.
Reported profit before tax reduced by 13% to GBP134.9m, which includes the impact of exceptional costs of GBP37.7m and, as a consequence, reported EPS decreased to 37.8p.
OPERATIONAL REVIEW
The Group operates two sets of businesses: 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 Trading Underlying
Margin Trading Profit
GBPm 2016 Growth CRE Organic 2015 2016 CRE 2015 2016 CRE 2015
JLT Specialty 327.5 5% 3% 3% 311.2 22% 21% 22% 73.1 67.8 68.3
JLT Re 195.6 13% 4% 4% 173.6 21% 19% 19% 40.5 34.8 32.4
JLT Australia
& New Zealand 117.7 7% (4%) (3%) 109.5 29% 29% 30% 34.1 30.6 32.7
JLT Asia 90.3 18% 5% 5% 76.6 19% 18% 17% 16.8 14.8 12.7
JLT Latin
America 71.4 13% 5% 4% 63.1 30% 27% 34% 21.1 17.6 21.3
JLT Insurance
Services 46.8 (7%) (11%) (11%) 50.6 2% - 12% 0.9 - 6.0
JLT EMEA 41.8 39% 28% 17% 30.1 16% 16% 20% 6.8 6.1 6.0
JLT US Specialty 41.3 77% 57% 52% 23.3 - - - (27.0) (24.0) (20.5)
JLT Canada 19.2 (6%) (14%) (14%) 20.4 (2%) (3%) 7% (0.5) (0.6) 1.5
JLT Insurance
Management 9.3 13% 2% 2% 8.2 8% 8% 6% 0.8 0.7 0.5
------ ------- ------ -------- ------ ----- ----- ----- ------- ------- -------
960.9 11% 4% 3% 866.6 17% 16% 19% 166.6 147.8 160.9
JLT Specialty
JLT Specialty generated a 5% increase in headline revenues to GBP327.5m, or a 3% increase both at CRE and on an organic basis. Trading profit increased by 7% to GBP73.1m, with the trading margin maintained at 22%.
This was a strong performance in challenging trading conditions which saw insurance rates continuing their downward trend across all Specialty lines. The business had to contend in particular with the reduced economic activity in the energy and marine sectors, which led to a lower total value of risk to insure. To put this in context, it has been reported that in excess of $1 trillion of oil and gas capital projects in 2015 and 2016 were deferred, delayed or abandoned. JLT's Energy and Marine divisions saw a GBP12m reduction in year on year revenues, despite increasing their client bases and market shares, and an estimated GBP8.5m negative impact on Group trading profit.
The revenue base of Specialty is, however, both diverse and well-balanced, which enables JLT better to withstand sector-specific challenges. In 2016 there were particularly strong performances by a number of divisions - including Aviation, Construction, Cargo and Food & Agriculture - with higher revenues driven by client retention and market share penetration.
In addition there were important client wins in the Cyber division across a range of major financial institutions and corporate clients, which in turn helped to drive growth across JLT's Financial Lines specialty.
International Specialty Businesses
JLT's international Specialty businesses together delivered revenues of GBP437.8m, an increase of 15% (or 4% at CRE), with organic growth of 3%.
Australia and New Zealand
On a reported basis the Australia and New Zealand businesses saw revenues increase by 7% to GBP117.7m, although this translated to a 4% reduction on a CRE basis. The trading environment has been particularly competitive in Australia and New Zealand and this, coupled with the continued significant pressure on rates in the region, masked a good underlying performance by the business, with high levels of client retention and a number of high profile client wins, particularly in the Financial Lines and Corporate divisions. The new business wins have included an increasing number of 'coast to coast' appointments, further underlining JLT's growing national Specialty presence.
Asia
Asia produced a strong performance in the year, with a headline 18% increase in revenues to GBP90.3m and a 5% organic growth rate. Trading profits grew strongly, with an increase of 17% at CRE. This was a good performance when set against the challenging economic conditions and fierce insurance rating pressure in the region.
Latin America
JLT's Latin American business delivered good revenue growth of 13%, with organic revenue growth of 4%. Operations in Brazil performed strongly despite the difficult economic backdrop in that country. While Latin American Risk and Insurance experienced good revenue growth, trading profit reduced year on year, reflecting the planned investment in building specialty capabilities across the region, the benefits of which are expected to start to be seen in 2017.
US Specialty
The US Specialty business continued to make progress in its second full year of operation, achieving organic revenue growth in excess of 50%, higher than the rate in 2015. The business continued a programme of recruitment, with headcount reaching 223 employees at the year end. Revenues for the year were $56m, up from $36m in 2015, while continued investment in the business resulted in losses of $37m (GBP27.0m).
The business now has a proven capability and a track record of winning business in specialist areas such as Financial Lines and Cyber, Energy, Real Estate and Entertainment.
The recently announced investment in, and partnership with, Construction Risk Partners, a highly respected construction specialist broker, which reported some $24m in revenues in 2016, will establish a market-leading Construction practice as part of the US Specialty business. The acquisition also completes JLT's global Construction capability and enables it to serve international clients wherever they operate around the world.
Given the investments to date in hiring and a steadily growing client list, the Group is confident that US Specialty revenues will once again see a significant uplift in 2017. The progress that has now been made in the US Specialty business means that 2016 represented the high-water mark for the losses recorded in this business.
JLT Re
JLT Re delivered a strong performance in the year, with reported revenues increasing by 13% to GBP195.6m, representing market-leading organic revenue growth of 4%, twice the rate of 2015.
This performance was delivered despite the well documented, multi-year decline in pricing across most lines of reinsurance and in most geographies and the continued consolidation in capital providers. JLT Re has continued to grow revenues and profits steadily despite consecutive years of downward rating pressure.
JLT Re's trading profits increased to GBP40.5m, with an improved trading margin of 21% (2015: 19%). This margin improvement was achieved while the business continues to invest significantly for future growth, not only in recruiting leading talent to further strengthen its General Property, Casualty and Specialty lines, and its analytics capabilities, but also in its infrastructure and systems. Two acquisitions were completed in December 2016 to deepen the capabilities of the business in Healthcare and the Central American region.
JLT Re operates on a global basis, and all regions delivered organic revenue growth in the year. North America continues to deliver a strong performance, with the benefits of the significant investments made in talent and infrastructure now beginning to be realised.
Looking to 2017 and the recent January renewals, a reduced rate of decline in prices from prior years has been evident, with global property-catastrophe pricing falling by 5.7%; this compares with 8.2% in 2016 and double-digit reductions in the two years prior to that. Casualty price reductions were, however, similar to those seen in 2016, with Specialty classes seeing more substantial rate reductions than other areas, but again, a reduced rate of decline was noted.
Today JLT Re is positioned amongst the leading global reinsurance brokers, providing real choice and differentiation. The strong start to the year which this business had underlines how the strategic investments made are enabling it to continue to take market share from its competitors.
Employee Benefits
Total Revenue Trading Underlying
Margin Trading Profit
GBPm 2016 Growth CRE Organic 2015 2016 CRE 2015 2016 CRE 2015
UK & Ireland 160.0 (4%) (5%) (8%) 167.4 8% 7% 8% 12.3 11.9 12.8
Asia 87.3 11% (2%) - 78.9 31% 31% 31% 27.2 23.7 24.5
Australia
& New Zealand 27.5 36% 22% 4% 20.3 20% 20% 16% 5.5 4.9 3.3
Latin America 21.7 15% 10% 10% 18.9 17% 18% 19% 3.7 3.7 3.5
Europe, Middle
East & Africa 1.9 13% 15% 14% 1.7 10% 10% (17%) 0.2 0.2 (0.3)
Canada 2.0 47% 35% 35% 1.3 31% 31% (17%) 0.6 0.6 (0.2)
------ ------- ----- -------- ------ ----- ---- ------ ----- ----- ------
300.4 4% (1%) (3%) 288.5 16% 16% 15% 49.5 45.0 43.6
UK & IRELAND employee benefits
Reported revenues for the year for JLT's UK EB business were GBP160.0m, compared to GBP167.4m in 2015, reflecting the final impact of the cessation of commission revenue from life assurers - which amounted to GBP5m earned in 2015. Second half revenues of GBP85.1m exceeded those of the same period in 2015 of GBP82.4m following the successful completion of the restructure of the business, which was an encouraging indication of the stabilisation in the revenue run rate.
At the time of its 2016 interim results the Group indicated that the business would deliver the majority of its profits in the second half and this has been the case. Trading profit for the year was GBP12.3m, compared to break even at the half year.
The business successfully completed its restructure programme, which has resulted in a flatter, more client-centric structure and a headcount reduction of over 300 employees. The programme will deliver GBP14m of annualised savings in 2017, GBP9m of which were delivered in 2016 (GBP7m of that in the second half).
The focus in 2016 was, and will continue to be into 2017, on transitioning and rebalancing the business so that revenues and trading profit margins can grow. The emphasis of the business continues to be on investing to strengthen and enhance platforms and to build out the sales function.
It is anticipated that UK EB will deliver organic revenue growth for 2017 and this, taken with the GBP5m residual benefit of the restructure programme, means the Group is confident that this business is making steady progress towards delivering a 15% trading profit margin for 2018.
INTERNATIONal Employee Benefits
JLT's EB businesses in other parts of the world performed well.
Asia
In Asia, the Private Client Services (PCS) high net worth life insurance broking business saw some slowdown in first half revenues due to regional economic uncertainty in South Asia; however, steps were taken in the second half to broaden the range of products offered by the business. This succeeded in pulling revenues back up from the half year position, which had been negative year on year.
Australia and New Zealand
The Australia and New Zealand EB business achieved 36% revenue growth, following the acquisitions made in 2015 and 2016 of rehabilitation services providers in relation to workers compensation insurance. Organic revenue growth was 4%. With a series of major client wins as a result of the expanded capability of the business, accelerated revenue growth and improved margins are anticipated in 2017. The trading margin of the business improved to 20% (2015:16%).
Latin America
JLT's Latin America EB operations delivered organic revenue growth of 10%. Performance was particularly notable in Colombia - driven by the workers compensation business - and in Brazil, despite the challenging local economic backdrop. Investment has continued to be made in building out capabilities and expanding the offering in the region, which drove a small increase in trading profit but a 200 bps reduction in trading margin.
ASSOCIATES
The Group's income from its Associates reduced by GBP4.5m to GBP1.0m following the disposal of JLT's French associate in May 2015.
OPERATING COSTS
In 2016, total underlying operating costs (excluding exceptional items) increased by GBP100m, or 10%, to GBP1,067.6m. Of this increase, GBP53m resulted from changes in foreign exchange rates; GBP17m from investment in US Specialty; GBP9m from the continued growth of the JLT Specialty business; and GBP7m from the net impact of acquisitions and disposals. Staff costs in 2016 (outside of US Specialty) increased by GBP21m as a result of investment in the Fine Arts division in JLT Specialty, the build out of the Latin America operations and investments in other markets including Europe, Middle East and Africa. The mix of the cost base remained unchanged, with staff and premises costs as the major individual expense items.
In 2017, the cost of the Group's operations in London will increase by approximately GBP7m as the business increases the space it occupies to accommodate growth in the business and other costs are incurred, such as higher UK business rates and the UK apprenticeship levy.
The Group's underlying operating cost ratio increased by 80 basis points to 84.6% of total revenues. This reflected the impact of a higher level of planned investment in US Specialty, the trading loss incurred by Thistle UK in the year and the 2015 non-recurring reduction of GBP5.5m in Head Office costs. The impact of the continued investment in US Specialty was the principal reason for the increase in the staff costs to revenue ratio from 61.0% to 62.3%.
EXCEPTIONAL ITEMS
Total net exceptional costs were GBP37.7m (2015: GBP15.1m). These were primarily driven by net costs of GBP21.1m relating to a litigation settlement, which was marginally less than originally anticipated; restructuring costs of GBP13.9m relating to the UK EB business; GBP1.2m of acquisition and related costs; and a GBP1.6m loss mainly on the disposal of a business in Indonesia. The UK EB restructuring programme is complete and the remaining GBP5m of benefit is expected to be captured in 2017.
BalanCe Sheet and funding
The net assets of the Group increased to GBP351m from GBP331m. The key movements were:
-- an increase in goodwill of GBP47m, almost entirely due to the re-translation of goodwill recognised in foreign currencies. The Group completed 7 acquisitions for a total consideration of GBP25.3m, the goodwill impact of which was offset by the 2 disposals in the year;
-- an increase in the investments in Associates related to the increase to 49% (from 26%) in the Group's interest in its Indian Associate business. Approximately GBP6m of the increase related to foreign exchange;
-- a net increase in working capital of GBP31m which included GBP14m in respect of foreign exchange re-translation. JLT Specialty's debtors increased in line with their business, with the debtor ageing profile remaining similar year-on-year. JLT Re's debtors increased as a result of the nature of their business where, for certain lines, the collection period is more than 12 months from initial income recognition; and
-- an increase in the pension liability to GBP198m (2015: GBP130m), as a result of changes in corporate bond yields and inflation rates. The deferred tax asset attributable to this movement was recognised in the tax line.
The Group continues to be well funded, with an appropriate mix of short and long-term debt, with a range of maturities that extend to 2029.
Net debt, defined as own funds less total borrowings net of transaction costs, was GBP496m (2015: GBP440m). At 31 December 2016, the Group had committed long-term unsecured revolving credit facilities of GBP500m and drawn private placement loan notes equivalent to GBP508m, resulting in total committed debt facilities equivalent to GBP1,008m, with maturities between 2017 and 2029. In January 2017, the Group agreed with its relationship banks an extension of its core revolving credit facility by a further one year to a new maturity date of 2022.
Gross borrowings were GBP688m, which includes GBP671m of borrowings under the Group's committed facilities, leaving unutilised committed facilities headroom of GBP337m.
Net finance costs in 2016 reduced by GBP1m to GBP22m. They are expected to increase in 2017, due to acquisition spend.
The Net Debt to EBITDA ratio, calculated on a bank covenant basis, reduced from 1.7:1 at the end of 2015 to 1.6:1 at the end of 2016. This remains well within JLT's bank covenant and continues to reflect an investment grade profile. JLT will continue to invest in its businesses in line with its strategy and the Group anticipates keeping the Net Debt to EBITDA ratio within a conservative range.
cashflow
The Group primarily monitors operational cash flows, which report cash and net debt movements but exclude fiduciary funds; the statutory cash flows include movements in these funds.
In 2016, the Group generated GBP238m of EBITDA, which included GBP31m of outflows in respect of exceptional items (2015: GBP12m). Operational free cash flow was GBP141m, which was lower as a percentage of EBITDA compared to 2015, but higher as a percentage than the prior three years.
Within operational free cash flow, the net increase in working capital in the year is predominantly driven by an increase in JLT Specialty and JLT Re debtors in line with their growth, but without a deterioration in the ageing profile. Annual capex outflow reduced in the year, primarily driven by a GBP15m reduction in staff related items, with the balance being split between IT and premises.
The net effect of acquisitions and disposals, including deferred consideration adjustments, was a cash inflow of GBP7m.
The tax charge for the year was GBP44.0m, representing an effective tax rate of 32.6% (2015: 26.8%). The underlying tax expense was GBP52.3m, representing an effective tax rate of 30.3% (2015: 27.9%). The year-on-year increase in the underlying tax expense was mainly due to deferred tax assets not being recognised in respect of certain of the Group's overseas operations, combined with the global nature of JLT's business and the different tax rates across those geographies.
Taken together, the net cash outflow of GBP15m for 2016 was relatively small compared to that of prior periods, and not unexpected given the growth and investment across JLT. 2015 cash flows were influenced by the proceeds from the sale of the Group's French associate in May 2015.
DIVIDS
Subject to shareholder approval, the final dividend will be increased to 20.6p per share for the year ended 31 December 2016 (2015: 19.5p) and will be paid on 4 May 2017 to shareholders on the register at 31 March 2017. This brings the total dividend for the year to 32.2p per share, compared to 30.6p for the prior year, an increase of 5.2%.
BOARD AND SENIOR MANAGEMENT DEVELOPMENTS
There were a number of Board and senior management changes during the year. James Twining stepped down from the Board with effect from 26 April 2016. Bruce Carnegie-Brown joined the Board as a Non-executive Director on 1 May 2016 and succeeded Richard Harvey as Chairman of the Remuneration Committee on 1 November 2016. Bruce will unfortunately be stepping down from the Board at the end of June, following his appointment as Chairman of Lloyd's of London. Lord Leach, a Non-executive Director for many years, sadly died on 12 June 2016. Adam Keswick joined the Board as Deputy Chairman with effect from 1 September 2016. Richard Harvey retired from the Board with effect from 31 December 2016 and Jonathan Dawson succeeded him as Senior Independent Director with effect from the same date.
Mike Rice, CEO of JLT's US Specialty business, and William Nabarro, Special Adviser to the Group Chief Executive, both joined the Group Executive Committee with effect from 1 May 2016. Lucy Clarke, Deputy CEO of JLT Specialty, joined the Group Executive Committee with effect from 26 September 2016.
