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JLT Jardine Lloyd

1,914.00
0.00 (0.00%)
28 Mar 2024 - Closed
Delayed by 15 minutes
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 00:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
0 0 N/A 0

Jardine Lloyd Thompson Group PLC Half-year Report (8010V)

26/07/2018 7:02am

UK Regulatory


Jardine Lloyd Thompson (LSE:JLT)
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TIDMJLT

RNS Number : 8010V

Jardine Lloyd Thompson Group PLC

26 July 2018

26 JULY 2018

Jardine Lloyd Thompson Group plc

INTERIM RESULTS

FOR THE SIX MONTHSED 30 JUNE 2018 (UNAUDITED)

Jardine Lloyd Thompson Group plc ("JLT" or the "Group") announces its interim results for the six months ended 30 June 2018.*

GROUP FINANCIAL HIGHLIGHTS

   --    Total revenue growth of 3% to GBP713.5m 
   --    Organic revenue growth of 4%: 
   -    4% in Specialty 
   -    6% in Reinsurance 
   -    4% in Employee Benefits 
   --    Underlying** trading margin increased by 80 basis points from 15.8% to 16.6% 
   --    Underlying** profit before tax increased by 10% to GBP108.8m 

-- Reported profit before tax decreased by 9% to GBP89.4m, reflecting the exceptional costs of the Global Transformation Programme

   --    Underlying** diluted earnings per share (EPS) rose 11% from 31.4p to 34.7p 

-- Reported diluted EPS decreased by 12% from 31.2p to 27.5p, reflecting the exceptional costs of the Global Transformation Programme

   --    Interim cash dividend of 12.7p, up 4.1% 

* The Company's 2017 financial results have been restated following the implementation of IFRS 15 "Revenue from Contracts with Customers" ("IFRS 15"), effective from 1 January 2018, and the Group's new segment reporting structure, in order to show prior year figures on a comparative basis. A restatement of the Full Year and Half Year 2017 financial results was published by the Company on 3 July 2018 and is available on the Company's website at http://www.jlt.com/investors.

** Underlying results exclude exceptional items.

BUSINESS HIGHLIGHTS

-- The new leadership and management structure in Specialty is driving closer co-ordination and increasing global opportunities. Strong performances were delivered in Latin America, Australia and in the global Energy specialty.

-- New business wins in Reinsurance across the UK, European and US markets were achieved, alongside the launch of JLT's next-generation economic capital modelling software, ANSER.

-- Employee Benefits won several global mandates from large multi-national clients, accompanied by good organic revenue growth in Brazil and Asia. UK Employee Benefits remains on track to achieve a 15% trading margin in 2019.

-- US Specialty delivered 17% organic revenue growth, and is on track to move into profit in 2019. The business now employs 380 people and continues to attract the best industry practitioners.

-- The Global Transformation Programme delivered benefits of GBP6.1m in the period and remains on track to deliver annualised benefits of GBP40m by 2020 for a one-off cost of GBP45m.

Dominic Burke, Group Chief Executive, commented:

"The Group's results for the first six months of 2018 represent a robust trading performance. The strategic initiatives we are implementing are already generating tangible benefits for our clients and for the Group. We are trading with real momentum as we move into the second half and we expect to report continued strong organic revenue growth and further financial progress for the full year."

ENQUIRIES:

Jardine Lloyd Thompson Group plc

 
 Dominic Burke      Group Chief Executive         020 7558 3373 
 Charles Rozes      Group Finance Director        020 7558 3380 
 Paul Dransfield    Head of Investor Relations    020 7528 4933 
 

Brunswick Group LLP

 
 Tom Burns / Dania Saidam    020 7404 5959 
 

Click on, or paste, the following link into your web browser to view the associated PDF document.

http://www.rns-pdf.londonstockexchange.com/rns/8010V_1-2018-7-25.pdf

A presentation to investors and analysts will take place at 9.00am 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.

INTERIM STATEMENT

JLT made significant progress in the first half of 2018, set against a global economic and insurance markets environment that remains inconsistent and unpredictable.

Total revenues increased by 3%, or 6% at constant rates of exchange (CRE), to GBP713.5m. The Group achieved organic revenue growth of 4%.

 
6 months to                      Total Revenue                   Underlying Trading        Trading Margin 
 30 June                                                                Profit 
GBPm                     2018     2017  Growth  CRE  Organic     2018     CRE      2017   2018    CRE   2017 
 
Specialty               408.3    392.9      4%   7%       4%     68.3    68.0      60.2    17%    16%    15% 
Reinsurance             152.8    146.9      4%   6%       6%     49.1    48.5      43.8    32%    31%    30% 
Employee Benefits       152.4    152.0      0%   4%       4%     18.6    20.7      21.7    12%    13%    14% 
Head Office                 -        -       -    -        -   (17.6)  (15.8)    (16.6)      -      -      - 
Group                   713.5    691.8      3%   6%       4%    118.4   121.4     109.1  16.6%  16.5%  15.8% 
 
 

Notes:

   --      Total revenue comprises fees, commissions and investment income. 

-- CRE: Constant rates of exchange are calculated by translating 2018 results at 2017 exchange rates.

-- Organic revenue growth is based on total revenue excluding the effect of currency, acquisitions, disposals and investment income.

   --      Underlying results exclude exceptional items. 
   --      2017 results have been restated for IFRS 15 and the new segment reporting structure. 

JLT's Specialty business delivered a 4% increase in revenues to GBP408.3m, or 7% at CRE, with organic revenue growth of 4%. The trading margin in Specialty was 17%, an improvement on the prior year both on a reported and a CRE basis.

The Reinsurance business delivered revenue growth of 4%, or 6% on an organic revenue basis, to GBP152.8m. The trading margin in Reinsurance increased year-on-year from 30% to 32%.

Revenues within JLT's Employee Benefits business were GBP152.4m, increasing by 4% on an organic revenue basis or largely unchanged on a reported basis. The trading margin reduced year-on-year from 14% to 12%. This was largely due to the impact of the new revenue accounting standard, IFRS 15, on the phasing of profits and is expected to unwind in the second half of 2018 as explained in the 'Employee Benefits' section below.

For the Group, the negative impact of foreign exchange movements, most of which was translational, impacted revenue growth in the period by 300 basis points.

 
6 months to 30 June 
GBPm                                                                          2018                      2017* 
Underlying trading profit                                                    118.4                      109.1 
Underlying share of associates                                                 2.5                        2.1 
Net finance costs                                                           (12.1)                     (12.0) 
                                                       ---------------------------  ------------------------- 
Underlying profit before taxation                                            108.8                       99.2 
Exceptional items                                                           (19.4)                      (0.9) 
                                                       ---------------------------  ------------------------- 
Profit before taxation                                                        89.4                       98.3 
Underlying tax expense                                                      (29.5)                     (29.3) 
Tax on exceptional items                                                       3.6                        0.3 
Underlying non-controlling interests                                         (4.3)                      (2.4) 
Non-controlling interests on exceptional items                                 0.3                        0.3 
                                                       ---------------------------  ------------------------- 
Profit after taxation and non-controlling interests                           59.5                       67.2 
                                                       ---------------------------  ------------------------- 
Underlying profit after taxation and non-controlling 
 interests                                                                    75.0                       67.5 
                                                       ---------------------------  ------------------------- 
Diluted earnings per share                                                   27.5p                      31.2p 
Underlying diluted earnings per share                                        34.7p                      31.4p 
Interim dividend per share                                                   12.7p                      12.2p 
-----------------------------------------------------  ---------------------------  ------------------------- 
 

*2017 results have been restated for IFRS 15.

Group underlying trading profit increased by 9% to GBP118.4m, or 11% at CRE. Underlying profit before tax increased by 10% to GBP108.8m.

The underlying trading margin increased to 16.6%, up from 15.8% in the first half of 2017.

The Group's reported profit before tax was GBP89.4m, compared with GBP98.3m for the same period in 2017. This decrease reflects the exceptional costs of the Global Transformation Programme. Underlying EPS increased by 11%, to 34.7p.

DIVIDS

The Board has declared an increased interim dividend of 12.7p per share for the period ended 30 June 2018 (2017: 12.2p), which will be paid on 3 October 2018 to shareholders on the register at 24 August 2018.

OPERATIONAL REVIEW

The Group now operates as three global trading businesses: Specialty, Reinsurance and Employee Benefits.

SPECIALTY

 
6 months to 30 June                                      Growth 
GBPm                      2018      2017     Reported           CRE     Organic 
Revenue                  408.3     392.9           4%            7%          4% 
Underlying Cost        (340.0)   (332.7)           2%            6% 
Underlying Trading 
 Profit                   68.3      60.2          13%           13% 
===================  =========  ========  ===========  ============ 
Underlying Trading 
 Margin                    17%       15% 
  CRE                      16% 
-------------------  ---------  --------  -----------  ------------  ---------- 
 

Notes:

-- CRE: Constant rates of exchange are calculated by translating 2018 results at 2017 exchange rates.