With effect from 28 February 2017, the following senior management changes are being made: Mike Methley is being appointed as Group Chief Operating Officer; Mark Drummond Brady becomes CEO of JLT Latin America and Chairman of JLT Canada, in addition to his current role as Deputy Group CEO; Mike Reynolds, Global CEO of JLT Re, assumes responsibility for JLT Insurance Management; and Bala Viswanathan, CEO of JLT UK & Ireland Employee Benefits, also becomes International Chairman of Employee Benefits.
impact of foreign exchange
There are two components to the Group's foreign exchange (FX) exposure: translation of overseas results into sterling; and transactional exchange where local revenues and costs are denominated in different currencies, which the Group seeks to mitigate by hedging where appropriate.
The translation of overseas results is done using an average rate. Although the USD is a large driver of FX impacts, it is only one of approximately 30 currencies which affect the ultimate outcome in a given period.
The weakening of sterling after the EU referendum in June had a significant impact in the year. While the Group's hedging programme has the effect of smoothing the achieved rate on USD transactional revenues, the scale of the sterling depreciation nonetheless saw material improvement in the achieved rate, especially in the second half of 2016. Of the overall GBP22.2m gain at underlying profit before tax level, GBP13.4m related to transactional FX and GBP8.8m related to the translation of overseas results into sterling.
The FX market currently remains volatile, consequently it is not possible to predict the impact of foreign exchange on the Group's 2017 results with any certainty.
restatement of EPS
During the year a review was undertaken of the application of IAS 33 "Earnings per share", following changes made during 2014 and 2015 to the terms of certain staff share awards that were classified as "Participating Equity Instruments" for the purposes of calculating Earnings per Share ("EPS"). This review has led to a restatement of the reported number of ordinary shares in 2015, resulting in a small increase of 1.6p in basic EPS for 2015, from 47.0p to 48.6p and an increase of 1.0p in reported diluted EPS for 2015, from 47.0p to 48.0p.
OUTLOOK
JLT has entered 2017 with good momentum across all of its businesses. The Group is therefore confident that it will deliver organic revenue growth more in line with historical rates, generating sustained year-on-year financial progress.
Consolidated income statement
for the year ended 31 December 2016
2016 2015
Notes GBP'000 GBP'000
------------------------------------------ ----- --------- ---------
Fees and commissions 2 1,256,556 1,151,392
------------------------------------------ ----- --------- ---------
Investment income 2,4 4,730 3,689
------------------------------------------ ----- --------- ---------
Total revenue 2 1,261,286 1,155,081
------------------------------------------ ----- --------- ---------
Salaries and associated expenses 6 (794,363) (727,334)
------------------------------------------ ----- --------- ---------
Premises (66,849) (61,167)
------------------------------------------ ----- --------- ---------
Other operating costs (209,518) (163,685)
------------------------------------------ ----- --------- ---------
Depreciation, amortisation and impairment
charges 3 (34,951) (30,538)
------------------------------------------ ----- --------- ---------
Operating profit 1,2,3 155,605 172,357
------------------------------------------ ----- --------- ---------
Analysed as:
------------------------------------------ ----- --------- ---------
Operating profit before exceptional
items 1,2 193,672 187,462
------------------------------------------ ----- --------- ---------
Acquisition and integration costs 3 (1,245) (21,155)
------------------------------------------ ----- --------- ---------
Restructuring costs 3 (13,900) (9,878)
------------------------------------------ ----- --------- ---------
Net litigation costs 3 (21,114) (1,556)
------------------------------------------ ----- --------- ---------
Net gain on sale of associate 3 - 18,595
------------------------------------------ ----- --------- ---------
Other exceptional items 3 (1,808) (1,111)
------------------------------------------ ----- --------- ---------
Operating profit 1,2,3 155,605 172,357
------------------------------------------ ----- --------- ---------
Finance costs 5 (24,225) (24,473)
------------------------------------------ -----
Finance income 5 2,147 1,612
------------------------------------------ -----
Finance costs - net 5 (22,078) (22,861)
------------------------------------------ ----- --------- ---------
Share of results of associates 1,353 5,531
------------------------------------------ ----- --------- ---------
Profit before taxation 1,2 134,880 155,027
------------------------------------------ ----- --------- ---------
Income tax expense 8 (44,018) (41,586)
------------------------------------------ ----- --------- ---------
Profit for the year 90,862 113,441
------------------------------------------ ----- --------- ---------
Profit attributable to:
------------------------------------------ ----- --------- ---------
Owners of the parent 2 81,466 103,099
------------------------------------------ ----- --------- ---------
Non-controlling interests 9,396 10,342
------------------------------------------ ----- --------- ---------
90,862 113,441
------------------------------------------ ----- --------- ---------
Earnings per share attributable to
the owners of the parent during the
year
(expressed in pence per share) 9 restated
------------------------------------------ ----- --------- ---------
Basic earnings per share 38.6p 48.6p
------------------------------------------ ----- --------- ---------
Diluted earnings per share 37.8p 48.0p
------------------------------------------ ----- --------- ---------
Consolidated statement of comprehensive income
for the year ended 31 December 2016
2016 2015
Notes GBP'000 GBP'000
-------------------------------------------- ----- -------- --------
Profit for the year 90,862 113,441
-------------------------------------------- ----- -------- --------
Other comprehensive (expense)/income
-------------------------------------------- ----- -------- --------
Items that will not be reclassified
to profit or loss
-------------------------------------------- -----
Remeasurement of post-employment benefit
obligations 31 (71,642) 43,149
Taxation thereon 11,850 (8,856)
-------------------------------------------- -----
Total items that will not be reclassified
to profit or loss (59,792) 34,293
-------------------------------------------- ----- -------- --------
Items that may be reclassified subsequently
to profit or loss
-------------------------------------------- ----- -------- --------
Fair value gains/(losses) net of tax:
-------------------------------------------- -----
- available-for-sale 42 (34)
-------------------------------------------- -----
- available-for-sale reclassified
to the income statement (181) 10
-------------------------------------------- -----
- cash flow hedges (41,487) (12,569)
-------------------------------------------- -----
Currency translation differences 105,369 (13,622)
-------------------------------------------- -----
Total items that may be reclassified
subsequently to profit or loss 63,743 (26,215)
-------------------------------------------- ----- -------- --------
Other comprehensive income net of
tax 3,951 8,078
-------------------------------------------- ----- -------- --------
Total comprehensive income for the
year 94,813 121,519
-------------------------------------------- ----- -------- --------
Attributable to:
-------------------------------------------- -----
Owners of the parent 80,889 112,552
-------------------------------------------- -----
Non-controlling interests 13,924 8,967
-------------------------------------------- ----- -------- --------
94,813 121,519
-------------------------------------------- ----- -------- --------
Consolidated balance sheet
as at 31 December 2016
2016 2015
Notes GBP'000 GBP'000
--------------------------------------- ----- ----------- -----------
NET OPERATING ASSETS
--------------------------------------- ----- ----------- -----------
Non-current assets
--------------------------------------- ----- ----------- -----------
Goodwill 11 543,013 496,166
--------------------------------------- ----- ----------- -----------
Other intangible assets 12 101,963 104,323
--------------------------------------- ----- ----------- -----------
Property, plant and equipment 13 64,330 63,167
--------------------------------------- ----- ----------- -----------
Investments in associates 14 50,928 41,180
--------------------------------------- ----- ----------- -----------
Available-for-sale financial assets 15,20 23,805 15,466
--------------------------------------- ----- ----------- -----------
Derivative financial instruments 16,20 117,043 33,684
--------------------------------------- ----- ----------- -----------
Retirement benefit surpluses 31 509 366
--------------------------------------- ----- ----------- -----------
Deferred tax assets 22 70,088 51,023
--------------------------------------- ----- ----------- -----------
971,679 805,375
--------------------------------------- ----- ----------- -----------
Current assets
--------------------------------------- ----- ----------- -----------
Trade and other receivables 17 588,640 528,595
--------------------------------------- ----- ----------- -----------
Derivative financial instruments 16,20 7,930 1,544
--------------------------------------- ----- ----------- -----------
Available-for-sale financial assets 15,20 116,933 19
--------------------------------------- ----- ----------- -----------
Cash and cash equivalents 18,20 939,945 901,087
--------------------------------------- ----- ----------- -----------
1,653,448 1,431,245
--------------------------------------- ----- ----------- -----------
Current liabilities
--------------------------------------- ----- ----------- -----------
Borrowings 20,21 (54,729) (22,338)
--------------------------------------- ----- ----------- -----------
Trade and other payables 19 (1,257,782) (1,086,278)
--------------------------------------- -----
Derivative financial instruments 16,20 (33,136) (6,115)
--------------------------------------- -----
Current tax liabilities (5,119) (8,749)
--------------------------------------- -----
Provisions for liabilities and charges 23 (8,826) (18,594)
--------------------------------------- ----- ----------- -----------
(1,359,592) (1,142,074)
--------------------------------------- ----- ----------- -----------
Net current assets 293,856 289,171
--------------------------------------- ----- ----------- -----------
Non-current liabilities
--------------------------------------- ----- ----------- -----------
Borrowings 20,21 (633,103) (581,244)
--------------------------------------- ----- ----------- -----------
Derivative financial instruments 16,20 (69,652) (33,726)
--------------------------------------- ----- ----------- -----------
Deferred tax liabilities 22 (11,378) (16,978)
--------------------------------------- ----- ----------- -----------
Retirement benefit obligations 31 (198,921) (130,753)
--------------------------------------- ----- ----------- -----------
Provisions for liabilities and charges 23 (1,571) (1,043)
--------------------------------------- ----- ----------- -----------
(914,625) (763,744)
--------------------------------------- ----- ----------- -----------
350,910 330,802
--------------------------------------- ----- ----------- -----------
TOTAL EQUITY
--------------------------------------- ----- ----------- -----------
Capital and reserves attributable
to the owners of the parent
--------------------------------------- ----- ----------- -----------
Ordinary shares 24 11,008 11,008
--------------------------------------- ----- ----------- -----------
Share premium 24,26 104,111 104,074
--------------------------------------- ----- ----------- -----------
Fair value and hedging reserves 26 (54,453) (12,827)
--------------------------------------- ----- ----------- -----------
Exchange reserves 26 83,561 (17,280)
--------------------------------------- ----- ----------- -----------
Retained earnings 183,919 227,362
--------------------------------------- ----- ----------- -----------
Shareholders' equity 328,146 312,337
--------------------------------------- ----- ----------- -----------
Non-controlling interests 22,764 18,465
--------------------------------------- ----- ----------- -----------
350,910 330,802
--------------------------------------- ----- ----------- -----------
Consolidated statement of changes in equity
for the year ended 31 December 2016
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
period - - 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 29 - - - - (1,159) (1,159)
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Disposals 30 - - - - (31) (31)
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Change in 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
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
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
2015 11,006 98,674 178,932 288,612 17,940 306,552
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Profit for the
period - - 103,099 103,099 10,342 113,441
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Other comprehensive
(expense)/
income for the
period - (24,840) 34,293 9,453 (1,375) 8,078
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Total comprehensive
(expense)/
income for the
period - (24,840) 137,392 112,552 8,967 121,519
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Dividends 10 - - (64,484) (64,484) (8,923) (73,407)
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Amounts in respect
of share based
payments:
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
- reversal of amortisation
net of tax - - 21,740 21,740 - 21,740
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
- shares acquired - - (26,056) (26,056) - (26,056)
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Acquisitions - - - - (787) (787)
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Disposals - - - - 1,268 1,268
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Change in non-controlling
interests - - (20,162) (20,162) - (20,162)
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Issue of share
capital 24 2 133 - 135 - 135
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Balance at 31
December 2015 11,008 73,967 227,362 312,337 18,465 330,802
---------------------------- ----- -------- --------- --------- ---------------- ------------ ---------
Consolidated statement of cash flows
for the year ended 31 December 2016
2016 2015
Notes GBP'000 GBP'000
--------------------------------------------- ----- --------- ---------
Cash flows from operating activities
--------------------------------------------- ----- --------- ---------
Cash generated from operations 28 166,712 215,380
--------------------------------------------- ----- --------- ---------
Interest paid (17,403) (16,448)
--------------------------------------------- ----- --------- ---------
Interest received 6,639 5,116
--------------------------------------------- ----- --------- ---------
Taxation paid (46,241) (37,003)
--------------------------------------------- ----- --------- ---------
Increase in net insurance broking
payables 137,510 883
--------------------------------------------- ----- --------- ---------
247,217 167,928
--------------------------------------------- ----- --------- ---------
Dividend received from associates 935 800
--------------------------------------------- ----- --------- ---------
Net cash generated from operating
activities 248,152 168,728
--------------------------------------------- ----- --------- ---------
Cash flows from investing activities
--------------------------------------------- ----- --------- ---------
Purchase of property, plant and equipment 13 (9,556) (15,183)
--------------------------------------------- ----- --------- ---------
Purchase of other intangible assets 12 (30,215) (45,940)
--------------------------------------------- ----- --------- ---------
Proceeds from disposal of property,
plant and equipment 928 1,282
--------------------------------------------- ----- --------- ---------
Acquisition of businesses, net of
cash acquired 29 (13,381) (20,824)
--------------------------------------------- ----- --------- ---------
Acquisition of associates (3,013) (411)
--------------------------------------------- ----- --------- ---------
Proceeds from disposal of businesses,
net of cash disposed 30 15,141 (122)
--------------------------------------------- ----- --------- ---------
Proceeds from disposal of associates 2 - 80,235
--------------------------------------------- ----- --------- ---------
Purchase of available-for-sale financial
assets 15 (107,636) (5,081)
--------------------------------------------- ----- --------- ---------
Proceeds from disposal of available-for-sale
financial assets 20 5,039
--------------------------------------------- ----- --------- ---------
Purchase of available-for-sale other
investments 15 - (1,964)
--------------------------------------------- ----- --------- ---------
Proceeds from disposal of available-for-sale
other investments 303 243
--------------------------------------------- ----- --------- ---------
Net cash used in investing activities (147,409) (2,726)
--------------------------------------------- ----- --------- ---------
Cash flows from financing activities
--------------------------------------------- ----- --------- ---------
Dividends paid to owners of the parent (66,388) (63,094)
--------------------------------------------- ----- --------- ---------
Purchase of shares (17,809) (26,056)
--------------------------------------------- ----- --------- ---------
Proceeds from issuance of ordinary
shares 24 37 135
--------------------------------------------- ----- --------- ---------
Proceeds from borrowings 355 17,637
--------------------------------------------- ----- --------- ---------
Repayments of borrowings (5,056) (50,118)
--------------------------------------------- ----- --------- ---------
Dividends paid to non-controlling
interests (8,435) (8,923)
--------------------------------------------- ----- --------- ---------
Net cash used in financing activities (97,296) (130,419)
--------------------------------------------- ----- --------- ---------
Net increase in cash and cash equivalents 3,447 35,583
--------------------------------------------- ----- --------- ---------
Cash and cash equivalents at beginning
of year 901,087 871,246
--------------------------------------------- ----- --------- ---------
Exchange gains/(losses) on cash and
cash equivalents 35,411 (5,742)
--------------------------------------------- ----- --------- ---------
Cash and cash equivalents at end of year 18 939,945 901,087 --------------------------------------------- ----- --------- ---------
SIGNIFICANT ACCOUNTING POLICIES (UNAUDITED)
for the year ended 31 December 2016
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:
the available-for-sale financial assets, financial assets and liabilities (including derivative financial instruments) are measured at fair value; and
defined benefit pension plans where plan assets are measured at fair value.
STANDARDS, AMMENTS AND INTERPRETATIONS EFFECTIVE IN 2016
No new standards, amendments or interpretations, effective for the first time for the financial year beginning on or after 1 January 2016 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 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 remeasured 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:
assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
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
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 recognised in 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 1 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 33.33% 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:
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. These 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.
Interest on deposits and interest-bearing investments is credited 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.
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 includes 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 deferred and contingent consideration 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 benefit 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 and disposal 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.
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 recognised in 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 detailed in the Finance Director's Review and the Risk Management Report of the Annual Report 2016.
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 is 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 the 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) Errors and omissions liability
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, other than IFRS 16, have been published and are not mandatory for 31 December 2016 reporting periods and the Group has not adopted them early.
Accounting standards and interpretation applicable on or after 1 January 2017
IFRS 9 -Financial Instruments
IFRS 9, ('Financial instruments') addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of IFRS 9 was issued in July 2015. 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. There is now a new expected credit losses model that replaces the incurred loss impairment model used in IAS 39. For financial liabilities there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. 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 standard is effective for accounting periods beginning on or after 1 January 2018. Early adoption is permitted.
The changes to the hedge accounting requirements are not expected to have a material impact on the Group. The classification of Financial Instruments is not expected to have a material impact on the Group, with the exception of any items that are classified as fair value through OCI, where there will be no recycling through the Income statement. The change to an expected loss model will mainly focus of the Group's impairment of trade receivables. The impact of this is being assessed.
IFRS 15 - Revenue from contracts with customers
IFRS 15 ('revenue from contracts with customers') is effective for annual periods beginning on or after 1 January 2018 and addresses revenue recognition for customer contracts, with particular focus on aligning revenue recognition with the separate and distinct performance obligation to the customer. The standard replaces IAS 18 ('revenue') and IAS 11 ('construction contracts') and related interpretations. The Group's review of the standard is on-going, but will implement in January 2018, reporting revenues on this basis for the half year period ending 30 June 2018 and full year period ending 31 December 2018. Restatements of 2017 revenues for these corresponding periods will be completed at those intervals.