   --      Underlying results exclude exceptional items. 
   --      2017 results have been restated for IFRS 15 and the new segment reporting structure. 

JLT's Specialty business performed well during its first period under the new leadership and management structure, achieving organic revenue growth of 4%.

Specialty's underlying trading profit grew by 13% to GBP68.3m, with 7% revenue growth at CRE. This was underpinned by the continued reduction of net investment losses in US Specialty and the delivery of benefits from the Global Transformation Programme.

The US Specialty business delivered organic revenue growth of 17% and recorded total revenues of US$60m for the period. The business is successfully integrating International Risk Consultants, the specialist Credit and Political Risk broker acquired in February 2018. A number of important hires were also made in the period across US Specialty, bringing the total number of employees to 380, a headcount increase of 75 since the 2017 half year.

During the period, the US Specialty net investment loss was US$11m, compared to US$17m at the same time last year. As previously guided, the Group expects that total US Specialty net investment losses will be approximately US$100m and that the business will move into profit in 2019. The US Specialty build-out will continue to focus on continuing organic development, complemented by compatible acquisitions.

Within Asia Pacific, Australia returned to organic revenue growth, achieving good business wins across Energy, Power, Sport and Analytical and Consulting Services.

In May 2018, the Group acquired OWL Marine Insurance Brokers, based in Hamburg, strengthening JLT's Global Marine specialty. The transaction complements the acquisition of Belgibo, the Belgian specialty broker, in 2017 and further reinforces JLT's representation in Continental Europe.

REINSURANCE

 
6 months to 30 June                                   Growth 
GBPm                     2018       2017     Reported     CRE     Organic 
Revenue                 152.8      146.9           4%      6%          6% 
Underlying Cost       (103.7)    (103.1)           1%      4% 
Underlying Trading 
 Profit                  49.1       43.8          12%     11% 
===================  ========  =========  ===========  ====== 
Underlying Trading 
 Margin                   32%        30% 
  CRE                     31% 
-------------------  --------  ---------  -----------  ------  ---------- 
 

Notes:

-- CRE: Constant rates of exchange are calculated by translating 2018 results at 2017 exchange rates.

   --      Underlying results exclude exceptional items. 
   --      2017 results have been restated for IFRS 15 and the new segment reporting structure. 

JLT's Reinsurance business achieved strong organic revenue growth of 6%, with notable new business successes in the UK, European and US operations. Coupled with the delivery of benefits from the Global Transformation Programme, this resulted in underlying trading profit growth of 11% at CRE.

The business secured many new client wins in the period and also increased hiring, most notably in Cyber, Trade Credit and Analytics.

Reinsurance has successfully launched its next-generation economic capital modelling software under the ANSER brand, which has been well received by existing and prospective clients. This further enhances JLT's standing in the industry, while reinforcing its record of creating innovative client solutions.

EMPLOYEE BENEFITS

 
6 months to 30 June                                Growth 
GBPm                    2018     2017     Reported     CRE     Organic 
Revenue                152.4    152.0           0%      4%          4% 
Underlying Cost      (133.8)  (130.3)           3%      5% 
Underlying Trading 
 Profit                 18.6     21.7        (15%)    (5%) 
===================  =======  =======  ===========  ====== 
Underlying Trading 
 Margin                  12%      14% 
  CRE                    13% 
-------------------  -------  -------  -----------  ------  ---------- 
 

Notes:

-- CRE: Constant rates of exchange are calculated by translating 2018 results at 2017 exchange rates.

   --      Underlying results exclude exceptional items. 
   --      2017 results have been restated for IFRS 15 and the new segment reporting structure. 

JLT's Employee Benefits business achieved both CRE and organic revenue growth of 4%, although the negative impact of foreign exchange movements on international revenues resulted in reported revenue being flat overall.

JLT's international Employee Benefits businesses recorded significant organic revenue growth in the period, maintaining the momentum achieved in the second half of 2017.

The international sales team continued its record of successes with wins of multi-national clients, including one of the world's largest pharmaceutical companies.

Organic revenue growth of 4% in Employee Benefits did not translate into headline profit growth at the half year. In addition to foreign exchange rate movements, this was due to the variability introduced by the new revenue accounting standard adopted at the start of 2018. As explained in the Group's 2017 results restatement announcement dated 3 July 2018, IFRS 15 requires deferral of some revenues and costs, which can move profits across balance sheet dates. This has a particular effect on UK Employee Benefits due to the nature of its client contracts. This negative half year phasing is expected to unwind in the second half of the year and Employee Benefits is expected to achieve profit growth for the full year. The UK Employee Benefits business remains on track to achieve a 15% trading margin in 2019.

During the period, the business completed the substantial preparatory work necessary for it to start providing the actuarial, administration and documentation services to Lloyds Banking Group in respect of its Scottish Widows and Clerical Medical final salary pension clients. This is a portfolio of over 800 defined benefit pension and specialist schemes. The business also completed the acquisition of Chartwell Healthcare, making JLT one of the leading providers of Group Risk and Health services to mid-market clients in the UK.

ASSOCIATES

The Group's income from its Associates increased by GBP0.4m to GBP2.5m.

OPERATING COSTS

During the first half of 2018, the Group's underlying operating expenses, excluding exceptional items, increased by GBP12.4m, or 2%, to GBP595.1m. Operating expenses included a favourable foreign exchange impact of GBP18.0m, or 3%, and benefits from the delivery of the Global Transformation Programme of GBP6.1m, or 1%.

There was a net increase in costs of GBP7.5m (1%) from acquisitions and disposals, primarily relating to the acquisitions of Belgibo, CRP and IRC in Specialty which added GBP9.0m of operating expenses. This was partly offset by the disposal of Expacare and Peru Affinity in 2017. The overall organic growth in the Group's cost base, excluding benefits from the Global Transformation Programme, was GBP22.8m, or 4%.

The Group will continue to invest in the business, but remains focused on ensuring that costs and trading margins are well-managed as the Group continues to grow. Continued delivery of the benefits from the Global Transformation Programme, further details of which are set out below, will be a significant contributor in delivering operating leverage and enhancing the trading margin.

GLOBAL TRANSFORMATION PROGRAMME

The Global Transformation Programme achieved a total of GBP6.1m of cost savings in the first half of 2018, and is on track to deliver the benefits that were previously advised for the full year, as set out below. The programme generated an uplift in the Group trading margin of 85 basis points in the period and the Group expects to see further trading profit margin expansion as the programme continues to deliver benefits.

 
GBPm          Cost to  Incremental  Annualised 
             achieve*      Benefit     Benefit 
2018               33           16          16 
2019               12           19          35 
2020                -            5          40 
-----  --------------  -----------  ---------- 
 

* Treated as exceptional items.

The table below provides a breakdown of the benefits achieved in each business during the period, together with the approximate proportion of the programme's total annualised benefits to be delivered by each business over the programme period.

 
Business            Benefit in H1           Programme split 
                             2018   by 2020 (approximation) 
                             GBPm 
Specialty                     3.7                       55% 
Reinsurance                   1.7                       20% 
Employee Benefits             0.7                       25% 
------------------  -------------  ------------------------ 
Total                         6.1                      100% 
------------------  -------------  ------------------------ 
 

EXCEPTIONAL ITEMS

Net exceptional items in the first half totalled GBP19.4m, principally driven by Global Transformation Programme expenditure of GBP17.0m at the half year with a further GBP16.0m anticipated to be charged in the second half of 2018.

BALANCE SHEET AND FUNDING

Implementation of the new revenue recognition standard, IFRS 15, effective from 1 January 2018, resulted in the 1 January 2017 retained earnings being restated with a reduction of GBP38.2m due to a re-phasing of profits as a consequence of the new rules. IFRS 9 ('Financial Instruments') also became effective from 1 January 2018 resulting in a GBP0.7m reduction to 1 January 2018 retained earnings due to the revised impairment approach for trade receivables under the new standard.

The net assets of the Group decreased by GBP15m, from GBP356m at the 2017 financial year end, as restated for IFRS 15. The key movements were:

-- Goodwill and intangibles increased by GBP30m principally as a result of completed acquisitions for IRC, Chartwell and OWL Marine Insurance Brokers;

   --    Mark to market adjustments decreasing derivative fair values by GBP16m, net of deferred tax; 

-- An increase in the pension liability of GBP8m, net of deferred tax, mainly due to changes in actuarial assumptions and methodology arising from the triennial valuation partially offset by positive economic changes; and

-- Working capital, which for balance sheet presentation includes working capital acquired, taxation and provisions, increased by GBP62m.

Net debt, defined as own funds, less total borrowings net of transaction costs, was GBP593m (30 June 2017: GBP565m). The Net Debt to EBITDA ratio remained at similar levels to the same period last year, at 2.2:1 (2017: 2.1:1) on a reported basis and 1.9:1 (2017: 1.8:1) on a bank covenant basis.

As at 30 June 2018, the Group had long-term credit facilities totalling approximately GBP1bn. This comprised the private placement loan note programmes of US$458m and GBP75m, with a maturity profile extending to 2029, and the committed revolving credit facilities (RCF) totalling GBP500m, which are provided by the Group's relationship banks and mature in 2022. Utilisation of the RCF stood at GBP323m leaving unutilised headroom of GBP177m (31 December 2017: GBP229m), as June is historically the high point during the year for the Group's net debt seasonality.

CASH FLOW

 
6 months to 30 June 
GBPm                        2018  2017 
EBITDA                      145*   147 
Net interest                 (6)   (6) 
Working capital             (82)  (82) 
Annual capex                (24)  (32) 
==========================  ====  ==== 
Operational free cash 
 flow                         33    27 
==========================  ====  ==== 
Dividends paid              (48)  (45) 
Tax paid                    (21)  (17) 
Net shares acquired         (19)  (15) 
Other                        (1)   (2) 
==========================  ====  ==== 
Net cash inflow/(outflow) 
 excl acq/disp              (56)  (52) 
==========================  ====  ==== 
Acquisitions / disposals    (29)  (40) 
==========================  ====  ==== 
Net cash (outflow) 
 / inflow                   (85)  (92) 
--------------------------  ----  ---- 
 

Notes:

* Includes GBP15m Global Transformation Programme cash charges.

   --      2017 has been restated for IFRS 15. 

The Group primarily monitors operational cash flows, which report cash and net debt movements but exclude fiduciary funds; statutory cash flows include movements in fiduciary funds. The net cash outflow in the period was GBP85m, of which GBP29m was in relation to acquisitions and disposals. Annual capex was GBP24m, reduced on 2017, driven by lower expenditure on software with other cash flows at similar levels to prior periods.

EBITDA in the period was GBP145m, which included the cash amount of the Global Transformation Programme exceptional costs. Excluding this cash outflow of GBP15m, EBITDA was approximately GBP160m.

FOREIGN EXCHANGE

Foreign exchange movements across the Group reduced underlying profit before tax by GBP2.8m to GBP108.8m in the first half of 2018.

Foreign exchange rates remain volatile and are expected to be so as a result of Brexit-related events, as well as other macroeconomic and geopolitical developments. The Group continues to adopt a hedging strategy to mitigate transactional currency exposures.

BOARD AND SENIOR MANAGEMENT DEVELOPMENTS

As announced in March 2018, Lynne Peacock was appointed as a Non-Executive Director and joined the Board on 1 May 2018.

Derek Walsh was appointed as Group General Counsel and joined the Group Executive Committee on 4 June 2018.

OUTLOOK

The perennial softness the industry experienced in recent years would seem to have ceased, but it has not been replaced by any consistent hardening. This 'traders' market', as we described the evolving market conditions in February, plays to JLT's strengths. Turns in the insurance cycle have traditionally been led by the reinsurance sector. However, it is in the retail segment where JLT is seeing some rates rise, and in some cases, rise substantially, for particularly heavily loss affected lines or geographies. Conversely, there are many areas of the market in which conditions have not hardened at all, and attractive risks are often still able to secure material rate reductions. Across all of the market conditions in which we operate, JLT continues to improve its business and its propositions to clients.

The results for the first 6 months of 2018 demonstrate the steady progress JLT is making as it implements the decisions from last year's strategy re-examination. The Group is trading with real momentum as it moves into the second half and expects to report continued strong organic revenue growth and further financial progress for the full year.

(LEI Number: 213800XRWB6SDDCZZ434)

Consolidated income statement

Unaudited Interim Results for the six months ended 30 June 2018

 
                                                             6 months    6 months 
                                                                ended       ended 
                                                              30 June     30 June 
                                                                 2018        2017 
                                                                         Restated 
                                                    Notes     GBP'000     GBP'000 
==================================================  =====  ==========  ========== 
Fees and commissions                                    2     708,678     688,738 
                                                    -----  ----------  ---------- 
Investment income                                       2       4,806       3,021 
==================================================  =====  ==========  ========== 
Total revenue                                           2     713,484     691,759 
==================================================  =====  ==========  ========== 
Salaries and associated expenses                            (448,874)   (424,502) 
                                                    -----  ----------  ---------- 
Premises                                                     (36,268)    (35,564) 
                                                    -----  ----------  ---------- 
Other operating costs                                       (108,755)   (106,862) 
                                                    -----  ----------  ---------- 
Depreciation, amortisation and impairment charges            (16,675)    (16,668) 
                                                    -----  ----------  ---------- 
Impairment loss on financial assets                           (3,900)           - 
==================================================  =====  ==========  ========== 
Operating profit                                    1,2,3      99,012     108,163 
==================================================  =====  ==========  ========== 
Analysed as: 
                                                    -----  ----------  ---------- 
Operating profit before exceptional items             1,2     118,385     109,054 
                                                    -----  ----------  ---------- 
Acquisition and integration costs                       3       (793)     (1,022) 
                                                    -----  ----------  ---------- 
Restructuring costs                                     3    (16,996)           - 
                                                    -----  ----------  ---------- 
Other exceptional items                                 3     (1,584)         131 
==================================================  =====  ==========  ========== 
Operating profit                                    1,2,3      99,012     108,163 
==================================================  =====  ==========  ========== 
Finance costs                                                (13,497)    (13,520) 
                                                    -----  ----------  ---------- 
Finance income                                                  1,389       1,567 
                                                    -----  ==========  ========== 
Finance costs - net                                          (12,108)    (11,953) 
                                                    -----  ----------  ---------- 
Share of results of associates                                  2,549       2,051 
==================================================  =====  ==========  ========== 
Profit before taxation                                1,2      89,453      98,261 
==================================================  =====  ==========  ========== 
Income tax expense                                      4    (25,873)    (28,951) 
==================================================  =====  ==========  ========== 
Profit for the period                                          63,580      69,310 
==================================================  =====  ==========  ========== 
Profit attributable to: 
                                                    -----  ----------  ---------- 
Owners of the parent                                    2      59,509      67,163 
                                                    -----  ----------  ---------- 
Non-controlling interests                                       4,071       2,147 
==================================================  =====  ==========  ========== 
                                                               63,580      69,310 
==================================================  =====  ==========  ========== 
 
Earnings per share attributable to the owners 
 of the parent during the period 
 (expressed in pence per share) 
                                                    -----  ----------  ---------- 
Basic earnings per share                                5       28.1p       31.9p 
                                                    -----  ----------  ---------- 
Diluted earnings per share                              5       27.5p       31.2p 
                                                    -----  ----------  ---------- 
 

Consolidated statement of comprehensive income

Unaudited Interim Results for the six months ended 30 June 2018

 
                                                              6 months   6 months 
                                                                 ended      ended 
                                                               30 June    30 June 
                                                                  2018       2017 
                                                                         Restated 
                                                       Notes   GBP'000    GBP'000 
=====================================================  =====  ========  ========= 
Profit for the period                                           63,580     69,310 
=====================================================  =====  ========  ========= 
Other comprehensive (expense)/income 
                                                       -----  --------  --------- 
Items that will not be reclassified to profit 
 or loss 
                                                       -----  ========  ========= 
Remeasurement of post-employment benefit obligations      22   (7,579)     25,446 
=====================================================  =====  --------  --------- 
Taxation thereon                                                 1,375    (4,774) 
                                                       -----  ========  ========= 
Total items that will not be reclassified to 
 profit or loss                                                (6,204)     20,672 
                                                       -----  --------  --------- 
Items that may be reclassified subsequently 
 to profit or loss 
                                                       -----  --------  --------- 
Fair value (losses)/gains net of tax: 
                                                       -----  ========  ========= 
 - available-for-sale                                                -         35 
                                                       -----  --------  --------- 
 - cash flow hedges                                           (11,078)     39,639 
                                                       -----  --------  --------- 
Currency translation differences                               (2,619)   (22,854) 
                                                       -----  ========  ========= 
Total items that may be reclassified subsequently 
 to profit or loss                                            (13,697)     16,820 
=====================================================  =====  ========  ========= 
Other comprehensive (expense)/income net of 
 tax                                                          (19,901)     37,492 
=====================================================  =====  ========  ========= 
Total comprehensive income for the period                       43,679    106,802 
=====================================================  =====  ========  ========= 
 
Attributable to: 
                                                       -----  --------  --------- 
Owners of the parent                                            40,779    105,884 
                                                       -----  ========  ========= 
Non-controlling interests                                        2,900        918 
=====================================================  =====  ========  ========= 
                                                                43,679    106,802 
=====================================================  =====  ========  ========= 
 