Under existing accounting policies, the primary trigger for revenue recognition is the policy inception date, and this is anticipated to remain the same under the new standard. The Group defers some elements of revenue currently, primarily to reflect anticipated claims handling activity but is considering non-claims servicing requirements under the new standard. At this time, the Group is not able to conclude or quantify the impact of the new standard on revenues, but it is likely that further elements of revenue will be deferred for both insurance broking arrangements and long-term administrative contracts. The standard also requires costs to be aligned with revenue recognition wherever possible and this is also being reviewed.
IFRS 16 - Leases
IFRS 16, ('Leases') 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 subject to EU endorsement. The Group is yet to assess IFRS 16's full impact.
Notes to the financial statements
For the year ended 31 December 2016
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
2016
--------------------------------- ----------------------------------
Underlying 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
--------------------------------- ---------- ----------- ---------
Year ended 31 December
2015
--------------------------------- ----------------------------------
Underlying Exceptional
profit items Total
GBP'000 GBP'000 GBP'000
--------------------------------- ---------- ----------- ---------
Fees and commissions 1,151,392 - 1,151,392
--------------------------------- ---------- ----------- ---------
Investment income 3,689 - 3,689
--------------------------------- ---------- ----------- ---------
Salaries and associated expenses (704,435) (22,899) (727,334)
--------------------------------- ---------- ----------- ---------
Premises (58,852) (2,315) (61,167)
--------------------------------- ---------- ----------- ---------
Other operating costs (173,794) 10,109 (163,685)
--------------------------------- ---------- ----------- ---------
Depreciation, amortisation and
impairment charges (30,538) - (30,538)
--------------------------------- ---------- ----------- ---------
Trading profit 187,462 (15,105) 172,357
--------------------------------- ---------- ----------- ---------
Finance costs - net (22,861) - (22,861)
--------------------------------- ---------- ----------- ---------
Share of results of associates 5,531 - 5,531
--------------------------------- ---------- ----------- ---------
Profit before taxation 170,132 (15,105) 155,027
--------------------------------- ---------- ----------- ---------
In 2015 total other operating costs includes the gain on the disposal of the Group's interest in Milestone, the holding company of Siaci Saint Honoré, and elements of the net litigation costs.
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, wholesale, reinsurance broking, personal lines and SME 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.
JLT USA now qualifies as a reportable operating segment and as a result comparatives have been restated.
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.
During the year, the Group increased its stake in JLT Independent Insurance Brokers Private Ltd. from 26% to 49% for a consideration of GBP3,013,000.
On 6 May 2015, the Group disposed of its 26% stake in Milestone, the holding company of Siaci Saint Honoré, generating cash proceeds of GBP80,235,000 and net exceptional gain of GBP18,595,000.
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 JLT & & Employee Office
31 December Specialty Re Zealand Asia 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 GBP'000
---------------- --------- -------- --------- ------- --------- --------- -------- ------- -------- ------------ -----------
Fees and
commissions 325,675 195,065 115,950 90,133 41,313 188,103 160,016 87,260 53,041 - 1,256,556
---------------- --------- -------- --------- ------- --------- --------- -------- ------- -------- ------------ -----------
Investment
income 1,776 541 1,702 149 - 488 2 17 55 - 4,730
---------------- --------- -------- --------- ------- --------- --------- -------- ------- -------- ------------ -----------
Total revenue 327,451 195,606 117,652 90,282 41,313 188,591 160,018 87,277 53,096 - 1,261,286
---------------- --------- -------- --------- ------- --------- --------- -------- ------- -------- ------------ -----------
Underlying
trading profit 73,016 40,521 34,137 16,825 (26,981) 29,060 12,315 27,130 10,029 (22,380) 193,672
---------------- --------- -------- --------- ------- --------- --------- -------- ------- -------- ------------ -----------
Operating
profit 52,172 40,589 34,135 19,404 (26,981) 30,742 (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 before
taxation 52,172 40,589 34,135 19,404 (26,981) 30,742 (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
attributable
to the owners
of the parent 52,172 40,589 34,135 19,404 (26,981) 30,742 (2,390) 23,290 9,851 (99,346) 81,466
---------------- --------- -------- --------- ------- --------- --------- -------- ------- -------- ------------ -----------
2,574,199 2,574,199
---------------- --------- -------- --------- ------- --------- --------- -------- ------- -------- ------------ -----------
Segment assets
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 2,997 7,406 2,821 1,401 3,204 4,759 11,338 314 391 5,140 39,771
---------------- --------- -------- --------- ------- --------- --------- -------- ------- -------- ------------ -----------
Depreciation,
amortisation
and impairment
charges (9,434) (3,141) (2,274) (2,932) (3,434) (4,424) (7,583) (1,262) (1,109) (14,310) (49,903)
---------------- --------- -------- --------- ------- --------- --------- -------- ------- -------- ------------ -----------
Risk & Insurance Employee Benefits
------------------------------------------------------------ --------------------------
JLT Other
Australia Risk UK Other Head
Year ended JLT JLT & New JLT JLT & & Employee Office
31 December Specialty Re Zealand Asia USA Insurance Ireland Asia Benefits & Other Total
2015 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- --------- ------- --------- ------- --------- --------- ------- ------- -------- ----------- -----------
Fees and
commissions 310,366 173,274 107,504 76,406 23,285 172,138 167,376 78,903 42,140 - 1,151,392
---------------- --------- ------- --------- ------- --------- --------- ------- ------- -------- ----------- -----------
Investment
income 805 286 2,032 177 - 347 1 13 28 - 3,689
---------------- --------- ------- --------- ------- --------- --------- ------- ------- -------- ----------- -----------
Total revenue 311,171 173,560 109,536 76,583 23,285 172,485 167,377 78,916 42,168 - 1,155,081
---------------- --------- ------- --------- ------- --------- --------- ------- ------- -------- ----------- -----------
Underlying
trading profit 68,294 32,416 32,745 12,657 (20,544) 35,286 12,829 24,433 6,295 (16,949) 187,462
---------------- --------- ------- --------- ------- --------- --------- ------- ------- -------- ----------- -----------
Operating
profit 60,071 36,739 32,745 12,814 (20,984) 33,303 8,041 24,431 4,481 (19,284) 172,357
---------------- --------- ------- --------- ------- --------- --------- ------- ------- -------- ----------- -----------
Finance costs
- net - - - - - - - - - (22,861) (22,861)
---------------- --------- ------- --------- ------- --------- --------- ------- ------- -------- ----------- -----------
Share of
results of
associates - - - - - - - - - 5,531 5,531
---------------- --------- ------- --------- ------- --------- --------- ------- ------- -------- ----------- -----------
Profit before
taxation 60,071 36,739 32,745 12,814 (20,984) 33,303 8,041 24,431 4,481 (36,614) 155,027
---------------- --------- ------- --------- ------- --------- --------- ------- ------- -------- ----------- -----------
Income tax
expense - - - - - - - - - (41,586) (41,586)
---------------- --------- ------- --------- ------- --------- --------- ------- ------- -------- ----------- -----------
Non-controlling
interests - - - - - - - - - (10,342) (10,342)
---------------- --------- ------- --------- ------- --------- --------- ------- ------- -------- ----------- -----------
Net profit
attributable
to the owners
of the parent 60,071 36,739 32,745 12,814 (20,984) 33,303 8,041 24,431 4,481 (88,542) 103,099
---------------- --------- ------- --------- ------- --------- --------- ------- ------- -------- ----------- -----------
Segment assets 2,195,440 2,195,440
Investments
in associates 41,180 41,180
---------------- --------- ------- --------- ------- --------- --------- ------- ------- -------- ----------- -----------
Total assets 2,236,620 2,236,620
---------------- --------- ------- --------- ------- --------- --------- ------- ------- -------- ----------- -----------
Segment
liabilities (1,905,818) (1,905,818)
---------------- --------- ------- --------- ------- --------- --------- ------- ------- -------- ----------- -----------
Total
liabilities (1,905,818) (1,905,818) ---------------- --------- ------- --------- ------- --------- --------- ------- ------- -------- ----------- ----------- Other segment items: ---------------- --------- ------- --------- ------- --------- --------- ------- ------- -------- ----------- ----------- Capital expenditure 10,578 8,877 1,737 2,752 7,531 4,374 10,851 1,510 473 12,440 61,123 ---------------- --------- ------- --------- ------- --------- --------- ------- ------- -------- ----------- ----------- Depreciation, amortisation and impairment charges (8,232) (1,949) (2,614) (2,638) (2,577) (4,114) (6,561) (880) (775) (12,570) (42,910) ---------------- --------- ------- --------- ------- --------- --------- ------- ------- -------- ----------- -----------
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, 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 and deferred tax assets are excluded from segment assets. Interest bearing liabilities (eg borrowings) and income 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 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)
--------------------------- ------------ ------------ ------------ ---------- ------------
Fees and Fees and Segment
commissions commissions non-current Segment Segment
(1) (2) assets assets liabilities
--------------------------- ------------ ------------ ------------ --------- ------------
Year ended 31
December 2015 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ------------ ------------ ------------ --------- ------------
UK 592,652 365,892 391,344 1,271,524 (854,669)
--------------------------- ------------ ------------ ------------ --------- ------------
Americas 218,962 335,914 167,288 345,628 (178,662)
--------------------------- ------------ ------------ ------------ --------- ------------
Australia 130,470 140,631 32,725 112,941 (74,525)
--------------------------- ------------ ------------ ------------ --------- ------------
Asia 173,305 175,082 44,462 162,495 (124,704)
--------------------------- ------------ ------------ ------------ --------- ------------
Europe 31,000 87,804 21,745 58,465 (31,818)
--------------------------- ------------ ------------ ------------ --------- ------------
Rest of the
World 5,003 46,069 6,092 8,433 (4,986)
--------------------------- ------------ ------------ ------------ --------- ------------
1,151,392 1,151,392 663,656 1,959,486 (1,269,364)
--------------------------- ------------ ------------ ------------ --------- ------------
Investments
in associates 41,180 -
--------------------------- ------------ ------------ ------------ --------- ------------
Unallocated
assets/(liabilities) 235,954 (636,454)
--------------------------- ------------ ------------ ------------ --------- ------------
Total assets/(liabilities) 2,236,620 (1,905,818)
--------------------------- ------------ ------------ ------------ --------- ------------
3. Operating profit
The following items have been (credited)/charged in arriving at operating profit:
2016 2015
GBP'000 GBP'000
------------------------------------------ -------- --------
Foreign exchange gains:
------------------------------------------ -------- --------
- fees and commissions (5,841) (3,133)
------------------------------------------ -------- --------
- other operating costs (10,838) (3,236)
------------------------------------------ -------- --------
(16,679) (6,369)
------------------------------------------ -------- --------
Amortisation of other intangible
assets:
------------------------------------------ -------- --------
- software costs 19,813 17,171
------------------------------------------ -------- --------
- other intangible assets 2,131 1,767
------------------------------------------
Depreciation on property, plant and
equipment:
------------------------------------------ -------- --------
- owned assets 12,291 11,316
------------------------------------------ -------- --------
- leased assets under finance leases 235 284
------------------------------------------ -------- --------
Impairment of goodwill (included
in exceptional items below) 481 -
------------------------------------------ -------- --------
Total depreciation, amortisation
and impairment charges 34,951 30,538
------------------------------------------ -------- --------
Amortisation of other intangible
assets:
------------------------------------------ -------- --------
- employment contract payments (included
in salaries and associated expenses) 14,952 12,372
------------------------------------------ -------- --------
(Gains)/losses on disposal of property,
plant and equipment (10) 60
------------------------------------------ -------- --------
Operating lease rentals payable:
------------------------------------------ -------- --------
- minimum lease payments:
------------------------------------------ -------- --------
- land and buildings 41,233 36,409
------------------------------------------ -------- --------
- furniture, equipment and motor
vehicles 792 821
------------------------------------------ -------- --------
- computer equipment and software 543 364
------------------------------------------ -------- --------
- sub-leases receipts:
------------------------------------------ -------- --------
- land and buildings (426) (376)
------------------------------------------ -------- --------
42,142 37,218
------------------------------------------ -------- --------
Available-for-sale financial assets:
------------------------------------------ -------- --------
- fair value (gains)/losses (87) 41
------------------------------------------ -------- --------
- losses on sale 8 72
------------------------------------------ -------- --------
(79) 113
------------------------------------------ -------- --------
Exceptional items:
------------------------------------------ -------- --------
Acquisition and integration costs
of which:
------------------------------------------
- included in salaries and associated
expenses 228 13,274
------------------------------------------
- included in premises costs 70 1,736
------------------------------------------
- included in other operating costs 947 6,145
------------------------------------------
1,245 21,155
------------------------------------------ -------- --------
Restructuring costs of which:
------------------------------------------
- included in salaries and associated
expenses 9,355 9,314
------------------------------------------
- included in premises costs 1,689 233
------------------------------------------
- included in other operating costs 2,856 331
------------------------------------------
13,900 9,878
------------------------------------------ -------- --------
Net litigation costs:
------------------------------------------
- included in salaries and associated
expenses - 529
------------------------------------------
- included in premises costs - 346
------------------------------------------
- included in other operating costs 21,114 681
------------------------------------------
21,114 1,556
------------------------------------------ -------- --------
Costs associated with a regulatory
review:
------------------------------------------
- included in salaries and associated
expenses - 274
------------------------------------------
- included in other operating costs 488 1,258
------------------------------------------
488 1,532
------------------------------------------ -------- --------
Net loss on disposal of businesses
of which:
------------------------------------------
- included in salaries and associated
expenses 116 -
------------------------------------------
- included in premises costs 783 -
------------------------------------------
- included in other operating costs 391 527
------------------------------------------
- included in depreciation, amortisation
and impairment charges 370 -
------------------------------------------
1,660 527
------------------------------------------ -------- --------
Net gain on sale of associate - (18,595)
------------------------------------------ -------- --------
Pension curtailment gain (127) (492)
------------------------------------------ -------- --------
Release of contingent considerations (324) (456)
------------------------------------------ -------- --------
Impairment of goodwill 111 -
------------------------------------------ -------- --------
Total exceptional items included
within operating profit 38,067 15,105
------------------------------------------ -------- --------
Profit on sale of associates' subsidiary
- included in share of results of
associates (378) -
------------------------------------------ -------- --------
Total exceptional items 37,689 15,105
------------------------------------------ -------- --------
4. Investment income
2016 2015
-------------------------------------- ------- -------
GBP'000 GBP'000
-------------------------------------- ------- -------
Interest receivable - fiduciary funds 4,730 3,689
-------------------------------------- ------- -------
Prior year investment income 3,689 4,398
-------------------------------------- ------- -------
Effect of:
-------------------------------------- ------- -------
- average cash balance variance (190) 127
-------------------------------------- ------- -------
- interest yield variance 799 (614)
-------------------------------------- ------- -------
- foreign exchange variance 432 (222)
-------------------------------------- ------- -------
4,730 3,689
-------------------------------------- ------- -------
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 GBP797 million (2015: GBP766 million) denominated principally in US dollars (57%), sterling (18%) and Australian dollars (10%). The average return for 2016 was 0.60% (2015: 0.50%). Based upon average invested balances each 1% movement in the average achieved rate of return would impact anticipated interest income by some GBP8.0 million.
5. Finance income and costs
2016 2015
-------------------------------------- --------- --------
GBP'000 GBP'000
-------------------------------------- --------- --------
Interest receivable - own funds 1,938 1,503
Investment income from available
for-sale financial assets 209 109
-------------------------------------- --------- --------
Interest expense:
-------------------------------------- --------- --------
- bank and other borrowings (17,434) (16,733)
-------------------------------------- --------- --------
- finance leases (57) (49)
-------------------------------------- --------- --------
- interest in respect of liability
discounting (1,862) (1,567)
Pension financing:
- expected return on post employment
scheme assets 19,065 18,749
- interest on post employment scheme
liabilities (23,937) (24,873)
Net pension financing expense (4,872) (6,124)
-------------------------------------- --------- --------
Finance costs - net (22,078) (22,861)
-------------------------------------- --------- --------
Finance costs (24,225) (24,473)
Finance income 2,147 1,612
-------------------------------------- --------- --------
Finance costs - net (22,078) (22,861)
-------------------------------------- --------- --------
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 GBP5.6 million based on average net borrowings in 2016.
6. Employee information (UNAUDITED)
2016 2015
------------------------------------- ------- -------
GBP'000 GBP'000
------------------------------------- ------- -------
a) Salaries and associated expenses
Wages and salaries 619,422 573,723
------------------------------------- ------- -------
Social security costs 51,881 49,448
------------------------------------- ------- -------
Pension costs 41,385 40,185
------------------------------------- ------- -------
Equity settled share-based payments:
-------------------------------------
- incentive schemes (LTIP, SESS,
ESOS) 25,174 19,991
- Sharesave Scheme - 84
25,174 20,075
------- -------
Other staff costs 56,501 43,903
------------------------------------- ------- -------
794,363 727,334
------------------------------------- ------- -------
2016 2015
---------------------------------- ------ ------
b) Analysis of employees
Monthly average number of persons
employed by the Group during the
year
---------------------------------- ------ ------
Geographical segment:
---------------------------------- ------ ------
- UK 3,878 4,131
- Americas 1,813 1,679
---------------------------------- ------ ------
- Australasia 1,130 1,133
------ ------
- Asia 3,292 3,322
----------------------------------
- Europe 253 234
------ ------
- Rest of the world 133 105
---------------------------------- ------ ------
10,499 10,604
---------------------------------- ------ ------
Business segment:
----------------------------------
- Risk & Insurance 6,174 5,990
------ ------
- Employee Benefits 3,475 3,778
---------------------------------- ------ ------
- Head Office & Other 850 836
---------------------------------- ------ ------
10,499 10,604
---------------------------------- ------ ------
2016 2015
--------------------------------- ------- -------
GBP'000 GBP'000
--------------------------------- ------- -------
c) Key management compensation
Salaries and short-term employee
benefits 13,792 13,893
--------------------------------- ------- -------
Post employment benefits 406 457
--------------------------------- ------- -------
Other long-term benefits 333 448
--------------------------------- ------- -------
Share-based payments 2,812 5,992
--------------------------------- ------- -------
17,343 20,790
--------------------------------- ------- -------
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, Executive Share Option Scheme and the Sharesave Schemes.
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 the 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 DDE that has accrued on the balance sheet is 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 2015. 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.
Sharesave Scheme
The Sharesave Scheme is open to all employees and are exercised after 5 years from the date of grant. Options are satisfied by the issue of new shares or market-purchased shares. The price at which options are offered is not less than 80% of the market price on the date preceding the date of invitation. All Sharesave Scheme options have no performance criteria attached, other than the requirement that the employee remains in employment with the Group. All options must be exercised within 6 months of the vesting date. As at 31 December 2016, there are no options outstanding in the scheme.
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
--------------------- --------- ------------ --------- ---------- -------- -------- --------- --------
2016 1 -
2016 31 March - - 22 844.50 20.67 - 6 0.86 844.50
------ ------------- --------- ------------ --------- ---------- -------- -------- --------- --------
2016 1 -
2016 23 September - - 21 1,013.00 21.87 - 5 0.21 1,013.00
------ ------------- --------- ------------ --------- ---------- -------- -------- --------- --------
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 and Sharesave Schemes 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
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
---------------- ------------ --------- --------- ----------- ------------ --------- ------------ ------------
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
15 Granted Lapsed Exercised 15 price 15 life
number number number number number (p) number years
------------ --------- ----------- ----------- ------------ --------- ------------ ------------
JLT Long Term
Incentive
Plan
(2004/2013) 2,178,744 762,100 (326,796) (686,266) 1,927,782 1,052.56 37,514 8.18
-------------- ------------ --------- ----------- ----------- ------------ --------- ------------ ------------
Senior
Executive
Share Scheme 7,006,456 2,784,511 (686,913) (1,936,272) 7,167,782 1,026.77 887,022 8.00
-------------- ------------ --------- ----------- ----------- ------------ --------- ------------ ------------
Executive
Share
Option Scheme 301,576 - - (236,776) 64,800 1,018.15 64,800 0.75
-------------- ------------ --------- ----------- ----------- ------------ --------- ------------ ------------
Sharesave
Scheme 417,429 - (19,919) (397,510) - 1,010.94 - -
-------------- ------------ --------- ----------- ----------- ------------ --------- ------------ ------------
Total 9,904,205 3,546,611 (1,033,628) (3,256,824) 9,160,364 1,029.65 989,336 7.98
-------------- ------------ --------- ----------- ----------- ------------ --------- ------------ ------------
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:
2016 2015
GBP'000 GBP'000
------------------------------------------- ------- -------
Fees payable to the Group's auditor
for the audit of the parent Company
and consolidated financial statements 200 217
Fees payable to the Group's auditor
and its associates for other services:
------------------------------------------- ------- -------
- the audit of the Company's subsidiaries 2,449 2,436
-------
- audit related assurance services 254 417
------------------------------------------- ------- -------
- tax compliance services 130 120
------- -------
- tax advisory services 46 51
------------------------------------------- ------- -------
- other assurance services 190 131
------------------------------------------- ------- -------
- other non-audit services 135 23
------------------------------------------- ------- -------
3,404 3,395
------------------------------------------- ------- -------
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 GBP18,700 (2015: GBP18,200).
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. For 2016 the Audit & Risk Committee has set this limit at GBP1 million (2015: GBP1 million).
8. Income tax expense
2016 2015
-------------------------------------- ------------------ -------
GBP'000 GBP'000
-------------------------------------- ------------------ -------
Current tax expense
Current year 51,499 43,153
-------------------------------------- ------------------ -------
Adjustments in respect of prior years (7,129) (2,167)
-------------------------------------- ------------------ -------
44,370 40,986
-------------------------------------- ------------------ -------
Deferred tax (credit)/expense
------------------ -------
Origination and reversal of temporary
differences (4,912) (1,515)
-------------------------------------- ------------------ -------
Reduction in tax rate 240 655
-------------------------------------- ------------------ -------
Adjustments in respect of prior years 4,320 1,460
-------------------------------------- ------------------ -------
(352) 600
-------------------------------------- ------------------ -------
Total income tax expense 44,018 41,586
-------------------------------------- ------------------ -------
The total income tax expense in the income statement of GBP44,018,000 (2015: GBP41,586,000) includes a tax credit on exceptional items of GBP8,245,000 (2015: GBP5,914,000). There were no non-recurring tax credits in the year.
In July 2015 the UK Government announced further measures in relation to the UK corporation tax rate, reducing the headline rate of corporation tax to 19% from April 2017 and then to 18% from April 2020. A further 1% reduction in the main rate of corporation tax rate to 17% from 1 April 2020 was announced in Budget 2016. As at 31 December 2016, the additional 1% 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 2016, taking into consideration when timing 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:
2016 2015
-------------------------------------- ------- -------
GBP'000 GBP'000
-------------------------------------- ------- -------
Profit before taxation 134,880 155,027
-------------------------------------- ------- -------
Tax calculated at UK Corporation Tax
rate of 20% (2015: 20.25%) 26,976 31,393
-------------------------------------- ------- -------
Non-deductible expenses 4,214 4,405
------- -------
Non recognition of tax losses 4,538 5,037
------- -------
Other* (595) (3,878)
------- -------
Adjustments in respect of prior years (2,809) (707)
-------------------------------------- ------- -------
Effect of difference between UK and
non-UK tax rates 11,725 5,801
------- -------
Effect of reduction in tax rate 240 655
-------------------------------------- ------- -------
Tax on associates (271) (1,120)
-------------------------------------- ------- -------
Total income tax expense 44,018 41,586
-------------------------------------- ------- -------
Other includes the non-taxable gain on disposal of subsidiaries
9. Earnings per share
Following changes to the terms of several share-based staff compensation schemes, whereby dividend rights eligibility were removed in certain circumstances, a comprehensive review of IAS 33 ('earnings per share' or 'EPS') was undertaken in the year to determine the impact of these changes. The schemes affected by this change include the JLT Long Term Incentive Plan (2004/2013), the Senior Executive Share Scheme, the Executive Share Option Scheme, and the Sharesave Scheme. The review considered whether the share options in these plans continued to qualify as participating equity instruments under IAS 33 for the purposes of calculating basic and diluted EPS. With the changes to schemes, the review concluded that only vested share options eligible to receive discretionary dividend equivalents should be included in the basic calculation. As a result, for the basic EPS calculation, the number of ordinary shares in 2015 should reduce from 219,234,336 to 210,767,437, resulting in an increase in basic EPS of 1.6p from 47.0p to 48.6p. The review also concluded that unvested share options should be included in the diluted EPS calculation, using the treasury stock method. This has the effect of reducing the number of ordinary shares in the 2015 diluted EPS calculation from 219,451,514 to 214,939,730, resulting in an increase in diluted EPS of 1.0p from 47.0p to 48.0p.
Under the revised calculation, basic 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 for discretionary dividend 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 dividend equivalents and undistributed earnings attributable to the unvested share options carrying unconditional dividend equivalent rights.
Diluted EPS is calculated by adjusting the weighted average number of ordinary shares in issue to take account of 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:
2016 2015
------------------------------------ ----------- -----------
No. of No. of
shares shares
restated
------------------------------------ ----------- -----------
Weighted average number of shares 210,455,334 210,767,437
Effect of outstanding share options 5,210,752 4,172,293
------------------------------------ ----------- -----------
Adjusted weighted average number of
shares 215,666,086 214,939,730
------------------------------------ ----------- -----------
2016
------------------------------------------------------------
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) 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
------------------------------ ------------- ---------- ---------- ---------- ---------
2015
------------------------------ ------------------------------------------------------------
GBP'000 GBP'000 GBP'000 Pence Pence
------------------------------ ------------- ---------- --------- ---------- ----------
Adjusted
earnings
for
basic Basic Diluted
earnings earnings earnings
per per share per share
Earnings Adjustments(2) share restated restated
------------------------------ ------------------------- --------- ---------- ----------
Underlying profit after
taxation and non-controlling
interests(1) 112,290 (782) 111,508 52.9 52.2
------------------------------ ---------- ---------- ----------
Exceptional items before
tax (15,105)
------------------------------ ---------- ---------- ----------
Taxation thereon 5,914
------------------------------ ---------- ---------- ----------
(9,191) 63 (9,128) (4.3) (4.2)
------------------------------ ------------- ---------- --------- ---------- ----------
Profit attributable
to the owners of the
parent 103,099 (719) 102,380 48.6 48.0
------------------------------ ------------- ---------- --------- ---------- ----------
(1) Underlying excludes exceptional items
(2) Adjustments related to the dividends and undistributed earnings on unvested share options carrying dividends equivalent rights.
10. Dividends
2016 2015
------------------------------------- ------- -------
GBP'000 GBP'000
------------------------------------- ------- -------
Final dividend in respect of 2015 of
19.5p per share (2014: 18.3p) 42,713 40,141
------------------------------------- ------- -------
Less: adjustment* (200) (164)
------------------------------------- ------- -------
42,513 39,977
Interim dividend in respect of 2016
of 11.6p per share (2015: 11.1p) 25,449 24,507
------------------------------------- ------- -------
67,962 64,484
------------------------------------- ------- -------
*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 2016 of 20.6p per share (2015: 19.5p) amounting to a total of GBP45,100,000 (2015: GBP42,710,000) is proposed by the Board. The dividend proposed will not be accounted for until it has been approved at the Annual General Meeting on 27 April 2017.
11. Goodwill
Gross Impairment Net carrying
amount losses amount
------------------------ --------------- ---------- ------------
GBP'000 GBP'000 GBP'000
------------------------ --------------- ---------- ------------
At 31 December 2016
------------------------ --------------- ---------- ------------
Opening net book amount 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 amount 548,117 (5,104) 543,013
------------------------ --------------- ---------- ------------
At 31 December 2015
------------------------ --------------- ---------- ------------
Opening net book amount 480,176 (4,479) 475,697
------------------------ --------------- ---------- ------------
Exchange differences (2,266) 211 (2,055)
------------------------ --------------- ---------- ------------
Acquisitions 23,239 - 23,239
------------------------ --------------- ---------- ------------
Disposals (715) - (715)
------------------------ --------------- ---------- ------------
Closing net book amount 500,434 (4,268) 496,166
------------------------ --------------- ---------- ------------
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 2016
------------------------------- ------------- ------- --------
JLT Re 186,215 2.10% 7.06%
------------------------------- ------------- ------- --------
JLT Speciality 110,811 2.00% 6.05%
------------------------------- ------------- ------- --------
UK & Ireland Employee Benefits 78,717 2.00% 6.05%
------------------------------- ------------- ------- --------
Latin America 42,262 3.39% 11.16%
------------------------------- ------------- ------- --------
JLT Insurance Services 9,806 2.41% 7.24%
------------------------------- ------------- ------- --------
Asia 29,912 2.41% 6.48%
------------------------------- ------------- ------- --------
Australia & New Zealand 38,455 2.50% 8.26%
------------------------------- ------------- ------- --------
Others 46,835 2.46% 7.28%
------------------------------- ------------- ------- --------
543,013 2.28% 6.98%
------------------------------- ------------- ------- --------
At 31 December 2015
------------------------------- ------------- ------- --------
JLT Re 161,767 2.13% 7.36%
------------------------------- ------------- ------- --------
JLT Speciality 101,669 2.12% 6.45%
------------------------------- ------------- ------- --------
UK & Ireland Employee Benefits 79,729 2.13% 6.46%
------------------------------- ------------- ------- --------
Latin America 31,670 3.75% 11.14%
------------------------------- ------------- ------- --------
JLT Insurance Services 30,894 2.09% 7.01%
------------------------------- ------------- ------- --------
Asia 27,513 2.59% 7.06%
------------------------------- ------------- ------- --------
Australia & New Zealand 24,068 2.82% 7.36%
------------------------------- ------------- ------- --------
Others 38,856 2.35% 7.78%
------------------------------- ------------- ------- --------
496,166 2.42% 7.23%
------------------------------- ------------- ------- --------
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 IBA interest 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% on the growth rate resulted in a reduction of 19% in the excess between the value in use and the adjusted carrying value of goodwill.
An increase of 2% on the discount rate resulted in a reduction of 36% in the excess between the value in use and the adjusted carrying value of goodwill.
A combined decrease of 1% on the growth rate and an increase of 2% in the discount rate resulted in a reduction of 44% 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 2016
------------------------- --------- ------------------ ------------------- -----------------
Opening net book amount 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 amount 60,059 19,334 22,570 101,963 ------------------------- --------- ------------------ ------------------- ----------------- At 31 December 2015 ------------------------- --------- ------------------ ------------------- ----------------- Opening net book amount 55,353 16,005 15,137 86,495 ------------------------- --------- ------------------ ------------------- ----------------- Exchange differences (231) 213 (152) (170) ------------------------- --------- ------------------ ------------------- ----------------- Additions 23,884 22,056 - 45,940 ------------------------- --------- ------------------ ------------------- ----------------- Companies acquired 48 - 3,320 3,368 ------------------------- --------- ------------------ ------------------- ----------------- Amortisation charge (17,171) (12,372) (1,767) (31,310) ------------------------- --------- ------------------ ------------------- ----------------- Closing net book value 61,883 25,902 16,538 104,323 ------------------------- --------- ------------------ ------------------- ----------------- 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 amount 61,883 25,902 16,538 104,323 ------------------------- --------- ------------------ ------------------- ----------------- At 31 December 2014 ------------------------- --------- ------------------ ------------------- ----------------- Cost 135,451 36,039 22,878 194,368 ------------------------- --------- ------------------ ------------------- ----------------- Accumulated amortisation and impairment (80,098) (20,034) (7,741) (107,873) ------------------------- --------- ------------------ ------------------- ----------------- Closing net book amount 55,353 16,005 15,137 86,495 ------------------------- --------- ------------------ ------------------- -----------------
Additions to computer software during 2016 include GBP18,097,000 of capitalised costs in respect of internal developments (2015: GBP20,523,000).
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
2016
---------------- -------------------- ------------------ ------------------ ------------------ ------------------
Opening net
book amount 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 amount 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 amount 20 47,156 15,017 2,137 64,330
---------------- -------------------- ------------------ ------------------ ------------------ ------------------
At 31 December
2015
---------------- -------------------- ------------------ ------------------ ------------------ ------------------
Opening net
book amount 210 43,660 14,163 3,372 61,405
---------------- -------------------- ------------------ ------------------ ------------------ ------------------
Exchange
differences 2 (498) (574) (197) (1,267)
---------------- -------------------- ------------------ ------------------ ------------------ ------------------
Additions - 8,050 6,039 1,094 15,183
---------------- -------------------- ------------------ ------------------ ------------------ ------------------
Companies
acquired - 452 345 13 810
---------------- -------------------- ------------------ ------------------ ------------------ ------------------
Companies
disposed - - (22) - (22)
---------------- -------------------- ------------------ ------------------ ------------------ ------------------
Disposals (193) (166) (368) (615) (1,342)
---------------- -------------------- ------------------ ------------------ ------------------ ------------------
Depreciation
charge (1) (5,463) (4,965) (1,171) (11,600)
---------------- -------------------- ------------------ ------------------ ------------------ ------------------
Closing net
book amount 18 46,035 14,618 2,496 63,167
---------------- -------------------- ------------------ ------------------ ------------------ ------------------
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 amount 18 46,035 14,618 2,496 63,167
---------------- -------------------- ------------------ ------------------ ------------------ ------------------
At 31 December
2014
---------------- -------------------- ------------------ ------------------ ------------------ ------------------
Cost 365 82,333 85,400 6,493 174,591 ---------------- -------------------- ------------------ ------------------ ------------------ ------------------ Accumulated depreciation (155) (38,673) (71,237) (3,121) (113,186) ---------------- -------------------- ------------------ ------------------ ------------------ ------------------ Closing net book amount 210 43,660 14,163 3,372 61,405 ---------------- -------------------- ------------------ ------------------ ------------------ ------------------
The net book amount of property, plant and equipment held under finance leases is as follows:
2016 2015
---------------------------------------- ------- -------
GBP'000 GBP'000
---------------------------------------- ------- -------
Furniture, equipment and motor vehicles 777 650
---------------------------------------- ------- -------
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.
On 6 May 2015, the Group disposed of its stake in its principal associate Milestone, the holding company of Siaci Saint Honoré. Milestone, in the opinion of the directors, was the only material associate to the Group. The associate had share capital consisting solely of ordinary shares, which was held directly by the Group; the country of incorporation or registration was also its principal place of business.