Consolidated balance sheet

Unaudited Interim Results as at 30 June 2018

 
                                                          As at         As at         As at 
                                                        30 June       30 June        31 Dec 
                                                           2018          2017          2017 
                                                                     Restated      Restated 
                                            Notes       GBP'000       GBP'000       GBP'000 
==========================================  =====  ============  ============  ============ 
NET OPERATING ASSETS 
                                            -----  ------------  ------------  ------------ 
Non-current assets 
==========================================  =====  ============  ============  ============ 
Goodwill                                        7       604,569       571,100       577,778 
==========================================  =====  ============  ============  ============ 
Other Intangible assets                                 112,928       107,364       108,954 
                                            -----  ------------  ------------  ------------ 
Property, plant and equipment                            67,063        66,030        68,645 
                                            -----  ------------  ------------  ------------ 
Investments in associates                       2        53,047        53,401        53,055 
                                            -----  ------------  ------------  ------------ 
Available-for-sale financial assets          8,15             -        17,343        16,858 
                                            -----  ------------  ------------  ------------ 
Other financial assets at fair value 
 through other comprehensive income          8,15         8,623             -             - 
                                            -----  ------------  ------------  ------------ 
Other financial assets at fair value 
 through profit or loss                      8,15         4,890             -             - 
                                            -----  ------------  ------------  ------------ 
Other financial assets at amortised costs    8,15        11,478             -             - 
                                            -----  ------------  ------------  ------------ 
Derivative financial instruments                9        77,759        92,641        82,569 
                                            -----  ------------  ------------  ------------ 
Trade and other receivables                    10        22,114        20,993        21,609 
                                            -----  ------------  ------------  ------------ 
Contract assets                                13        33,120        17,488        18,249 
==========================================  =====  ============  ============  ============ 
Retirement benefit surpluses                   22           337           125            92 
                                            -----  ------------  ------------  ------------ 
Deferred tax assets                                      55,280        54,112        63,751 
==========================================  =====  ============  ============  ============ 
                                                      1,051,208     1,000,597     1,011,560 
==========================================  =====  ============  ============  ============ 
Current assets 
                                            -----  ------------  ------------  ------------ 
Trade and other receivables                    10       536,200       507,154       495,725 
                                            -----  ------------  ------------  ------------ 
Contract assets                                13        69,611        66,031        68,576 
                                            -----  ------------  ------------  ------------ 
Current tax assets                                       20,612             -             - 
                                            -----  ------------  ------------  ------------ 
Derivative financial instruments                9         6,155         8,667         5,545 
                                            -----  ------------  ------------  ------------ 
Available-for-sale financial assets          8,15             -       124,193       115,080 
                                            -----  ------------  ------------  ------------ 
Other financial assets at amortised costs    8,15       138,362             -             - 
==========================================  -----  ------------  ------------  ------------ 
Held-for-sale financial assets                  8           193             -           189 
                                            -----  ------------  ------------  ------------ 
Cash and cash equivalents                   11,15     1,043,365       965,764     1,015,087 
==========================================  =====  ============  ============  ============ 
                                                      1,814,498     1,671,809     1,700,202 
==========================================  =====  ============  ============  ============ 
Current liabilities 
==========================================  =====  ============  ============  ============ 
Borrowings                                  15,16      (19,129)      (51,093)      (19,226) 
==========================================  =====  ============  ============  ============ 
Trade and other payables                       12   (1,281,554)   (1,150,288)   (1,212,988) 
                                            -----  ============  ============  ============ 
Contract liabilities                           14      (59,303)      (52,136)      (60,392) 
                                            -----  ============  ============  ============ 
Derivative financial instruments                9       (9,465)      (17,873)      (10,265) 
                                            -----  ------------  ------------  ------------ 
Current tax liabilities                                (18,366)      (14,332)      (10,290) 
                                            -----  ============  ============  ============ 
Provisions for liabilities and charges         17      (11,962)      (12,695)       (6,865) 
==========================================  =====  ============  ============  ============ 
                                                    (1,399,779)   (1,298,417)   (1,320,026) 
==========================================  =====  ============  ============  ============ 
Net current assets                                      414,719       373,392       380,176 
==========================================  =====  ============  ============  ============ 
Non-current liabilities 
==========================================  =====  ============  ============  ============ 
Borrowings                                  15,16     (746,651)     (696,087)     (690,872) 
==========================================  =====  ============  ============  ============ 
Trade and other payables                       12      (52,056)      (52,178)      (49,475) 
==========================================  =====  ============  ============  ------------ 
Contract liabilities                           14      (27,261)      (27,868)      (27,278) 
==========================================  =====  ============  ============  ------------ 
Derivative financial instruments                9     (100,522)      (96,878)      (85,516) 
                                            -----  ------------  ------------  ------------ 
Deferred tax liabilities                               (17,351)       (7,898)      (11,773) 
                                            -----  ------------  ------------  ------------ 
Retirement benefit obligations                 22     (179,458)     (175,679)     (169,376) 
                                            -----  ------------  ------------  ------------ 
Provisions for liabilities and charges         17       (1,616)       (1,798)       (1,549) 
==========================================  =====  ============  ============  ============ 
                                                    (1,124,915)   (1,058,386)   (1,035,839) 
==========================================  =====  ============  ============  ============ 
                                                        341,012       315,603       355,897 
==========================================  =====  ============  ============  ============ 
TOTAL EQUITY 
                                            -----  ------------  ------------  ------------ 
Capital and reserves attributable to 
 the owners of the parent 
                                            -----  ------------  ------------  ------------ 
Ordinary shares                                          11,008        11,008        11,008 
                                            -----  ------------  ------------  ------------ 
Share premium                                  18       104,111       104,111       104,111 
                                            -----  ------------  ------------  ------------ 
Fair value and hedging reserves                18       (1,869)      (14,779)         9,290 
                                            -----  ------------  ------------  ------------ 
Exchange reserves                              18        47,515        61,936        48,963 
                                            -----  ------------  ------------  ------------ 
Retained earnings                                       163,580       135,171       163,072 
==========================================  =====  ============  ============  ============ 
Shareholders' equity                                    324,345       297,447       336,444 
                                            -----  ------------  ------------  ------------ 
Non-controlling interests                                16,667        18,156        19,453 
==========================================  =====  ============  ============  ============ 
                                                        341,012       315,603       355,897 
==========================================  =====  ============  ============  ============ 
 

Consolidated statement of

changes in equity

Unaudited Interim Results for the six months ended 30 June 2018

 
                                     Ordinary      Other   Retained  Shareholders'  Non- controlling         Total 
                                       shares   reserves   earnings         equity         interests        equity 
                              Notes   GBP'000    GBP'000    GBP'000        GBP'000           GBP'000       GBP'000 
============================  =====  ========  =========  =========  =============  ================  ============ 
Balance at 31 December 
 2017                                  11,008    162,005    204,781        377,794            19,911       397,705 
                              -----  --------  ---------  ---------  -------------  ----------------  ------------ 
Change in accounting 
 policy in respect of 
 IFRS 15                         25         -        359   (41,709)       (41,350)             (458)      (41,808) 
============================  =====  ========  =========  =========  =============  ================  ============ 
Balance at 31 December 
 (restated)                            11,008    162,364    163,072        336,444            19,453       355,897 
                                     --------  ---------  ---------  -------------  ----------------  ------------ 
Change in accounting 
 policy in respect of 
 IFRS 9                          25         -       (81)      (646)          (727)              (20)         (747) 
============================  =====  ========  =========  =========  =============  ================  ============ 
Balance at 1 January 
 2018 (restated)                       11,008    162,283    162,426        335,717            19,433       355,150 
                                     --------  ---------  ---------  -------------  ----------------  ------------ 
Profit for the period                       -          -     59,509         59,509             4,071        63,580 
                              -----  --------  ---------  ---------  -------------  ----------------  ------------ 
Other comprehensive 
 expense for the period                     -   (12,526)    (6,204)       (18,730)           (1,171)      (19,901) 
============================  =====  ========  =========  =========  =============  ================  ============ 
Total comprehensive 
 income for the period                      -   (12,526)     53,305         40,779             2,900        43,679 
                              -----  --------  ---------  ---------  -------------  ----------------  ------------ 
Dividends                         6         -          -   (47,134)       (47,134)           (4,388)      (51,522) 
                              -----  --------  ---------  ---------  -------------  ----------------  ------------ 
Amounts in respect 
 of share based payments: 
                              -----  --------  ---------  ---------  -------------  ----------------  ------------ 
 - reversal of amortisation 
  net of tax                                -          -     14,163         14,163                 -        14,163 
                              -----  --------  ---------  ---------  -------------  ----------------  ------------ 
 - shares acquired                          -          -   (19,132)       (19,132)                 -      (19,132) 
                              -----  --------  ---------  ---------  -------------  ----------------  ------------ 
Acquisitions                                -          -          -              -           (1,402)       (1,402) 
                              -----  --------  ---------  ---------  -------------  ----------------  ------------ 
Disposals                                   -          -          -              -               124           124 
                              -----  --------  ---------  ---------  -------------  ----------------  ------------ 
Change in non-controlling 
 interests                                  -          -       (48)           (48)                 -          (48) 
============================  =====  ========  =========  =========  =============  ================  ============ 
Balance at 30 June 
 2018                                  11,008    149,757    163,580        324,345            16,667       341,012 
============================  =====  ========  =========  =========  =============  ================  ============ 
                                                                                                Non- 
                                     Ordinary      Other   Retained  Shareholders'       controlling         Total 
                                       shares   reserves   earnings         equity         interests        equity 
                              Notes   GBP'000    GBP'000    GBP'000        GBP'000           GBP'000       GBP'000 
============================  =====  ========  =========  =========  =============  ================  ============ 
Balance at 1 January 
 2017                                  11,008    133,219    183,919        328,146            22,764       350,910 
                              -----  --------  ---------  ---------  -------------  ----------------  ------------ 
Change in accounting 
 policy in respect of 
 IFRS 15                         25         -          -   (38,153)       (38,153)             (450)      (38,603) 
============================  =====  ========  =========  =========  =============  ================  ============ 
Balance at 1 January 
 2017 (restated)                       11,008    133,219    145,766        289,993            22,314       312,307 
============================  =====  ========  =========  =========  =============  ================  ============ 
Profit for the period 
 (restated)                                 -          -     67,163         67,163             2,147        69,310 
                              -----  --------  ---------  ---------  -------------  ----------------  ------------ 
Other comprehensive 
 income/(expense) 
 for the period (restated)                  -     18,049     20,672         38,721           (1,229)        37,492 
============================  =====  ========  =========  =========  =============  ================  ============ 
Total comprehensive 
 income/(expense) 
 for the period (restated)                  -     18,049     87,835        105,884               918       106,802 
                              -----  --------  ---------  ---------  -------------  ----------------  ------------ 
Dividends                         6         -          -   (44,280)       (44,280)           (6,223)      (50,503) 
                              -----  --------  ---------  ---------  -------------  ----------------  ------------ 
Amounts in respect 
 of share based payments: 
                              -----  --------  ---------  ---------  -------------  ----------------  ------------ 
 - reversal of amortisation 
  net of tax                                -          -     14,145         14,145                 -        14,145 
                              -----  --------  ---------  ---------  -------------  ----------------  ------------ 
 - shares acquired                          -          -   (15,009)       (15,009)                 -      (15,009) 
                              -----  --------  ---------  ---------  -------------  ----------------  ------------ 
Acquisitions                                -          -          -              -             1,926         1,926 
                              -----  --------  ---------  ---------  -------------  ----------------  ------------ 
Change in non-controlling 
 interests                                  -          -   (53,286)       (53,286)             (779)      (54,065) 
============================  =====  ========  =========  =========  =============  ================  ============ 
Balance at 30 June 
 2017 (restated)                       11,008    151,268    135,171        297,447            18,156       315,603 
============================  =====  ========  =========  =========  =============  ================  ============ 
 
 

Consolidated statement of cash flows

Unaudited Interim Results for the six months ended 30 June 2018

 
                                                              6 months    6 months 
                                                                 ended       ended 
                                                               30 June     30 June 
                                                                  2018        2017 
                                                                          Restated 
                                                     Notes     GBP'000     GBP'000 
===================================================  =====  ==========  ========== 
Cash flows from operating activities 
                                                     -----  ----------  ---------- 
Cash generated from operations                          19      60,215      64,463 
                                                     -----  ----------  ---------- 
Interest paid                                                  (7,986)     (7,518) 
                                                     -----  ----------  ---------- 
Interest received                                                7,002       4,330 
                                                     -----  ----------  ---------- 
Taxation paid                                                 (21,140)    (16,647) 
                                                     -----  ----------  ---------- 
Increase in net insurance broking payables                      85,200      28,248 
===================================================  =====  ==========  ========== 
                                                               123,291      72,876 
                                                     -----  ----------  ---------- 
Dividend received from associates                                2,222       1,030 
===================================================  =====  ==========  ========== 
Net cash generated from operating activities                   125,513      73,906 
===================================================  =====  ==========  ========== 
 
Cash flows from investing activities 
                                                     -----  ----------  ---------- 
Purchase of property, plant and equipment                      (4,780)     (9,096) 
                                                     -----  ----------  ---------- 
Purchase of other intangible assets                           (19,086)    (23,947) 
                                                     -----  ----------  ---------- 
Proceeds from disposal of property, plant and 
 equipment                                                         208         750 
                                                     -----  ----------  ---------- 
Proceeds from disposal of other intangible fixed 
 assets                                                              -         122 
                                                     -----  ----------  ---------- 
Acquisition of businesses, net of cash acquired         20    (22,841)    (32,131) 
                                                     -----  ----------  ---------- 
Acquisition of associates                                            -        (89) 
                                                     -----  ----------  ---------- 
Proceeds from disposal of businesses, net of 
 cash disposed                                                       -       1,601 
                                                     -----  ----------  ---------- 
Purchase of fair value through other comprehensive 
 income financial assets                                 8     (2,264)           - 
                                                     -----  ----------  ---------- 
Purchase of fair value through profit or loss 
 financial assets                                        8        (20)           - 
===================================================  =====  ==========  ========== 
Net cash (used) in investing activities                       (48,783)    (62,790) 
===================================================  =====  ==========  ========== 
 
Cash flows from financing activities 
                                                     -----  ----------  ---------- 
Dividends paid to owners of the parent                        (48,375)    (44,620) 
                                                     -----  ----------  ---------- 
Purchase of available-for-sale financial assets          8           -   (119,467) 
                                                     -----  ----------  ---------- 
Purchase of other financial assets at amortised 
 costs                                                   8   (144,179)           - 
                                                     -----  ----------  ---------- 
Proceeds from disposal of available-for-sale 
 financial assets                                        8           -     117,133 
                                                     -----  ----------  ---------- 
Proceeds from disposal of other financial assets 
 at amortised costs                                      8     114,851           - 
                                                     -----  ----------  ---------- 
Purchase of shares                                            (19,132)    (15,009) 
                                                     -----  ----------  ---------- 
Proceeds from borrowings                                        57,211      95,749 
                                                     -----  ----------  ---------- 
Repayments of borrowings                                       (1,652)     (1,981) 
                                                     -----  ----------  ---------- 
Dividends paid to non-controlling interests                    (4,388)     (6,223) 
===================================================  =====  ==========  ========== 
Net cash (used)/generated in financing activities             (45,664)      25,582 
===================================================  =====  ==========  ========== 
Net increase in cash and cash equivalents                       31,066      36,698 
                                                     -----  ----------  ---------- 
Cash and cash equivalents at beginning of period             1,015,087     939,945 
                                                     -----  ----------  ---------- 
Exchange losses on cash and cash equivalents                   (2,788)    (10,879) 
===================================================  =====  ==========  ========== 
Cash and cash equivalents at end of period                   1,043,365     965,764 
===================================================  =====  ==========  ========== 
 

Notes to the unaudited interim results

For the six months ended 30 June 2018

BASIS OF ACCOUNTING

The Group's condensed consolidated interim financial statements for the six months ended 30 June 2018 have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and with IAS 34 Interim financial reporting (IAS 34) as adopted by the European Union.

The Group has considerable financial resources and a geographically diversified business and as a consequence, the Directors believe that the Group is well placed to manage its business risks in the context of the current economic outlook. Accordingly, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. They therefore continue to adopt the going concern basis in preparing these interim results.

These financial statements should be read in conjunction with the consolidated statutory accounts of the Group for the year ended 31 December 2017, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

This condensed consolidated interim financial information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2017 were approved by the Board of Directors on 28 February 2018 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.

These condensed consolidated interim financial statements have been reviewed, not audited.

The accounting policies are consistent with those of the annual financial statements for the year ended 31 December 2017, except for the adoption of IFRS 9 Financial instruments and IFRS 15 Revenue from Contract with Customers. The impact of the adoption of these standards and the new accounting policies are disclosed in note 25.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2017.

Full details of the audited accounts and accounting policies for the year ended 31 December 2017 are available at www.jlt.com

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.