% of % of
Place of ownership ownership Nature
business/country interest interest of Measurement
of incorporation (2016) (2015) the relationship method
------------------- ----------------- ---------- ---------- ----------------- -----------
Milestone (Siaci France - - Note 1 Equity
Saint Honoré)
------------------- ----------------- ---------- ---------- ----------------- -----------
Note 1: Siaci Saint Honoré is a leading independent provider of insurance broking and employee benefit services to major French companies and multinational corporations.
Milestone is a private company and there is no quoted market price available for its shares.
There are no contingent liabilities relating to the Group's interest in the associate.
Summarised Income Statement and Statement of Comprehensive Income
Siaci
----------------
2016 2015
-------------------------------------------- ------- -------
GBP'000 GBP'000
-------------------------------------------- ------- -------
Revenue - 54,820
-------------------------------------------- ------- -------
Depreciation and amortisation - (2,132)
-------------------------------------------- ------- -------
Interest income - 1,018
-------------------------------------------- ------- -------
Interest expense - (73)
-------------------------------------------- ------- -------
Profit from continuing operations - 22,078
-------------------------------------------- ------- -------
Income tax expense - (7,200)
-------------------------------------------- ------- -------
Profit after tax from continuing operations - 14,878
-------------------------------------------- ------- -------
Other comprehensive income - -
-------------------------------------------- ------- -------
Total comprehensive income - 14,878
-------------------------------------------- ------- -------
Reconciliation of summarised financial information
Reconciliation of the summarised financial information presented to the carrying amount of its interest in associates.
Siaci Others Total
-------------------------- ------------------ ---------------- ------------------
2016 2015 2016 2015 2016 2015
-------------------------- ------- --------- ------- ------- ------- ---------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ------- --------- ------- ------- ------- ---------
Opening net assets - 203,594 35,072 30,176 35,072 233,770
-------------------------- ------- --------- ------- ------- ------- ---------
Disposal during the
year - (208,416) - - - (208,416)
-------------------------- ------- --------- ------- ------- ------- ---------
Profit for the year - 14,878 1,330 6,671 1,330 21,549
-------------------------- ------- --------- ------- ------- ------- ---------
Other comprehensive
income - - - 167 - 167
-------------------------- ------- --------- ------- ------- ------- ---------
Dividends - - (4,592) (2,306) (4,592) (2,306)
-------------------------- ------- --------- ------- ------- ------- ---------
Change in non-controlling
interests - (491) - 90 - (401)
-------------------------- ------- --------- ------- ------- ------- ---------
Capital increase - - 2,854 1,677 2,854 1,677
-------------------------- ------- --------- ------- ------- ------- ---------
Exchange differences - (9,565) 4,663 (1,403) 4,663 (10,968)
-------------------------- ------- --------- ------- ------- ------- ---------
Closing net assets - - 39,327 35,072 39,327 35,072
-------------------------- ------- --------- ------- ------- ------- ---------
Carrying value - - 50,928 41,180 50,928 41,180
-------------------------- ------- --------- ------- ------- ------- ---------
15. Available-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.
Other Investments
investments & deposits Total
------------------------------------- ------------------ ----------- -----------------
GBP'000 GBP'000 GBP'000
------------------------------------- ------------------ ----------- -----------------
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 to be 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 ------------------------------------- ------------------ ----------- ----------------- At 1 January 2015 4,746 9,642 14,388 ------------------------------------- ------------------ ----------- ----------------- Exchange differences 194 (571) (377) ------------------------------------- ------------------ ----------- ----------------- Additions 1,964 5,081 7,045 ------------------------------------- ------------------ ----------- ----------------- Disposals/maturities (243) (5,099) (5,342) ------------------------------------- ------------------ ----------- ----------------- Revaluation gain/(deficit) (included within equity) (82) (4) (86) ------------------------------------- ------------------ ----------- ----------------- Amounts to be written off (143) - (143) ------------------------------------- ------------------ ----------- ----------------- At 31 December 2015 6,436 9,049 15,485 ------------------------------------- ------------------ ----------- ----------------- Analysis of available-for-sale financial assets ------------------------------------- ------------------ ----------- ----------------- Current - 19 19 ------------------------------------- ------------------ ----------- ----------------- Non-current 6,436 9,030 15,466 ------------------------------------- ------------------ ----------- ----------------- At 31 December 2015 6,436 9,049 15,485 ------------------------------------- ------------------ ----------- ----------------- Analysis of available-for-sale investments & deposits ------------------------------------- ------------------ ----------- ----------------- Fiduciary funds 8,894 ------------------------------------- ------------------ ----------- ----------------- Own funds 155 ------------------------------------- ------------------ ----------- ----------------- At 31 December 2015 9,049 ------------------------------------- ------------------ ----------- -----------------
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:
2016 2015
------ -------- -------
GBP'000 GBP'000
------ -------- -------
AA 49,621 4,133
------ -------- -------
AA/A 37,297 -
------ -------- -------
A 19,932 4,916
------ -------- -------
BBB 20,809 -
------ -------- -------
Total 127,659 9,049
------ -------- -------
16. Derivative financial instruments
At 31 December At 31 December
2016 2015
------------------------ ------------------------
Assets Liabilities Assets Liabilities
------------------------------ ---------- ------------ --------- -------------
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ---------- ------------ --------- -------------
Interest rate swaps - fair
value hedges 32,740 (3,477) 11,654 (5,490)
------------------------------ ---------- ------------ --------- -------------
Forward foreign exchange
contracts - cash flow hedges 92,233 (69,674) 23,574 (11,725)
------------------------------ ---------- ------------ --------- -------------
Redemption liabilities -
option contracts - (29,637) - (22,626)
------------------------------ ---------- ------------ --------- -------------
Total 124,973 (102,788) 35,228 (39,841)
------------------------------ ---------- ------------ --------- -------------
Current 7,930 (33,136) 1,544 (6,115)
------------------------------ ---------- ------------ --------- -------------
Non-current 117,043 (69,652) 33,684 (33,726)
------------------------------ ---------- ------------ --------- -------------
Total 124,973 (102,788) 35,228 (39,841)
------------------------------ ---------- ------------ --------- -------------
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:
2016 2015
------ -------- -------
GBP'000 GBP'000
------ -------- -------
AA 73,169 16,419
------ -------- -------
AA/A 9,374 2,973
------ -------- -------
BBB 42,430 15,836
------ -------- -------
Total 124,973 35,228
------ -------- -------
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 Greater
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
----------------------------------- ---------- ----------
Less Greater
than than
1 year 1 year
----------------------------------- ---------- ----------
At 31 December 2015 GBP'000 GBP'000
----------------------------------- ---------- ----------
Forward foreign exchange contracts
----------------------------------- ---------- ----------
Outflow (275,406) (442,156)
----------------------------------- ---------- ----------
Inflow 269,827 461,276
----------------------------------- ---------- ----------
17. Trade and other receivables
2016 2015
---------------------------------------- ----------------- --------
GBP'000 GBP'000
---------------------------------------- ----------------- --------
Trade receivables 440,941 368,215
---------------------------------------- ----------------- --------
Less: provision for impairment of trade
receivables (20,961) (15,018)
---------------------------------------- ----------------- --------
Trade receivables - net 419,980 353,197
---------------------------------------- ----------------- --------
Other receivables 143,703 152,282
---------------------------------------- ----------------- --------
Prepayments 24,957 23,116
---------------------------------------- ----------------- --------
588,640 528,595
---------------------------------------- ----------------- --------
As at 31 December 2016, 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 concentration 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-performance by trade counterparties that have not been provided for.
Movements on the Group provision for impairment of trade receivables are as follows:
2016 2015
----------------------------------- ----------------------- --------
GBP'000 GBP'000
----------------------------------- ----------------------- --------
At 1 January (15,018) (10,724)
----------------------------------- ----------------------- --------
Currency translation adjustments (1,483) (26)
----------------------------------- ----------------------- --------
Companies acquired (243) (28)
----------------------------------- ----------------------- --------
Provisions for impairment of trade
receivables (8,355) (9,849)
----------------------------------- ----------------------- --------
Receivables written off during the
year as uncollectible 2,980 2,499
----------------------------------- ----------------------- --------
Unused amounts reversed 1,158 3,110
----------------------------------- ----------------------- --------
At 31 December (20,961) (15,018)
----------------------------------- ----------------------- --------
The creation and release of provisions for impaired 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 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
-------------------------------- -------------- --------------- ----------------
Provision
Trade for Net trade
receivables impairment receivables
-------------------------------- ------------ ----------- ------------
At 31 December 2015 GBP'000 GBP'000 GBP'000
-------------------------------- ------------ ----------- ------------
Not overdue 270,706 - 270,706
-------------------------------- ------------ ----------- ------------
Past due not more than three
months 60,212 (539) 59,673
-------------------------------- ------------ ----------- ------------
Past due more than three months
and not more than six months 19,002 (2,600) 16,402
-------------------------------- ------------ ----------- ------------
Past due more than six months
and not more than one year 8,512 (2,975) 5,537
-------------------------------- ------------ ----------- ------------
Past due more than one year 9,783 (8,904) 879
-------------------------------- ------------ ----------- ------------
368,215 (15,018) 353,197
-------------------------------- ------------ ----------- ------------
18. Cash and cash equivalents
2016 2015
------------------------- -------- -------
GBP'000 GBP'000
------------------------- -------- -------
Cash at bank and in hand 514,474 463,665
------------------------- -------- -------
Short-term bank deposits 425,471 437,422
------------------------- -------- -------
939,945 901,087
------------------------- -------- -------
Fiduciary funds 748,628 737,676
------------------------- -------- -------
Own funds 191,317 163,411
------------------------- -------- -------
939,945 901,087
------------------------- -------- -------
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:
2016 2015
--------------- --------------------- ------------------
GBP'000 GBP'000
--------------- --------------------- ------------------
AAA 10,685 12,237
--------------- --------------------- ------------------
AA 318,613 336,311
--------------- --------------------- ------------------
AA/A 125,247 112,869
--------------- --------------------- ------------------
A 146,111 107,744
--------------- --------------------- ------------------
BBB 322,953 327,567
--------------- --------------------- ------------------
Other 16,336 4,359
--------------- --------------------- ------------------
Total 939,945 901,087
The effective interest rate in respect of short-term
deposits was 0.94% (2015: 0.87%). These deposits
have an average maturity of 16 days (2015: 24 days).
19. Trade and other payables
2016 2015
-------------------------------------- ---------- ---------
GBP'000 GBP'000
-------------------------------------- ---------- ---------
Insurance payables 875,986 746,570
-------------------------------------- ---------- ---------
Social security and other taxes 18,735 17,161
-------------------------------------- ---------- ---------
Other payables 198,156 166,880
-------------------------------------- ---------- ---------
Accruals and deferred income 137,408 137,905
-------------------------------------- ---------- ---------
Deferred and contingent consideration 27,497 17,762
-------------------------------------- ---------- ---------
1,257,782 1,086,278
-------------------------------------- ---------- ---------
All payables are considered current as the non-current portion is not material.
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 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) - (1,120,374) (1,120,374)
---------------------------------- ----------- ------------ ------------
Redemption liabilities
- option contracts (29,637) - (29,637)
---------------------------------- ----------- ------------ ------------
Derivative financial instruments (73,151) - (73,151)
---------------------------------- ----------- ------------ ------------
Total (102,788) (1,808,206) (1,910,994)
---------------------------------- ----------- ------------ ------------
Derivatives
used
Loans for Available-
At 31 December 2015 and receivables hedging for-sale Total
--------------------------------- ---------------- ----------- ---------- ---------
Assets per balance sheet GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- ---------------- ----------- ---------- ---------
Available-for-sale financial
assets - - 15,485 15,485
--------------------------------- ---------------- ----------- ---------- ---------
Derivative financial instruments - 35,228 - 35,228
--------------------------------- ---------------- ----------- ---------- ---------
Trade and other receivables
(a) 505,479 - - 505,479
--------------------------------- ---------------- ----------- ---------- ---------
Cash and cash equivalents 901,087 - - 901,087
--------------------------------- ---------------- ----------- ---------- ---------
Total 1,406,566 35,228 15,485 1,457,279
--------------------------------- ---------------- ----------- ---------- ---------
Derivatives
used Other
for financial
hedging liabilities Total
--------------------------------- ----------- ------------ -----------
Liabilities per balance
sheet GBP'000 GBP'000 GBP'000
--------------------------------- ----------- ------------ -----------
Borrowings - (603,582) (603,582)
---------------------------------- ----------- ------------ -----------
Trade and other payables
(b) - (948,373) (948,373)
---------------------------------- ----------- ------------ -----------
Redemption liabilities
- option contracts (22,626) - (22,626)
---------------------------------- ----------- ------------ -----------
Derivative financial instruments (17,215) - (17,215)
---------------------------------- ----------- ------------ -----------
Total (39,841) (1,551,955) (1,591,796)
---------------------------------- ----------- ------------ -----------
(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 2016.
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
-------------------------------------- ------- -------- -------- ---------
Deferred and contingent consideration - - (27,497) (27,497)
-------------------------------------- ------- -------- -------- ---------
Redemption liabilities -
option contracts - - (29,637) (29,637)
-------------------------------------- ------- -------- -------- ---------
Derivatives used for hedging - (73,151) - (73,151)
-------------------------------------- ------- -------- -------- ---------
Total - (73,151) (57,134) (130,285)
-------------------------------------- ------- -------- -------- ---------
Level Level Level
1 2 3 Total
-------------------------------------- ------- -------- -------- --------
At 31 December 2015 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- ------- -------- -------- --------
Assets
-------------------------------------- ------- -------- -------- --------
Derivatives used for hedging - 35,228 - 35,228
-------------------------------------- ------- -------- -------- --------
Available-for-sale financial
assets
-------------------------------------- ------- -------- -------- --------
- equity securities 311 - 1,312 1,623
-------------------------------------- ------- -------- -------- --------
- debt investments - - 4,813 4,813
-------------------------------------- ------- -------- -------- --------
- fixed deposits 9,049 - - 9,049
-------------------------------------- ------- -------- -------- --------
Total 9,360 35,228 6,125 50,713
-------------------------------------- ------- -------- -------- --------
Liabilities
-------------------------------------- ------- -------- -------- --------
Deferred and contingent consideration - - (17,762) (17,762)
-------------------------------------- ------- -------- -------- --------
Redemption liabilities -
option contracts - - (22,626) (22,626)
-------------------------------------- ------- -------- -------- --------
Derivatives used for hedging - (17,215) - (17,215)
-------------------------------------- ------- -------- -------- --------
Total - (17,215) (40,388) (57,603)
-------------------------------------- ------- -------- -------- --------
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 fair value an instrument are observable, the instrument is included in level 2. Level 2 includes derivatives used for hedging. The valuations of which are performed 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 JLT Specialty Insurance Services Inc., the largest item within the redemption liability, would result in a change of the overall redemption liability of 10%.
A reconciliation of the movements in level 3 is provided below:
Assets Liabilities
Level Level
3 3
GBP'000 GBP'000
-------------------------------- --------- ------------
At 1 January 2016 6,125 (40,388)
---------------------------------- --------- ------------
Exchange differences 984 (8,509)
---------------------------------- --------- ------------
Companies disposed 6,301 -
-------------------------------- --------- ------------
Companies acquired - (12,686)
---------------------------------- --------- ------------
Utilised in the year - 6,686
---------------------------------- --------- ------------
Charged to income statement (331) (2,237)
---------------------------------- --------- ------------
At 31 December 2016 13,079 (57,134)
---------------------------------- --------- ------------
Of the GBP331,000 charged to the income statement,
GBP148,000 is included in net finance costs and
GBP183,000 in Other operating costs.
-----------------------------------------------------------
Of the GBP2,237,000 charged to the income statement,
GBP1,862,000 is included in net finance costs and
GBP375,000 in Other operating costs.
-----------------------------------------------------------
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 2016 and designated as effective cash flow hedges was a net asset of GBP22.6 million and has been deferred in equity (2015: net asset of GBP11.8 million). Gains and losses arising on derivative instruments outstanding as at 31 December 2016 will be released to the income statement at various dates up to:
i) 47 months in respect of cash flow hedges on currency denominated UK earnings.
ii) 13 years in respect of specific hedges on USD denominated long-term debt drawn under the Group's USD private placement programme.
iii) 10 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 as 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 2016 the Group had outstanding foreign exchange contracts, principally in USD, amounting to a principal value of GBP1,199,325,000 (2015: GBP731,103,000).
As a guide, each 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 2016 was USD500,000,000 and GBP75,000,000 (2015: USD500,000,000 and GBP75,000,000). A net gain of GBP29.3 million (2015: net gain GBP6.2 million) on these instruments was offset by a fair value loss of GBP29.3 million (2015: loss GBP6.2 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 and JLT SCK Corretora e Administradora de Seguros Ltda. Fair value of these liabilities resulted in an expense of GBP699,000 which was recognised in the income statement in the year.
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 in the balance sheet.
SHAREHOLDER Information
21. Borrowings (UNAUDITED)
----------------------------------------------
2016 2015
GBP'000 GBP'000
-------------------------- -------- --------
Current
-------------------------- -------- --------
Bank overdraft 18,223 21,702
-------------------------- -------- --------
Unsecured loan notes 35,980 -
-------------------------- -------- --------
Bank borrowings 243 418
-------------------------- -------- --------
Finance lease liabilities 283 218
-------------------------- -------- --------
54,729 22,338
-------------------------- -------- --------
Non Current
-------------------------- -------- --------
Unsecured loan notes 471,975 419,394
-------------------------- -------- --------
Bank borrowing 160,629 161,435
-------------------------- -------- --------
Finance lease liabilities 499 415
-------------------------- -------- --------
633,103 581,244
-------------------------- -------- --------
Total borrowings 687,832 603,582
-------------------------- -------- --------
The borrowings include secured liabilities (finance leases) of GBP782,000 (2015: GBP633,000).
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
2016 632,035 243 - - 55,554 687,832
--------------- -------- -------- -------- -------- -------- --------
At 31 December
2015 557,334 - 418 - 45,830 603,582
--------------- -------- -------- -------- -------- -------- --------
The effective interest rates at the balance sheet date were as follows:
2016 2015
GBP'000 GBP'000
----------------------------------------- -------- --------
Bank overdraft - -
----------------------------------------- -------- --------
Unsecured loan notes - private placement 2.69% 2.84%
----------------------------------------- -------- --------
Bank borrowings 1.34% 1.53%
----------------------------------------- -------- --------
Finance lease liabilities 9.96% 8.14%
----------------------------------------- -------- --------
Maturity of non-current borrowings (excluding finance
lease liabilities):
2016 2015
GBP'000 GBP'000
-------------------------------- ----------- -----------
Between 1 and 2 years - 30,220
-------------------------------- ----------- -----------
Between 2 and 3 years 2 6
-------------------------------- ----------- -----------
Between 3 and 4 years 67,386 -
-------------------------------- ----------- -----------
Between 4 and 5 years 160,626 56,092
-------------------------------- ----------- -----------
Over 5 years 404,590 494,511
-------------------------------- ----------- -----------
632,604 580,829
-------------------------------- ----------- -----------
Finance lease liabilities - minimum lease payments:
2016 2015
GBP'000 GBP'000
------------------------------------------- -------- --------
No later than 1 year 337 255
------------------------------------------- -------- --------
Later than 1 year and no later than
2 years 268 204
------------------------------------------- -------- --------
Later than 2 years and no later than
3 years 173 142
------------------------------------------- -------- --------
Later than 3 years and no later than
4 years 78 80
------------------------------------------- -------- --------
Later than 4 years and no later than
5 years 32 31
------------------------------------------- -------- --------
Later than 5 years - -
------------------------------------------- -------- --------
888 712
------------------------------------------- -------- --------
Future finance charges on finance leases (106) (79)
------------------------------------------- -------- --------
Present value of finance lease liabilities 782 633
------------------------------------------- -------- --------
The present value of finance lease liabilities is as follows:
2016 2015
GBP'000 GBP'000
------------------------------------- -------- --------
No later than 1 year 283 218
------------------------------------- -------- --------
Later than 1 year and no later than
2 years 233 180
------------------------------------- -------- --------
Later than 2 years and no later than
3 years 161 127
------------------------------------- -------- --------
Later than 3 years and no later than
4 years 74 73
------------------------------------- -------- --------
Later than 4 years and no later than
5 years 31 35
------------------------------------- -------- --------
Later than 5 years - -
------------------------------------- -------- --------
782 633
------------------------------------- -------- --------
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:
--------------------------------------------------------
2016 2015
GBP'000 GBP'000
--------------------------- ------------- ------------
Sterling 264,657 263,729
--------------------------- ------------- ------------
US Dollar 422,148 338,796
--------------------------- ------------- ------------
Other currencies 1,027 1,057
--------------------------- ------------- ------------
687,832 603,582
--------------------------- ------------- ------------
Borrowing facilities
The Group has undrawn committed borrowing facilities of:
2016 2015
GBP'000 GBP'000
---------------------------- -------- --------
Floating rate
---------------------------- -------- --------
- expiring beyond one year 337,000 336,000
---------------------------- -------- --------
Facilities expiring within one year relate to:
a) Senior unsecured loan notes totalling USD42 million (GBP33.9 million) issued by JIB Group Limited under the Group's 2010 private placement programme in September 2017 with a coupon of 5.02%.
Facilities expiring beyond one year relate to:
b) The committed unsecured GBP500 million revolving credit facilities in the name of JIB Group Limited. 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. In January 2017, the Group agreed with its relationship banks to exercise an extension option, under existing agreed terms, by a further one year from February 2021 to a new maturity date of February 2022.
c) Senior unsecured loan notes totalling USD83 million issued by JIB Group Limited under the Group's 2010 private placement programme with USD42 million (GBP33.9 million) in September 2020 with a coupon of 5.59% and USD41 million (GBP33.1 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.
d) Senior unsecured loan notes totalling USD250 million issued by JIB Group Limited under the Group's 2012 private placement programme with maturities of USD40 million (GBP32.3 million) in January 2020 with a coupon of 3.21%, USD140 million (GBP113.2 million) in January 2023 with a coupon of 3.78% and USD70 million (GBP56.6 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.
e) 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.
f) Senior unsecured loan notes totalling USD125 million issued by JIB Group Limited under the Group's October 2014 private placement programme with maturities of USD62.5 million (GBP50.5 million) in October 2026 with a coupon of 3.93% and USD62.5 million (GBP50.5 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
----------------------------- ------------------ ------------------- ------------------
2016 2015 2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- -------- --------- -------- -------- --------
Property, plant and
equipment 1,555 2,105 (554) (746) 1,001 1,359
----------------------------- -------- -------- --------- -------- -------- --------
Provisions 15,937 11,588 (5,273) (910) 10,664 10,678
----------------------------- -------- -------- --------- -------- -------- --------
Losses 1,858 2,986 - - 1,858 2,986
----------------------------- -------- -------- --------- -------- -------- --------
Deferred income 879 285 (5,386) (8,619) (4,507) (8,334)
----------------------------- -------- -------- --------- -------- -------- --------
Other intangibles 3,052 2,436 (616) (48) 2,436 2,388
----------------------------- -------- -------- --------- -------- -------- --------
Goodwill 298 237 (3,046) (6,024) (2,748) (5,787)
----------------------------- -------- -------- --------- -------- -------- --------
Other 3,407 7,033 (1,826) (2,933) 1,581 4,100
----------------------------- -------- -------- --------- -------- -------- --------
Pensions 32,532 22,125 (131) (93) 32,401 22,032
----------------------------- -------- -------- --------- -------- -------- --------
Share based payments 4,858 6,554 - - 4,858 6,554
----------------------------- -------- -------- --------- -------- -------- --------
Fair values 11,166 - - (1,931) 11,166 (1,931)
----------------------------- -------- -------- --------- -------- -------- --------
Tax assets/(liabilities) 75,542 55,349 (16,832) (21,304) 58,710 34,045
----------------------------- -------- -------- --------- -------- -------- --------
Set off of tax (5,454) (4,326) 5,454 4,326 - -
----------------------------- -------- -------- --------- -------- -------- --------
Net tax assets/(liabilities) 70,088 51,023 (11,378) (16,978) 58,710 34,045
----------------------------- -------- -------- --------- -------- -------- --------
The majority of the deferred tax is not expected to reverse within 12 months.
At 1 Credit/ Credit/ Acquisitions/ At 31
January Exchange (charge) (charge) disposals December
2016 differences to income to equity of sub 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- ------------ ---------- ---------- ------------- ---------
Accelerated tax depreciation 1,359 (204) (154) - - 1,001
----------------------------- -------- ------------ ---------- ---------- ------------- ---------
Provisions 10,678 58 (79) - 7 10,664
----------------------------- -------- ------------ ---------- ---------- ------------- ---------
Losses 2,986 44 (1,172) - - 1,858
----------------------------- -------- ------------ ---------- ---------- ------------- ---------
Deferred income (8,334) 3,241 586 - - (4,507)
----------------------------- -------- ------------ ---------- ---------- ------------- ---------
Other intangibles 2,388 454 (102) - (304) 2,436
----------------------------- -------- ------------ ---------- ---------- ------------- ---------
Goodwill (5,787) 3,446 (407) - - (2,748)
----------------------------- -------- ------------ ---------- ---------- ------------- ---------
Other 4,100 (4,534) 2,015 - - 1,581
----------------------------- -------- ------------ ---------- ---------- ------------- ---------
Pensions 22,032 7 828 9,534 - 32,401
----------------------------- -------- ------------ ---------- ---------- ------------- ---------
Share based payments 6,554 - (1,163) (533) - 4,858
----------------------------- -------- ------------ ---------- ---------- ------------- ---------
Fair values (1,931) - - 13,097 - 11,166
----------------------------- -------- ------------ ---------- ---------- ------------- ---------
Net tax assets 34,045 2,512 352 22,098 (297) 58,710
----------------------------- -------- ------------ ---------- ---------- ------------- ---------
The total current and deferred income tax charged to equity during the year is as follows:
At 1 January Credit/(charge) At 31 December
2016 to equity 2016
---------------------- ------------ --------------- --------------
GBP'000 GBP'000 GBP'000
---------------------- ------------ --------------- --------------
Pensions 34,351 11,850 46,201
---------------------- ------------ --------------- --------------
Share based payments 12,033 (222) 11,811
----------------------
Fair values:
----------------------
- foreign exchange (16) 13,196 13,180
----------------------
- available-for-sale (30) 199 169
----------------------
(46) 13,395 13,349
---------------------- ------------ --------------- --------------
46,338 25,023 71,361
---------------------- ------------ --------------- --------------
23. PROVISIONS FOR LIABILITIES AND CHARGES
Property
related Litigation
provisions provisions Other Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------------- ----------- ----------- -------- ---------
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
---------------------- ----------- ----------- -------- ---------
At 1 January 2015 4,881 5,570 362 10,813
---------------------- -------- -------- ------ --------
Exchange differences 19 30 - 49
---------------------- -------- -------- ------ --------
Reclassification from
current liabilities 462 - - 462
---------------------- -------- -------- ------ --------
Utilised in the year (3,372) (3,710) (8) (7,090)
---------------------- -------- -------- ------ --------
Credited/(charged) to
the income statement (690) 16,333 (240) 15,403
---------------------- -------- -------- ------ --------
At 31 December 2015 1,300 18,223 114 19,637
---------------------- -------- -------- ------ --------
2016 2015
GBP'000 GBP'000
----------------------------- -------- --------
Analysis of total provisions
----------------------------- -------- --------
Current - to be utilised
within one year 8,826 18,594
------------------------------- -------- --------
Non-current - to be utilised
in more than one year 1,571 1,043
------------------------------- -------- --------
10,397 19,637
----------------------------- -------- --------
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 and dispute issues. 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.
The amount charged to the income statement in 2016 includes litigation costs related to employment contract disputes.
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
2016, in connection with certain litigation matters,
the Group's litigation provisions include an amount
of GBP0.1million (2015: 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 2016 (2015: 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 2015 220,136,567 11,006 103,941 114,947
------------------------ ------------ -------- -------- --------
Issued during the year 34,440 2 133 135
------------------------ ------------ -------- -------- --------
At 31 December 2015 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
------------------------ ------------ -------- -------- --------
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 10,000 (2015: 34,440) ordinary shares for a consideration of GBP38,250 (2015: GBP134,532) following exercises by executives of options held under the Jardine Lloyd Thompson Group plc Executive Share Option Scheme.
The Employee Benefit Trust holds 8,715,895 ordinary shares (2015: 8,994,952) 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 interests' financial position for the year is GBP22,764,000 of which GBP10,556,000 is attributed to JLT's Private Client Services group of business (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
2016 2015
GBP'000 GBP'000
------------ -------- --------
Current
------------ -------- --------
Assets 62,294 49,451
-------------- -------- --------
Liabilities (34,218) (28,535)
-------------- -------- --------
Total 28,076 20,916
-------------- -------- --------
Non-current
------------ -------- --------
Assets 3,152 2,998
-------------- -------- --------
Liabilities (316) (312)
-------------- -------- --------
Total 2,836 2,686
-------------- -------- --------
Net assets 30,912 23,602
-------------- -------- --------
25. Non-controlling interests
Summarised Statement of Comprehensive Income
2016 2015
GBP'000 GBP'000
--------------------------------------------------------------------- -------- --------
Revenue 64,018 55,357
----------------------------------------------------------------------- -------- --------
Profit for the year 20,663 18,195
----------------------------------------------------------------------- -------- --------
Other comprehensive income 550 95
----------------------------------------------------------------------- -------- --------
Total comprehensive income
for the year 21,213 18,290
----------------------------------------------------------------------- -------- --------
Total comprehensive income attributable to non-controlling interests 5,166 4,575
-------- --------
Dividends paid to non-controlling interests 2,229 4,289
-------- --------
Summarised Statement of Cash Flows
2016 2015
GBP'000 GBP'000
-------- --------
Net cash generated from operating activities 19,897 34,522
-------- --------
Net cash used in investing activities (291) (1,403)
-------- --------
Net cash used in financing activities (18,348) (17,340)
-------- --------
Net increase in cash and cash equivalents 1,258 15,779
-------- --------
The information above is the amount before inter-company eliminations.
26. Other reserves
Fair
Share value Exchange
premium 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 gains/(losses) net of tax:
-------- ------------ --------- ---------
- available-for-sale - 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
-------- ------------ --------- ---------
Fair
Share value Exchange
premium and hedging reserves Total
GBP'000 GBP'000 GBP'000 GBP'000
-------- ------------ --------- ---------
At 1 January 2015 103,941 (234) (5,033) 98,674
-------- ------------ --------- ---------
Fair value (losses)/gains net of tax:
-------- ------------ --------- ---------
- available-for-sale - (34) - (34)
-------- ------------ --------- ---------
- available-for-sale reclassified to the income statement - 10 - 10
-------- ------------ --------- ---------
- cash flow hedges - (12,569) - (12,569)
-------- ------------ --------- ---------
Currency translation differences - - (12,247) (12,247)
-------- ------------ --------- ---------
Net losses recognised directly in equity - (12,593) (12,247) (24,840)
-------- ------------ --------- ---------
Issue of share capital 133 - - 133
-------- ------------ --------- ---------
At 31 December 2015 104,074 (12,827) (17,280) 73,967
-------- ------------ --------- ---------
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 (2015: nil).
28. Cash generated from operations
2016 2015
GBP'000 GBP'000
--------- --------
Profit before taxation 134,880 155,027
--------
Investment and finance income (6,877) (5,301)
------------------------------------------------ --------- --------
Interest payable on bank loans and
finance leases 17,491 16,782
------------------------------------------------ --------- --------
Fair value (gains)/losses on available-for-sale
financial assets (87) 41
------------------------------------------------ --------- --------
Net pension financing expenses 4,872 6,124
------------------------------------------------ --------- --------
Unwinding of liability discounting 1,862 1,567
------------------------------------------------ --------- --------
Depreciation 12,526 11,600
------------------------------------------------ --------- --------
Amortisation of other intangible assets 36,896 31,310
------------------------------------------------ --------- --------
Amortisation of share based payments 24,892 20,075
------------------------------------------------ --------- --------
Share of results of associates' undertakings (1,353) (5,531)
------------------------------------------------ --------- --------
Non cash exceptional items 5,294 21,959
------------------------------------------------ --------- --------
Losses on disposal of businesses 1,660 527
------------------------------------------------ --------- --------
(Gains)/losses on disposal of property,
plant and equipment (10) 60
------------------------------------------------ --------- --------
Losses on disposal of available-for-sale
financial assets 8 72
------------------------------------------------ --------- --------
Gain on sale of associates - (19,142)
------------------------------------------------ --------- --------
Increase in trade and other receivables (67,160) (23,475)
------------------------------------------------ --------- --------
Increase in trade and other payables
- excluding insurance broking balances 24,788 22,539
------------------------------------------------ --------- --------
Decrease in provisions for liabilities
and charges (12,440) (7,833)
------------------------------------------------ --------- --------
Decrease in retirement benefit obligations (10,530) (11,021)
------------------------------------------------ --------- --------
Net cash inflow from operations 166,712 215,380
------------------------------------------------ --------- --------
29. Business combinations
Adjustments in respect of prior year acquisitions
During the year, the contingent consideration booked in respect of acquisitions completed in previous years has been revised following the final settlement of amounts due or the revision of amounts due or the revision of estimates based on performance conditions.
Change in estimated
Revisions to contingent Consideration at 31 consideration Consideration at 31
consideration during Dec 15 impacting goodwill Dec 2016 Paid during the year
the year GBP'000 GBP'000 GBP'000 GBP'000
Ingham Holdings Limited 1,577 (1,577) - -
---------------------- ---------------------- ---------------------
Keenan Insurances
(Ireland) 46 (46) - -
---------------------- ---------------------- ---------------------
1,623 (1,623) - -
---------------------- ---------------------- ---------------------
2016 Acquisitions
During the year, the process of finalising the provisional fair values in respect of acquisitions carried out during 2015 has resulted in following changes.