 
                                            Underlying  Exceptional 
                                                profit        items       Total 
6 months ended 30 June 2018                    GBP'000      GBP'000     GBP'000 
==========================================  ==========  ===========  ========== 
Fees and commissions                           708,678            -     708,678 
                                            ----------  -----------  ---------- 
Investment income                                4,806            -       4,806 
                                            ----------  -----------  ---------- 
Salaries and associated expenses             (432,283)     (16,591)   (448,874) 
                                            ----------  -----------  ---------- 
Premises                                      (36,074)        (194)    (36,268) 
                                            ----------  -----------  ---------- 
Other operating costs                        (106,167)      (2,588)   (108,755) 
                                            ----------  -----------  ---------- 
Depreciation, amortisation and impairment 
 charges                                      (16,675)            -    (16,675) 
                                            ----------  -----------  ---------- 
Impairment loss on financial assets            (3,900)            -     (3,900) 
==========================================  ==========  ===========  ========== 
Trading profit                                 118,385     (19,373)      99,012 
                                            ----------  -----------  ---------- 
Finance costs - net                           (12,108)            -    (12,108) 
                                            ----------  -----------  ---------- 
Share of results of associates                   2,549            -       2,549 
==========================================  ==========  ===========  ========== 
Profit before taxation                         108,826     (19,373)      89,453 
==========================================  ==========  ===========  ========== 
 
 
                                                        Exceptional 
                                                profit        items       Total 
6 months ended 30 June 2017 (restated)         GBP'000      GBP'000     GBP'000 
==========================================  ==========  ===========  ========== 
Fees and commissions                           688,738            -     688,738 
                                            ----------  -----------  ---------- 
Investment income                                3,021            -       3,021 
                                            ----------  -----------  ---------- 
Salaries and associated expenses             (423,470)      (1,032)   (424,502) 
                                            ----------  -----------  ---------- 
Premises                                      (35,529)         (35)    (35,564) 
                                            ----------  -----------  ---------- 
Other operating costs                        (107,038)          176   (106,862) 
                                            ----------  -----------  ---------- 
Depreciation, amortisation and impairment 
 charges                                      (16,668)            -    (16,668) 
==========================================  ==========  ===========  ========== 
Trading profit                                 109,054        (891)     108,163 
                                            ----------  -----------  ---------- 
Finance costs - net                           (11,953)            -    (11,953) 
                                            ----------  -----------  ---------- 
Share of results of associates                   2,051            -       2,051 
==========================================  ==========  ===========  ========== 
Profit before taxation                          99,152        (891)      98,261 
==========================================  ==========  ===========  ========== 
 

2. Segment information

Management has determined its operating segments based on the analysis used to make strategic decisions.

Business segment analysis

The Group has been restructured into three global trading divisions each operating on a worldwide basis, Specialty, Reinsurance and Employee Benefits, and Head Office & Other. These segments are 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 Group Executive Committee.

The Specialty segment comprises JLT's global specialist, wholesale, personal lines and SME activities. The Reinsurance segment comprises JLT's global reinsurance and captives management activities. The Employee Benefits segment consists of pension administration, outsourcing and employee benefits consultancy, healthcare and wealth management activities. 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. Prior period numbers have been restated to reflect the new operating structure.

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, JLT Insurance Management Malta, JLT Energy (France) SAS and JLT Independent Insurance Brokers Private Ltd.

On 20 December 2017, the Group disposed of its 35.5% stake in its Mexican associate, Sterling Re Intermediaro de Reaseguro SA de CV.

The disposal is subject to certain conditions that are in the process of being completed.

Other segment items

Capital expenditure comprises additions to property, plant and equipment and other intangible assets.

Business cyclicality

From an overall perspective, given the inherent nature and geographical spread of the Group's operations, whilst there may be an element of period on period phasing of revenue and profits, the business is not considered to be significantly cyclical between each half year period.

 
 
                                                           Employee   Head Office 
                                 Specialty  Reinsurance    Benefits       & Other         Total 
  6 months ended 30 June 2018      GBP'000      GBP'000     GBP'000       GBP'000       GBP'000 
===============================  =========  ===========  ==========  ============  ============ 
Fees and commissions               404,745      151,546     152,387             -       708,678 
                                 ---------  -----------  ----------  ------------  ------------ 
Investment income                    3,510        1,266          30             -         4,806 
===============================  =========  ===========  ==========  ============  ============ 
Total revenue                      408,255      152,812     152,417             -       713,484 
===============================  =========  ===========  ==========  ============  ============ 
Underlying trading profit           68,294       49,099      18,572      (17,580)       118,385 
===============================  =========  ===========  ==========  ============  ============ 
Operating profit                    59,273       44,968      12,850      (18,079)        99,012 
                                 ---------  -----------  ----------  ------------  ------------ 
Finance costs - net                                                      (12,108)      (12,108) 
                                 ---------  -----------  ----------  ------------  ------------ 
Share of results of associates                                              2,549         2,549 
===============================  =========  ===========  ==========  ============  ============ 
Profit before taxation              59,273       44,968      12,850      (27,638)        89,453 
                                 ---------  -----------  ----------  ------------  ------------ 
Income tax expense                                                       (25,873)      (25,873) 
                                 ---------  -----------  ----------  ------------  ------------ 
Non-controlling interests                                                 (4,071)       (4,071) 
===============================  =========  ===========  ==========  ============  ============ 
Net profit attributable to 
 the owners of the parent           59,273       44,968      12,850      (57,582)        59,509 
===============================  =========  ===========  ==========  ============  ============ 
Segment assets 
 Investments in associates                                              2,812,659     2,812,659 
                                 ---------  -----------  ----------  ------------  ------------ 
Investments in associates                                                  53,047        53,047 
===============================  =========  ===========  ==========  ============  ============ 
Total assets                                                            2,865,706     2,865,706 
===============================  =========  ===========  ==========  ============  ============ 
Segment liabilities                                                   (2,524,694)   (2,524,694) 
===============================  =========  ===========  ==========  ============  ============ 
Total liabilities                                                     (2,524,694)   (2,524,694) 
===============================  =========  ===========  ==========  ============  ============ 
 
Other segment items: 
                                 ---------  -----------  ----------  ------------  ------------ 
Capital expenditure                 11,912        2,071       4,752         5,131        23,866 
                                 ---------  -----------  ----------  ------------  ------------ 
Depreciation, amortisation 
 and impairment charges           (10,014)      (2,543)     (6,684)       (5,805)      (25,046) 
                                 ---------  -----------  ----------  ------------  ------------ 
 
 
 
                                                           Employee  Head Office 
  6 months ended 30 June 2017    Specialty  Reinsurance    Benefits      & Other        Total 
  (restated)                       GBP'000      GBP'000     GBP'000      GBP'000      GBP'000 
===============================  =========  ===========  ==========  ===========  =========== 
Fees and commissions               390,491      146,247     152,000            -      688,738 
                                 ---------  -----------  ----------  -----------  ----------- 
Investment income                    2,390          594          37            -        3,021 
===============================  =========  ===========  ==========  ===========  =========== 
Total revenue                      392,881      146,841     152,037            -      691,759 
===============================  =========  ===========  ==========  ===========  =========== 
Underlying trading profit           60,182       43,717      21,730     (16,575)      109,054 
===============================  =========  ===========  ==========  ===========  =========== 
Operating profit                    58,302       43,600      22,838     (16,577)      108,163 
                                 ---------  -----------  ----------  -----------  ----------- 
Finance costs - net                                                     (11,953)     (11,953) 
                                 ---------  -----------  ----------  -----------  ----------- 
Share of results of associates                                             2,051        2,051 
===============================  =========  ===========  ==========  ===========  =========== 
Profit before taxation              58,302       43,600      22,838     (26,479)       98,261 
                                 ---------  -----------  ----------  -----------  ----------- 
Income tax expense                                                      (28,951)     (28,951) 
                                                                     -----------  ----------- 
Non-controlling interests                                                (2,147)      (2,147) 
===============================  =========  ===========  ==========  ===========  =========== 
Net profit attributable to 
 the owners of the parent           58,302       43,600      22,838     (57,577)       67,163 
===============================  =========  ===========  ==========  ===========  =========== 
Segment assets                                                         2,619,005    2,619,005 
                                 ---------  -----------  ----------  -----------  ----------- 
Investments in associates                                                 53,401       53,401 
===============================  =========  ===========  ==========  ===========  =========== 
Total assets                                                           2,672,406    2,672,406 
===============================  =========  ===========  ==========  ===========  =========== 
Segment liabilities                                                  (2,356,803)  (2,356,803) 
===============================  =========  ===========  ==========  ===========  =========== 
Total liabilities                                                    (2,356,803)  (2,356,803) 
===============================  =========  ===========  ==========  ===========  =========== 
Other segment items: 
                                 ---------  -----------  ----------  -----------  ----------- 
Capital expenditure                 11,627        3,140      11,549        6,727       33,043 
                                 ---------  -----------  ----------  -----------  ----------- 
Depreciation, amortisation 
 and impairment charges           (10,401)      (2,290)     (4,765)      (6,757)     (24,213) 
                                 ---------  -----------  ----------  -----------  ----------- 
 

3. Operating profit

The following items have been charged/(credited) in arriving at operating profit:

 
                                                             6 months       6 months 
                                                                ended          ended 
                                                         30 June 2018   30 June 2017 
                                                              GBP'000        GBP'000 
======================================================  =============  ============= 
Foreign exchange losses/(gains): 
                                                        -------------  ------------- 
 - fees and commissions                                           286         17,525 
------------------------------------------------------  -------------  ------------- 
 - other operating costs                                          954        (1,745) 
======================================================  =============  ============= 
                                                                1,240         15,780 
======================================================  =============  ============= 
Amortisation of other intangible assets: 
                                                        -------------  ------------- 
 - software costs                                               8,893          8,997 
                                                        -------------  ------------- 
 - other intangible assets                                      1,711          1,423 
                                                        =============  ============= 
Depreciation on property, plant and equipment                   6,071          6,248 
======================================================  =============  ============= 
Total depreciation, amortisation and impairment 
 charges                                                       16,675         16,668 
======================================================  =============  ============= 
Amortisation of other intangible assets: 
                                                        -------------  ------------- 
 - employment contract payments (included in salaries 
  and associated expenses)                                      8,371          7,545 
======================================================  =============  ============= 
Gains on disposal of property, plant and equipment               (92)           (11) 
======================================================  =============  ============= 
Fair value losses/(gains) on derivative financial 
 instruments                                                    1,083          (371) 
======================================================  =============  ============= 
Available-for-sale and held-for-sale assets: 
                                                        -------------  ------------- 
 - Fair value (gains)/losses                                      (4)            122 
======================================================  =============  ============= 
 
Exceptional items: 
                                                        -------------  ------------- 
Acquisition and integration costs of which: 
                                                        =============  ============= 
 - included in salaries and associated expenses                    60            606 
------------------------------------------------------  -------------  ------------- 
 - included in premises costs                                       2              7 
------------------------------------------------------  -------------  ------------- 
 - included in other operating costs                              731            409 
------------------------------------------------------  =============  ============= 
                                                                  793          1,022 
                                                        -------------  ------------- 
Restructuring costs of which: 
                                                        =============  ============= 
 - included in salaries and associated expenses                16,531              - 
------------------------------------------------------  -------------  ------------- 
 - included in premises costs                                     192              - 
------------------------------------------------------  -------------  ------------- 
 - included in other operating costs                              273              - 
------------------------------------------------------  =============  ============= 
                                                               16,996              - 
                                                        -------------  ------------- 
Net gains on disposal of businesses of which: 
                                                        =============  ============= 
 - included in salaries and associated expenses                     -            426 
------------------------------------------------------  -------------  ------------- 
 - included in premises costs                                       -             28 
------------------------------------------------------  -------------  ------------- 
 - included in other operating costs                                -        (1,340) 
------------------------------------------------------  =============  ============= 
                                                                    -          (886) 
                                                        -------------  ------------- 
Net litigation costs                                            1,640              - 
                                                        -------------  ------------- 
Release of contingent consideration                              (56)          (464) 
                                                        -------------  ------------- 
Fair value losses on available-for-sale financial 
 assets                                                             -          1,375 
                                                        -------------  ------------- 
Additional deferred consideration received on 
 a disposal of a business                                           -          (156) 
======================================================  =============  ============= 
Total exceptional items included within operating 
 profit                                                        19,373            891 
======================================================  =============  ============= 
 

4. Income tax expense

 
 
                                                    6 months   6 months 
                                                       ended      ended 
                                                     30 June    30 June 
                                                        2018       2017 
                                                               Restated 
                                                     GBP'000    GBP'000 
==================================================  ========  ========= 
Current tax expense 
                                                    --------  --------- 
Current period                                         9,523     22,094 
                                                    --------  --------- 
Adjustments in respect of prior periods                (853)      (756) 
==================================================  ========  ========= 
                                                       8,670     21,338 
==================================================  ========  ========= 
Deferred tax expense 
                                                    --------  --------- 
Origination and reversal of temporary differences     17,330      6,363 
                                                    --------  --------- 
Reduction in tax rate                                    129        515 
                                                    --------  --------- 
Adjustments in respect of prior periods                (256)        735 
==================================================  ========  ========= 
                                                      17,203      7,613 
==================================================  ========  ========= 
Total income tax expense                              25,873     28,951 
==================================================  ========  ========= 
 

The total income tax expense in the income statement of GBP25,873,000 (2017: GBP28,951,000) includes a tax credit on exceptional items of GBP3,607,000 (2017: GBP272,000). There were no non-recurring tax credits in the period.

The headline rate of UK corporation tax is currently 19%, this will reduce to 17% from 1 April 2020. As at 30 June 2018, the rate reduction to 17% from April 2020 has been enacted. The impact of the rate reduction to 17% has been incorporated into the income tax charge for the 6 months ended 30 June 2018, taking into consideration when temporary differences are expected to reverse.

As explained in note 25, prior period balances have been restated for IFRS 15, resulting in the recognition of higher deferred tax balances. As IFRS 15 or equivalent local standards have been recognised in local tax bases in 2018 some of those timing differences have reversed resulting in lower current tax and reversal of deferred tax temporary difference.

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:

 
                                                       6 months  6 months 
                                                          ended     ended 
                                                        30 June   30 June 
                                                           2018      2017 
                                                                 Restated 
                                                        GBP'000   GBP'000 
=====================================================  ========  ======== 
Profit before taxation                                   89,453    98,261 
=====================================================  ========  ======== 
Tax calculated at UK Corporation Tax rate of 19.0% 
 (2017: 19.25%)                                          16,996    18,915 
                                                       --------  -------- 
Non-deductible expenses                                   2,626     3,820 
                                                       --------  -------- 
Non recognition of tax losses                             1,553     2,422 
                                                       --------  -------- 
Other*                                                        -     (953) 
                                                       --------  -------- 
Adjustments in respect of prior periods                 (1,109)      (19) 
                                                       --------  -------- 
Effect of difference between UK and non-UK tax rates      6,162     4,648 
                                                       --------  -------- 
Effect of reduction in tax rate                             129       515 
                                                       --------  -------- 
Tax on associates                                         (484)     (397) 
=====================================================  ========  ======== 
Total income tax expense                                 25,873    28,951 
=====================================================  ========  ======== 
 

* Other includes the non-taxable (gain)/loss on disposal of subsidiaries

5. Earnings per share

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:

 
                                                    As at         As at 
                                                  30 June       30 June 
                                                     2018          2017 
                                                   No. of        No. of 
                                                   shares        shares 
===========================================  ============  ============ 
Weighted average number of shares             211,781,704   210,691,298 
                                             ------------  ------------ 
Effect of outstanding share options             4,385,374     4,388,282 
===========================================  ============  ============ 
Adjusted weighted average number of shares    216,167,078   215,079,580 
===========================================  ============  ============ 
 
 
                                                     6 months ended 30 June 2018 
                                    ============================================================= 
                                      GBP'000         GBP'000     GBP'000       Pence       Pence 
                                    ---------  --------------  ----------  ----------  ---------- 
                                                                 Adjusted 
                                                                 earnings 
                                                                for basic       Basic     Diluted 
                                                                 earnings    earnings    earnings 
                                     Earnings  Adjustments(2)   per share   per share   per share 
==================================  =========  ==============  ==========  ==========  ========== 
Underlying profit after taxation 
 and non-controlling interests(1)      75,055            (29)      75,026        35.4        34.7 
                                               --------------              ----------  ---------- 
Exceptional items before tax         (19,373) 
----------------------------------  ---------  --------------  ----------  ----------  ---------- 
Taxation thereon                        3,607 
----------------------------------  ---------  --------------              ----------  ---------- 
Non-controlling interests thereon         220 
----------------------------------             --------------              ----------  ---------- 
                                     (15,546)               6    (15,540)       (7.3)       (7.2) 
==================================  =========  ==============  ==========  ==========  ========== 
Profit attributable to the owners 
 of the parent                         59,509            (23)      59,486        28.1        27.5 
==================================  =========  ==============  ==========  ==========  ========== 
 
 
                                               6 months ended 30 June 2017 (restated) 
                                    ============================================================ 
                                     GBP'000         GBP'000     GBP'000       Pence       Pence 
                                    --------  --------------  ----------  ----------  ---------- 
                                                                Adjusted 
                                                                earnings 
                                                               for basic       Basic     Diluted 
                                                                earnings    earnings    earnings 
                                    Earnings  Adjustments(2)   per share   per share   per share 
==================================  ========  ==============  ==========  ==========  ========== 
Underlying profit after taxation 
 and non-controlling 
 interests(1)                         67,500            (50)      67,450        32.0        31.4 
                                    ========  --------------  ==========  ----------  ---------- 
Exceptional items before tax           (891) 
----------------------------------  --------  --------------  ----------  ----------  ---------- 
Taxation thereon                         272 
----------------------------------  --------  --------------  ==========  ----------  ---------- 
Non-controlling interests thereon        282 
----------------------------------  ========  --------------  ==========  ----------  ---------- 
                                       (337)               -       (337)       (0.1)       (0.2) 
==================================  ========  ==============  ==========  ==========  ========== 
Profit attributable to the 
 owners of the parent                 67,163            (50)      67,113        31.9        31.2 
==================================  ========  ==============  ==========  ==========  ========== 
 

(1) Underlying excludes exceptional items.