Provisional fair value
reported at
Revised fair value acquired 31 Dec 2015 Change in fair value
GBP'000 GBP'000 GBP'000
Close Brothers Asset Management
(Close brothers) 491 580 (89)
Pierre Leblanc & Associés
SAS (PL&A) 1,127 990 137
---------------------------- ------------------------------ ---------------------
1,618 1,570 48
These changes in fair value affected the following balance sheet classes:
Provisional
fair value
reported at Change in
Revised fair value acquired 31 Dec 2015 fair value
GBP'000 GBP'000 GBP'000
Property, plant and equipment 43 4 39
Other intangible assets 1,068 1,068 -
--------------------------- ------------ -----------
Trade and other receivables 713 713 -
--------------------------- ------------ -----------
Cash and cash equivalents
- own cash 511 511 -
- fiduciary cash 2,218 2,218 -
Insurance payables (2,218) (2,218) -
Trade and other payables (793) (704) (89)
Current taxation 76 (22) 98
1,618 1,570 48
At At
31 Dec 2016 31 Dec 2015 Change
Goodwill calculation GBP'000 GBP'000 GBP'000
Purchase consideration
- cash paid 6,030 6,030 -
------------ ------------ --------
- contingent consideration 717 717 -
------------ ------------ --------
- deferred consideration 248 248 -
Total purchase consideration 6,995 6,995 - Less: fair value of net assets acquired 1,618 1,570 48 Goodwill 5,377 5,425 (48)
29. Business combinations continued
At At
31 Dec 2016 31 Dec 2015 Change
GBP'000 GBP'000 GBP'000
Purchase consideration settled in cash 6,030 6,030 -
Cash and cash equivalents - own cash in subsidiaries acquired (511) (511) -
------------ --------
5,519 5,519 -
Cash and cash equivalents - fiduciary cash in subsidiaries acquired (2,218) (2,218) -
------------ --------
Cash outflow on acquisition 3,301 3,301 -
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
Broderick Piller Pty Ltd (Workwise) i May 2016 100% 7,135
Stonehill Reinsurance Partners, LLC (Stonehill) ii Dec 2016 100% 8,790
------ ------------ -------------- --------
Jan -
Acquisition of other new businesses completed during the year iii Dec 2016 various 9,392
------ ------------ -------------- --------
Jan -
Additional investments in existing businesses iv Dec 2016 various 5,489
------ ------------ -------------- --------
30,806
i) Acquisition of Broderick Piller Pty Ltd (Workwise)
On 10 May 2016, the Group completed the acquisition of Broderick Piller Pty Ltd trading as Workwise Occupational Health, a leading provider of workplace, health & safety and rehabilitation services in Western Australia. The acquired business contributed revenue of GBP1,243,000 and net profit, including acquisition and integration costs incurred to date, of GBP70,000 to the Group for the period since acquisition. If the acquisition had taken place on 1 January 2016, we estimate the contribution to Group revenue would have been GBP2,086,000 and net profit, including acquisition and integration costs incurred to date, would have been GBP434,000.
Goodwill calculation GBP'000
Purchase consideration
- cash paid 4,415
-------
- contingent consideration 2,720
-------
Total purchase consideration 7,135
Less: fair value of net assets acquired 1,258
Goodwill 5,877
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 59 59
Other intangible assets 3 606
Trade and other receivables 277 277
---------- ----------
Cash and cash equivalents
- own cash 497 497
Deferred taxation (181) (181)
655 1,258
GBP'000
Purchase consideration settled in cash 4,415
---------------------------------------- -------
Cash and cash equivalents - own cash
in subsidiary acquired (497)
---------------------------------------- -------
Cash outflow on acquisition 3,918
---------------------------------------- -------
As at 31 December 2016, the process of reviewing the fair values of assets acquired had not been completed, consequently the fair values stated above are provisional.
The contingent consideration of GBP2,720,000 is primarily based upon the expected profit before tax of the business for future periods up to 2020.
None of the goodwill recognised is expected to be deductible for income tax purposes.
ii) Acquisition of Stonehill Reinsurance Partners, LLC (Stonehill)
On 15 December 2016, the Group acquired the assets of Stonehill Reinsurance Partners LLC in North America, a reinsurance intermediary specialised in Medical Professional Liability and healthcare related business. The acquired business contributed revenue of GBP147,000 and net profit, including acquisition and integration costs incurred to date, of GBP24,000 to the Group for the year since acquisition. If the acquisition had taken place on 1 January 2016, we estimate the contribution to Group revenue would have been GBP3,804,000 and net profit, including acquisition and integration costs incurred to date, would have been GBP529,000.
Goodwill calculation GBP'000
---------------------------------------- -------
Purchase consideration
---------------------------------------- -------
- cash paid 2,657
- contingent consideration 6,133
-------
Total purchase consideration 8,790
----------------------------------------- -------
Less: fair value of net assets acquired 2,085
Goodwill 6,705
----------------------------------------- -------
The assets and liabilities arising from the acquisition were as follows:
Acquiree's
carrying Fair value
amount GBP'000
Property, plant and equipment 141 141
------------------------------ ---------- ----------
Other intangible assets - 1,626
Trade and other receivables 243 243
Cash and cash equivalents
- own cash 1,015 1,015
---------- ----------
- fiduciary cash 1,098 1,098
---------- ----------
Insurance creditors (1,098) (1,098)
------------------------------ ---------- ----------
Trade and other payables (940) (940)
------------------------------ ---------- ----------
459 2,085
GBP'000
Purchase consideration settled in cash 2,657
---------------------------------------- --------
Cash and cash equivalents - own cash
in subsidiary acquired (1,015)
----------------------------------------
1,642
---------------------------------------
Cash and cash equivalents - fiduciary
cash in subsidiary acquired (1,098)
----------------------------------------
Cash outflow on acquisition 544
----------------------------------------
As at 31 December 2016, the process of reviewing the fair values of assets acquired had not been completed, consequently the fair values stated above are provisional.
The contingent consideration of GBP6,133,000 is based upon expected revenues up to 2020.
The maximum consideration is capped at USD15,000,000.
Goodwill recognised is expected to be deductible for income tax purposes.
Overview
iii) Other acquisitions and additional investments
Goodwill calculation GBP'000
Purchase consideration
--------------------------------------- -------
- cash paid 9,315
- contingent consideration 4,641
-------
- deferred consideration 815
-------
- cancellation of loans 110
Total purchase consideration 14,881
---------------------------------------- -------
Less fair value of net assets acquired 3,608
Less equity movement on transactions
with non-controlling interests 4,330
---------------------------------------- -------
Goodwill 6,943
----------------------------------------
The assets and liabilities arising from acquisitions were as follows:
Acquiree's Fair
carrying value
amount GBP'000
------------------------------ ---------- --------
Property, plant and equipment 12 12
------------------------------ ---------- --------
Other intangible assets - 1,692
Trade and other receivables 846 846
Cash and cash equivalents
------------------------------ ---------- --------
- own cash 106 106
---------- --------
- fiduciary cash 290 290
---------- --------
Insurance payables (290) (290)
------------------------------ ---------- --------
Trade and other payables (64) (64)
------------------------------ ---------- --------
Current taxation (27) (27)
------------------------------ ---------- --------
Deferred taxation (116) (116)
------------------------------ ---------- --------
Non-controlling interests 1,159 1,159
------------------------------ ---------- --------
1,916 3,608
GBP'000
Purchase consideration settled in cash 9,315
---------------------------------------- -------
Cash and cash equivalents - own cash
in subsidiary acquired (106)
----------------------------------------
9,209
Cash and cash equivalents - fiduciary
cash in subsidiary acquired (290)
----------------------------------------
Cash outflow on acquisition 8,919
----------------------------------------
As at 31 December 2016, the process of reviewing the fair values of assets acquired had not been completed, consequently the fair values stated above are provisional.
The contingent consideration of GBP4,641,000 relates to various acquisitions of which the largest individual consideration of GBP1,347,000 is based upon expected revenues from 2017 to 2020.
The deferred consideration of GBP815,000 is based upon the net assets in the completion accounts.
None of the goodwill recognised is expected to be deductible for income tax purposes.
Group summary of the net assets acquired and goodwill
The assets and liabilities arising from acquisitions were as follows:
Workwise Stonehill Others Total
GBP'000 GBP'000 GBP'000 GBP'000
Purchase consideration:
---------------------------------------------------------------------------- -------- --------- -------- ---------
- cash paid 4,415 2,657 9,315 16,387
- contingent consideration 2,720 6,133 4,641 13,494
- deferred consideration - - 815 815
-------- --------- -------- ---------
- cancellation of loans - - 110 110
-------- --------- -------- ---------
Total purchase consideration 7,135 8,790 14,881 30,806
----------------------------------------------------------------------------
Less fair value of net
assets acquired 1,258 2,085 3,608 6,951
---------------------------------------------------------------------------- -------- --------- -------- ---------
Less equity movement on transactions with non-controlling interests - - 4,330 4,330
-------- --------- --------
Goodwill on acquisitions
occurring during the year 5,877 6,705 6,943 19,525
----------------------------------------------------------------------------
Impact of revisions to
deferred consideration (1,623)
---------------------------------------------------------------------------- -------- --------- -------- ---------
Impact of revision to fair value adjustment in relation to acquisitions
completed in 2015 (48)
Net increase in goodwill 17,854
Impact of additional investments 4,330
-------- --------- --------
Net decrease in equity 4,330
Group summary of cash flows
Workwise Stonehill Others Total
GBP'000 GBP'000 GBP'000 GBP'000
Purchase consideration
settled in cash 4,415 2,657 9,315 16,387
------------------------------------------------------------ -------- --------- -------- ---------
Cash and cash equivalents - own cash in subsidiary acquired (497) (1,015) (106) (1,618)
-------- --------- --------
3,918 1,642 9,209 14,769
Cash and cash equivalents
- fiduciary cash in subsidiary
acquired - (1,098) (290) (1,388)
------------------------------------------------------------ -------- --------- -------- ---------
Total purchase consideration 3,918 544 8,919 13,381
------------------------------------------------------------
30. Business disposals
On 30 December 2016, the Group disposed of 100% of its shareholdings in Thistle Insurance Services Limited.
Net assets and proceeds of disposal
Fair value
GBP'000
Goodwill 15,846
---------------------------------------- ----------
Property, plant and equipment 591
---------------------------------------- ----------
Other intangible assets 3,553
---------------------------------------- ----------
Trade and other receivables 13,410
---------------------------------------- ----------
Cash and cash equivalents
--------------------------------------- ----------
- own cash 8,548
----------
- fiduciary cash 9,196
----------
Insurance payables (9,196)
---------------------------------------- ----------
Trade and other payables (2,202)
Provisions for liabilities and charges (119)
---------------------------------------- ----------
Net assets at disposal 39,627
----------------------------------------
Gain on disposal 3,438
---------------------------------------- ----------
Proceeds on disposal 43,065
Total
--------------------------------------- ----------
GBP'000
--------------------------------------- ----------
Deferred proceeds 10,570
---------------------------------------- ----------
Cash inflow on disposal during the
year 32,495
---------------------------------------- ----------
Total consideration 43,065
----------------------------------------
Total
GBP'000
Disposal consideration settled in cash 32,495
---------------------------------------- --------
Cash and cash equivalents - own cash
in subsidiaries disposed
--------------------------------------- --------
- own cash in subsidiary sold (8,548)
--------
- fiduciary cash in subsidiary sold (9,196)
--------
Cash inflow on disposal during the
year 14,751
----------------------------------------
The deferred proceeds of GBP10,570,000 include an amount of GBP4,269,000 based upon the balance sheet positions at completion and an amount of GBP6,301,000 contingent upon the recovery of certain assets, the majority of which were included in the final closing balance sheet of the company disposed of. The contingent consideration of GBP6,301,000 is recognised as an available-for-sale asset. Including the cost on disposal of GBP3,484,000, the net loss is GBP46,000.
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
Goodwill 1,705
Property, plant and equipment 176
Other intangible assets 224
Trade and other receivables 366
Cash and cash equivalents
- own cash 494
- fiduciary cash 286
Insurance payables (286)
Trade and other payables (894)
Current taxation 90
Non-controlling interests (31)
Net assets at disposal 2,130
Exchange gains recycled from exchange reserves 325
Equity movement on transactions with non-controlling interests 32
Loss on disposal (770)
Proceeds on disposal 1,717
Total
GBP'000
Deferred proceeds 547
Cash inflow on disposal during the year 1,170
Total consideration 1,717
Total
GBP'000
Disposal consideration settled in cash 1,170
---------------------------------------- --------
Cash and cash equivalents - own cash
in subsidiaries disposed
--------------------------------------- --------
- own cash in subsidiary sold (494)
--------
- fiduciary cash in subsidiary sold (286)
--------
Cash inflow on disposal during the
year 390
----------------------------------------
Including the cost on disposal of GBP844,000, the net loss is GBP1,614,000.
Group summary of cash flows
Thistle Others Total
GBP'000 GBP'000 GBP'000
-------------------------------------------------------------- -------- -------- --------
Disposal consideration
settled in cash 32,495 1,170 33,665
--------------------------------------------------------------- -------- -------- --------
Cash and cash equivalents - own cash in subsidiaries disposed
- own cash in subsidiary
sold (8,548) (494) (9,042)
--------------------------------------------------------------- -------- -------- --------
- fiduciary cash in subsidiary sold (9,196) (286) (9,482)
-------- --------
Cash inflow on disposal
during the year 14,751 390 15,141
---------------------------------------------------------------
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.
The pension service costs accrued for the year are as follows:
UK Schemes Overseas Schemes Total
2016 2015 2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Defined benefit schemes - - 487 2,630 487 2,630
Defined contribution schemes 20,824 21,265 19,254 15,723 40,078 36,988
20,824 21,265 19,741 18,353 40,565 39,618
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. This valuation was updated to 31 December 2016 by a qualified actuary employed by the Group. An updated triennial actuarial valuation will be performed in 2017.
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 USD18,000 in 2016 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 USD10,600. Employees aged over 50 may make "catch-up" contributions subject to an IRS maximum each year USD6,000 in 2016.
b)
The JLT (USA) Employee Retirement Plan which is a defined benefit scheme. The latest actuarial valuation was undertaken at 1 January 2016 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 has made a settlement gain of GBP127,000 (2015: GBP492,000) 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 2016 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 will be determined as at 31 March 2016. The Plan was closed in 2016, however the Group made an allowance for the upcoming closure of the Stable Value Plan to future accrual in the 2015 accounts. As a result, a curtailment gain of GBP506,000 was recognised in 2015. No further gain or loss on curtailment was recognised 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 Plans last formal valuation was undertaken as of 31 December 2013 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 next actuarial valuation is due and being carried out as part of the current renewal of the Scheme for 1 January 2017.
The principal actuarial assumptions used were as follows:
UK US Irish
At 31 December 2016 Scheme Scheme Canadian Scheme Scheme US Stable Value Plan
Rate of increase in salaries n/a n/a 3.25% n/a n/a
Rate of increase of pensions in payment (a) 3.24% n/a 3.25% 3.00% n/a
Discount rate (b) 2.80% 4.00% 3.90% 1.90% 3.35-3.40%
Inflation rate 3.34% 2.00% 2.25% 1.50% 2.00%
Revaluation rate for deferred pensioners 2.34% n/a n/a 1.50% 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
UK US Irish
At 31 December 2015 Scheme Scheme Canadian Scheme Scheme US Stable Value Plan
Rate of increase in salaries n/a n/a 2.50% n/a n/a
Rate of increase of pensions in payment (a) 2.82% n/a 3.25% 3.00% n/a
Discount rate (b) 3.86% 4.20% 4.00% 2.50% 3.50-3.55%
Inflation rate 2.92% 2.00% 2.25% 1.75% 2.00%
Revaluation rate for deferred pensioners 1.92% n/a n/a 1.75% n/a
Mortality - life expectancy at age 65 for male
members: (c)
Aged 65 at 31 December (years) 21.7 21.7 22.0 22.8 21.7
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 2015 tables with a 1.25% p.a. long-term rate of improvement.
Mortality assumptions for the US Scheme and US Stable Value Plan are based on the RP2014 Mortality Table with MP2016 Projections.
Mortality assumptions for the Canadian Scheme are based on the CPM-2014 Private Table with generational projection using scale CPM-B1D2014.
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.
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
2016 2015 2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Present value of funded obligations (674,029) (576,343) (72,315) (61,940) (746,344) (638,283)
Fair value of plan assets 489,533 457,396 58,399 50,500 547,932 507,896
Net liability recognised in the balance sheet (184,496) (118,947) (13,916) (11,440) (198,412) (130,387)
Reconciliation of defined benefit liability
UK Schemes Overseas Schemes Total
2016 2015 2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening defined benefit liability (118,947) (162,620) (11,440) (16,415) (130,387) (179,035)
Exchange differences - - (2,169) (396) (2,169) (396)
Pension expense (4,778) (5,902) (1,274) (2,421) (6,052) (8,323)
Employer contributions 10,952 11,117 886 3,101 11,838 14,218
Total (loss)/gain recognised in reserves (71,723) 38,458 81 4,691 (71,642) 43,149
Net liability recognised in the balance sheet (184,496) (118,947) (13,916) (11,440) (198,412) (130,387)
Reconciliation of defined benefit obligation
UK Schemes Overseas Schemes Total
2016 2015 2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening defined benefit obligation (576,343) (641,759) (61,940) (78,044) (638,283) (719,803)
Exchange differences - - (11,626) (870) (11,626) (870)
Service cost - - (487) (2,630) (487) (2,630)
Interest cost (21,435) (22,366) (2,502) (2,507) (23,937) (24,873)
Curtailment gain - - 127 998 127 998
Settlement amount - - 1,315 5,773 1,315 5,773
(Loss)/gain on defined benefit obligation (121,841) 50,051 (1,120) 5,453 (122,961) 55,504
Actual benefit payments 45,590 37,731 3,918 9,887 49,508 47,618
Closing defined benefit obligation (674,029) (576,343) (72,315) (61,940) (746,344) (638,283)
Reconciliation of fair value of assets
UK Schemes Overseas Schemes Total
2016 2015 2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening value of assets 457,396 479,139 50,500 61,629 507,896 540,768
Exchange differences - - 9,457 474 9,457 474
Expected return on assets 17,034 16,722 2,031 2,027 19,065 18,749
Actuarial gain/(loss) 50,118 (11,593) 1,201 (762) 51,319 (12,355)
Employer contributions 10,952 11,117 886 3,101 11,838 14,218
Actual benefit payments (45,590) (37,731) (3,918) (9,887) (49,508) (47,618)
Settlement amount - - (1,315) (5,773) (1,315) (5,773)
Expenses (377) (258) (443) (309) (820) (567)
Closing value of assets 489,533 457,396 58,399 50,500 547,932 507,896
Overview
The analysis of the fair value of the scheme assets is as follows:
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%
UK Schemes Overseas Schemes
Value Value Value Value
At 31 December 2015 GBP'000 % GBP'000 %
Equities 174,843 38% 32,395 64%
Bonds - - 14,848 30%
Investment funds 99,079 22% - -
Qualifying insurance policies 176,996 39% - -
Other assets - - 2,656 5%
Cash 6,478 1% 601 1% Total market value 457,396 100% 50,500 100%
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
2016 2015 2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Expected return on assets 17,034 16,722 2,031 2,027 19,065 18,749
Actuarial gain/(loss) 50,118 (11,593) 1,201 (762) 51,319 (12,355)
Actual return on assets 67,152 5,129 3,232 1,265 70,384 6,394
The amounts recognised in the consolidated income statement are as follows:
UK Schemes Overseas Schemes Total
2016 2015 2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Service cost - - (487) (2,630) (487) (2,630)
Settlement and curtailment gain - - 127 998 127 998
Expenses (377) (258) (443) (309) (820) (567)
Total (included within salaries and associated expenses) (377) (258) (803) (1,941) (1,180) (2,199)
Interest cost (21,435) (22,366) (2,502) (2,507) (23,937) (24,873)
Expected return on assets 17,034 16,722 2,031 2,027 19,065 18,749
Total (included within finance costs) (4,401) (5,644) (471) (480) (4,872) (6,124)
Expenses before taxation (4,778) (5,902) (1,274) (2,421) (6,052) (8,323)
The amounts included in the consolidated statement of comprehensive income are as follows:
UK Schemes Overseas Schemes Total
2016 2015 2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
(Loss)/gain on defined benefit obligation (121,841) 50,051 (1,120) 5,453 (122,961) 55,504
Actuarial gain/(loss) 50,118 (11,593) 1,201 (762) 51,319 (12,355)
Total actuarial (loss)/gain recognised (71,723) 38,458 81 4,691 (71,642) 43,149
Cumulative actuarial loss recognised (277,162) (205,439) (32,756) (32,837) (309,918) (238,276)
The five year history of experience adjustments is as follows:
UK Schemes
2012
2016 2015 2014 2013 GBP'000
GBP'000 GBP'000 GBP'000 GBP'000 restated
Defined benefit obligation at end of year (674,029) (576,343) (641,759) (583,745) (574,360)
Fair value of plan assets 489,533 457,396 479,139 458,727 463,621
Deficit in the schemes (184,496) (118,947) (162,620) (125,018) (110,739)
Difference between the actual and expected return on plan assets
- amount (GBP'000) 50,118 (11,593) 16,437 (22,217) 32,889
- expressed as a percentage of the plan assets 10.24% (2.53%) 3.43% (4.84%) 7.09%
Experience (gain)/loss on plan liabilities
- amount (GBP'000) (7,009) (8,840) 1,592 1,364 11,890
-
expressed as a percentage of the present value of the plan
liabilities 1.04% 1.53% (0.25%) (0.23%) (2.07%)
Overseas Schemes
2012
2016 2015 2014 2013 GBP'000
GBP'000 GBP'000 GBP'000 GBP'000 restated
Defined benefit obligation at end of year (72,315) (61,940) (78,044) (60,566) (68,937)
Fair value of plan assets 58,399 50,500 61,629 54,957 48,285
Deficit in the schemes (13,916) (11,440) (16,415) (5,609) (20,652)
Difference between the actual and expected return on plan assets
- amount (GBP'000) 1,201 (762) 2,450 6,863 3,034
- expressed as a percentage of the plan assets 2.06% (1.51%) 3.98% 12.49% 6.28%
Experience (gain)/loss on plan liabilities
- amount (GBP'000) (4,450) (1,427) 1,265 377 (3,925)
-
expressed as a percentage of the present value of the plan liabilities 6.15% 2.30% (1.62%) (0.62%) 5.69%
Defined
The expected employer contributions in respect of the year ending 31 December 2017 are as benefit
follows: GBP'000
UK Scheme 15,500
Irish Scheme 892
Total expected contributions 16,392
Overview
STRATEGIC REPORT
32. Related-party transactions
Transactions with the Jardine Matheson Group
As at 10 February 2017 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:
2016 2015
JMG JMA Total JMG JMA Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income
Fees and commissions 3,999 1,941 5,940 3,472 1,794 5,266
Expenditure
Administrative expenses 1,598 - 1,598 1,729 - 1,729
Year-end balances arising from these transactions:
Trade and other receivables 962 642 1,604 522 253 775
Trade and other payables (82) - (82) (58) (1) (59)
880 642 1,522 464 252 716
Transactions with associates
The following transactions were carried out with associates during the year:
2016 2015
GBP'000 GBP'000
Income
Fees and commissions 3,238 5,994
Finance income
Interest receivable - own funds 8 194
Expenditure
Administrative expenses 19 67
Year-end balances arising from these transactions:
Trade and other receivables 4,966 5,115
Trade and other payables (1) (140)
4,965 4,975
33. Commitments
Capital commitments
Capital expenditure contracted for 2016 at the balance sheet date amounts to GBP1,293,000. In 2015 there was no significant capital expenditure contracted.
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:
2016 2015
GBP'000 GBP'000
No later than 1 year 42,981 24,987
Later than 1 year and no later than 5 years 146,090 121,441
Later than 5 years 300,912 264,356
489,983 410,784
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 22 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:
2016 2015
GBP'000 GBP'000
No later than 1 year 151 143
Later than 1 year and no later than 5 years 231 370
382 513
Legal and other loss contingencies
Jardine Lloyd Thompson Group plc and its subsidiaries are subject to various claims and legal proceedings and disputes 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 2016, the Group has contingent liabilities in respect of guarantees and letters of credit given on behalf of Group companies amounting to GBP12,024,000 (2015: GBP7,113,000).
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 27 January 2017, the Group announced the acquisition of a 50.1% ownership interest in CRP Holding Company LLC, the holding company of Construction Risk Partners LLC, one of the leading construction risk and surety specialty brokers in the USA, for a consideration of USD 50,000,000 subject to adjustment.
35. Subsidiaries and associated companies
The following were the subsidiaries and associated undertakings at 31 December 2016. 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
Company (if less than 100%) Registered Office address Notes
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 Group Limited BDO LLP, 55 Baker Street, London, W1U 7EU,
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
Echelon Consulting Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
Expacare Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
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
Ingham & Co (Liabilities) Limited BDO LLP, 55 Baker Street, London, W1U 7EU,
England
Ingham (Holdings) Limited BDO LLP, 55 Baker Street, London, W1U 7EU,
England
Jardine (Lloyd's Underwriting Agents) BDO LLP, 55 Baker Street, London, W1U 7EU,
Limited England
Jardine Lloyd Thompson Reinsurance Holdings BDO LLP, 55 Baker Street, London, W1U 7EU,
Limited England
Jardine Lloyd Thompson Reinsurance Limited BDO LLP, 55 Baker Street, London, W1U 7EU,
England
Jardine Reinsurance Management Limited BDO LLP, 55 Baker Street, London, W1U 7EU,
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 Capital Markets Limited BDO LLP, 55 Baker Street, London, W1U 7EU,
England
JLT Colombia Retail Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
JLT Colombia Wholesale Limited 91.87 The St Botolph Building, 138 Houndsditch, 3
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 iimia Limited BDO LLP, 55 Baker Street, London, W1U 7EU,
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 51.00 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 The St Botolph Building, 138 Houndsditch,
Limited 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 Quest Trustee Limited BDO LLP, 55 Baker Street, London, W1U 7EU,
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 (Falmouth) Limited BDO LLP, 55 Baker Street, London, W1U 7EU,
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
P3 Corporate Pensions Software Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
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
PIN Finance Limited BDO LLP, 55 Baker Street, London, W1U 7EU,
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
The Hayward Holding Group Limited The St Botolph Building, 138 Houndsditch,
London, EC3A 7AW, England
Thistle Underwriters Limited BDO LLP, 55 Baker Street, London, W1U 7EU,
England
Angola
Jardines PF (Angola) Lda Rua Lucrecia Paim 9, PO Box 239, Luanda,
Republica de Angola
Anguilla
JLT Towner Insurance Management (Anguilla) Babrow's Commercial Complex, The Valley,
Limited AI-2640, Anguilla
Argentina
JLT Re Argentina Corredores de Reaseguros 51.00 Della Paolera 265, Torre Boston, 24th Floor
S.A. Retiro, C.A.B.A, Argentina
Australia
AssetVal Pty Ltd Level 11, 66 Clarence Street, Sydney NSW
2000, Australia
Australian Insurance Brokers Pty Ltd Level 11, 66 Clarence Street, Sydney NSW
2000, Australia
Broderick Piller Pty Ltd Level 11, 66 Clarence Street, Sydney NSW
2000, Australia
Echelon Australia Pty Limited Level 11, 66 Clarence Street, Sydney NSW
2000, Australia
Group Promoters Pty Limited Level 11, 66 Clarence Street, Sydney NSW
2000, Australia
Jardine Lloyd Thompson Australia Pty Level 11, 66 Clarence Street, Sydney NSW
Limited 2000, Australia
JLT Group Services Pty Limited Level 11, 66 Clarence Street, Sydney NSW
2000, Australia
Jardine Lloyd Thompson Pty Limited Level 11, 66 Clarence Street, Sydney NSW
2000, Australia
JLT Re Pty Ltd Level 11, 66 Clarence Street, Sydney NSW
2000, Australia
Local Government Insurance Brokers Pty Level 11, 66 Clarence Street, Sydney NSW
Limited 2000, Australia
Premium Services Australia Pty Limited Level 11, 66 Clarence Street, Sydney NSW
2000, Australia
The Recovre Group Pty Ltd Level 11, 66 Clarence Street, Sydney NSW
2000, Australia
Risk Management Australia Pty Limited Level 11, 66 Clarence Street, Sydney NSW
2000, Australia
Thistle Underwriting Services Pty Ltd Level 11, 66 Clarence Street, Sydney NSW
2000, Australia
Austria
GrECo International Holding AG 20.00 1190 Vienna, Elmargasse 2-4, Postfach 299,
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
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 78.57 Avenida Beira Mar no. 200, 8 andar (parte),
Centro, Rio de Janeiro, Brazil
JLT do Brasil Corretagem de Seguros Ltda 78.57 Rua Sete de Abril, 230 - 2 andar,
cep-01044-000 Sao Paulo, Brazil
JLT RE Brasil, Administracao e Corretagem 78.57 Avenida Beira Mar no. 200, 8 andar (parte),
de Resseguros Ltda Centro, Rio de Janeiro, Brazil
JLT SCK Affinity Administracao e Corretora 58.92 Ave. Presidente Wilson, 231, 1
de Seguros Ltda. 74.107.483/0001-64, Centro, Rio de Janeiro,
Brazil
JLT SCK Corretora e Administradora de 58.92 Ave. Presidente Wilson, 231,
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 Maples Corporate Services Ltd, Ugland House
Limited , PO Box 309, Grand Cayman, KY1 1104,
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 85.00 Carrera 7 # 71- 21 , Torre B, Bogota,
Colombia
Beneficios Integrales Oportunos SA 68.00 Calle 72 Ndeg 10 - 07 Of. 1004. Bogota,
Colombia
JLT Re Colombia, Corredores Colombianos de 91.87 Calle 742 No. 10-51 PH, Bogota, Colombia
Reaseguros
Jardine Lloyd Thompson Valencia y Iragorri 68.00 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 24/26 Rue de la Pepiniere , 75008, Paris ,
France
JLT Energy (France) SAS 35.40 18 Rue de Courcelles, 75008, Paris, France
24/26 Rue de la Pépinière ,
JLT PLA 75008, Paris , France 4
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
JLT Agency Services Limited 25th Floor Devon House, Taikoo Place, 979
King's Road, Quarry Bay, 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 Benefits) Ltd 25th Floor Devon House, Taikoo Place, 979
King's Road, Quarry Bay, Hong Kong
Lambert Brothers Insurance Brokers (Hong Kong) Ltd 25th Floor Devon House, Taikoo Place, 979
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
Limited Marg, Off, Senapati Bapat Marg, Mumbai,
400013,
India
Jardine Lloyd Thompson Insurance 92.61 E-2/16, 2nd Floor, White House, Ansari
Consultants 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, Jl. Jendral Sudirman
Kav. 29-31, Jakarta 12920, Indonesia
PT Nexus Asia Pacific Antam Office Park Tower B, JI Letjen TB
Simatupang No.1 RT 010 RW 004,, Kel.
Tanjung Barat
Kec. Jagakarsa Selatan, 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 Limited Cherrywood Business Park, Loughlinstown,
Dublin 18, Ireland
Jardine Lloyd Thompson Ireland Cherrywood Business Park, Loughlinstown,
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 Financial Services Limited Cherrywood Business Park, Loughlinstown,
Dublin 18, Ireland
Italy
MAG JLT SpA 25.00 Francesco Crispi 74, Naples, Italy
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,
Malta
Manoel Management Services Ltd 34.00 Abate Rigord Street, Ta'Xbiex , XBX 1111,
Malta
Mauritius
JI Holdings Limited 92.61 c/o International Management (Mauritius)
Ltd, Les Cascades, Edith Cavell Street,
Port Louis,
Republic of Mauritius
Mexico
JLT Mexico, Intermediario de Reaseguro, S.A. de C.V. Avenida Insurgentes Sur 1898, Piso 19,
Colonia Florida, CP 01030 México
City
Sterling Re Intermediario de Reaseguro, SA 35.50 Insurgentes, Colonia, Torre 01030, Mexico
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 (2002) Limited Level 5, Tower Centre, 45 Queen Street,
Auckland, New Zealand
Client Provide Limited 75.40 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 75.40 Level 5, Tower Centre, 45 Queen Street,
Auckland, New Zealand
Norway
JLT Norway AS Strandveien 35, 1324 Lysaker, P.O.BOX 142,
Norway
Peru
JLT Affinity Latam S.A.C. 85.00 Avenida Angamos Oeste 1209, Miraflores,
Lima 18, 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 Reinsurance Brokers, Inc. 111 Paseo de Roxas Building, Legaspi
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 Limited 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) 63.00 Block D, Nicol Main Office Park, 2 Burton
Limited 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) LTD Block D, Nicol Main Office Park, 2 Burton
Road, Bryanston, 2191, South Africa
JLT SA IB Holding Company (Proprietary) Limited Block D, Nicol Main Office Park, 2 Burton
Road, Bryanston, 2191, South Africa
Spain
March-JLT, Correduria de Seguros y 25.00 Calle de Lagasca 88, Madrid, Spain
Reaseguros, S.A.
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 Precinct Building 5, 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
Core Risks Ltd. LLC Corporation Service Company, 2711
Centerville Road, Suite 400, Wilmington,
Delaware, 19808
GCube Insurance Services Inc CSC Lawyers Indorporating Service, 2710
Gateway Oaks Drive, Suite 150N,
Sacramento, CA95833
Jardine Lloyd Thompson Capital Markets Inc. Corporation Service Company, 2711
Centerville Road, Suite 400, Wilmington,
Delaware, 19808
Jardine Lloyd Thompson Insurance Services, Inc Corporation Service Company, 2711
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
Weston Preference LLC Corporation Service Company, 2711
Centerville Road, Suite 400, Wilmington,
Delaware, 19808
Worldlink Specialty Insurance Services Inc CSC Lawyers Indorporating Service, 2710
Gateway Oaks Drive, Suite 150N,
Sacramento, CA95833
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
SHAREHOLDER Information
Notes
Thistle Insurance Services Limited was sold on 30 December 2016.
JLT acquired a 50.1% stake in CRP Holding Company, LLC on 27 January 2017.
1 = Quotas;
2 = Preference shares;
3 = Ordinary and Preference shares; and
4 = Pierre le Blanc changed its name on 1 January 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 EAAAXALEXEAF
(END) Dow Jones Newswires
February 28, 2017 02:02 ET (07:02 GMT)
1 Year Jardine Lloyd Thompson Chart |
1 Month Jardine Lloyd Thompson Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