(2) Adjustments related to the dividends and undistributed earnings on unvested share options carrying dividend equivalent rights.

6. Dividends

 
                                                       6 months  6 months 
                                                          ended     ended 
                                                        30 June   30 June 
                                                           2018      2017 
                                                        GBP'000   GBP'000 
=====================================================  ========  ======== 
Final dividend in respect of 2017 of 21.8p per share 
 (2016: 20.6p)                                           47,134    44,280 
=====================================================  ========  ======== 
 

An interim dividend in respect of 2018 of 12.7p per share (2017: 12.2p) amounting to a total of GBP27,818,000 (2017: GBP26,810,000) is payable on 3 October 2018 to shareholders who are registered at the close of business on 24 August 2018. The dividend proposed will not be accounted for until it is paid. The ex-dividend date will be 23 August 2018.

7. Goodwill

 
                             Gross  Impairment  Net carrying 
                            amount      losses        amount 
                           GBP'000     GBP'000       GBP'000 
========================  ========  ==========  ============ 
At 30 June 2018 
                          --------  ----------  ------------ 
Opening net book amount    583,699     (5,921)       577,778 
                          --------  ----------  ------------ 
Exchange differences         2,087        (51)         2,036 
                          --------  ----------  ------------ 
Acquisitions                24,755           -        24,755 
========================  ========  ==========  ============ 
Closing net book amount    610,541     (5,972)       604,569 
========================  ========  ==========  ============ 
At 30 June 2017 
                          --------  ----------  ------------ 
Opening net book amount    548,117     (5,104)       543,013 
                          --------  ----------  ------------ 
Exchange differences       (9,596)       (137)       (9,733) 
                          --------  ----------  ------------ 
Acquisitions                37,820           -        37,820 
========================  ========  ==========  ============ 
Closing net book amount    576,341     (5,241)       571,100 
========================  ========  ==========  ============ 
 

8. OTHER financial assets and held-for-sale

Other financial assets are categorised according to their nature into three categories:

1. Financial assets at fair value through other comprehensive income (FVOCI) mainly consist of investments in preference shares and some equity holdings held for strategic purposes.

2. Financial assets at fair value through profit or loss (FVTPL) mainly consist of contingent considerations.

3. Financial assets at amortised costs include fixed term deposits, bonds and certificates of deposit.

On 20 December 2017, the Group disposed of its Mexican associate, Sterling Re Intermediaro de Reaseguros de CV. The disposal is subject to certain conditions that are in the process of being completed. The asset is recognised under held-for-sale.

 
                                                           As at 30 June 2018 
                                     --------------------------------------------------------------- 
                                                Financial       Financial 
                                                assets at          assets 
                                               fair value         at fair      Financial 
                                                  through   value through         assets 
                                      other comprehensive          profit   at amortised 
                                                   income         or loss           cost       Total 
                                     --------------------  --------------  -------------  ---------- 
                                                  GBP'000         GBP'000        GBP'000     GBP'000 
-----------------------------------  --------------------  --------------  -------------  ---------- 
At 1 January 2018 (restated)                        6,137           4,870        120,931     131,938 
                                     --------------------  --------------  -------------  ---------- 
Exchange differences                                  222               -          (419)       (197) 
                                     --------------------  --------------  -------------  ---------- 
Additions                                           2,264              20        144,179     146,463 
                                     --------------------  --------------  -------------  ---------- 
Disposals/maturities                                    -               -      (114,851)   (114,851) 
-----------------------------------  --------------------  --------------  -------------  ---------- 
At 30 June 2018                                     8,623           4,890        149,840     163,353 
-----------------------------------  --------------------  --------------  -------------  ---------- 
 
Analysis of other financial assets 
                                     --------------------  --------------  -------------  ---------- 
Current                                                 -               -        138,362     138,362 
                                     --------------------  --------------  -------------  ---------- 
Non-current                                         8,623           4,890         11,478      24,991 
-----------------------------------  --------------------  --------------  -------------  ---------- 
At 30 June 2018                                     8,623           4,890        149,840     163,353 
-----------------------------------  --------------------  --------------  -------------  ---------- 
 
Analysis of other financial assets 
                                     --------------------  --------------  -------------  ---------- 
Fiduciary funds                                         -               -        149,523     149,523 
                                     --------------------  --------------  -------------  ---------- 
Own funds                                           8,623           4,890            317      13,830 
-----------------------------------  --------------------  --------------  -------------  ---------- 
At 30 June 2018                                     8,623           4,890        149,840     163,353 
-----------------------------------  --------------------  --------------  -------------  ---------- 
                                                                      As at 30 June 2017 
                                     --------------------  ----------------------------------------- 
                                                                    Other    Investments 
                                                              investments     & deposits       Total 
                                     --------------------  --------------  -------------  ---------- 
                                                                  GBP'000        GBP'000     GBP'000 
-----------------------------------  --------------------  --------------  -------------  ---------- 
At 1 January 2017                                                  13,079        127,659     140,738 
                                     --------------------  --------------  -------------  ---------- 
Exchange differences                                                (273)            117       (156) 
                                     --------------------  --------------  -------------  ---------- 
Additions                                                               -        119,467     119,467 
                                     --------------------  --------------  -------------  ---------- 
Finance income                                                        154              -         154 
                                     --------------------  --------------  -------------  ---------- 
Disposals/maturities                                                    -      (117,133)   (117,133) 
                                     --------------------  --------------  -------------  ---------- 
Revaluation deficit (included 
 within equity)                                                         -             42          42 
                                     --------------------  --------------  -------------  ---------- 
Amounts written off                                               (1,576)              -     (1,576) 
-----------------------------------  --------------------  --------------  -------------  ---------- 
At 30 June 2017                                                    11,384        130,152     141,536 
-----------------------------------  --------------------  --------------  -------------  ---------- 
 
Analysis of available-for-sale 
 financial assets 
                                     --------------------  --------------  -------------  ---------- 
Current                                                                 -        124,193     124,193 
                                     --------------------  --------------  -------------  ---------- 
Non-current                                                        11,384          5,959      17,343 
-----------------------------------  --------------------  --------------  -------------  ---------- 
At 30 June 2017                                                    11,384        130,152     141,536 
-----------------------------------  --------------------  --------------  -------------  ---------- 
 
Analysis of available-for-sale 
 investments & deposit 
                                     --------------------  --------------  -------------  ---------- 
Fiduciary funds                                                         -        129,849     129,849 
                                     --------------------  --------------  -------------  ---------- 
Own funds                                                               -            303         303 
-----------------------------------  --------------------  --------------  -------------  ---------- 
At 30 June 2017                                                         -        130,152     130,152 
-----------------------------------  --------------------  --------------  -------------  ---------- 
 

9. Derivative financial instruments

 
                                         As at 30 June         As at 30 June 
                                              2018                  2017 
                                     --------------------  --------------------- 
                                      Assets  Liabilities    Assets  Liabilities 
                                     -------  -----------  --------  ----------- 
                                     GBP'000      GBP'000   GBP'000      GBP'000 
-----------------------------------  -------  -----------  --------  ----------- 
Interest rate swaps - fair value 
 hedges                                9,425     (10,570)    18,034      (4,230) 
                                     -------  -----------  --------  ----------- 
Forward foreign exchange contracts 
 - cash flow hedges                   74,489     (19,377)    83,274     (32,144) 
                                     -------  -----------  --------  ----------- 
Redemption liabilities - option 
 contracts                                 -     (80,040)         -     (78,377) 
-----------------------------------  -------  -----------  --------  ----------- 
Total                                 83,914    (109,987)   101,308    (114,751) 
-----------------------------------  -------  -----------  --------  ----------- 
Current                                6,155      (9,465)     8,667     (17,873) 
                                     -------  -----------  --------  ----------- 
Non-current                           77,759    (100,522)    92,641     (96,878) 
-----------------------------------  -------  -----------  --------  ----------- 
Total                                 83,914    (109,987)   101,308    (114,751) 
-----------------------------------  -------  -----------  --------  ----------- 
 

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 establishes 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 30 June 2018 and designated as effective cash flow hedges was an asset of GBP55.1 million and has been deferred in equity (2017: net assets of GBP51.1 million). Gains and losses arising on derivative instruments outstanding as at 30 June 2018 will be released to the income statement at various dates up to:

a) 31 months in respect of cash flow hedges on currency denominated UK earnings.

b) 11 years in respect of specific hedges on USD denominated long-term debt drawn under the Group's USD private placement programme.

c) 8 years in respect of specific hedges on GBP denominated long-term debt drawn under the Group's private placement programme.

No material amounts were transferred to the income statement during the period 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 30 June 2018 the Group had outstanding foreign exchange contracts, principally in USD, amounting to a principal value of GBP1,328,160,000 (2017: GBP1,327,379,000).

b) Interest rate swaps

The Group uses interest rate hedges, principally interest rate swaps, to mitigate the impact of changes in interest rates. As at 30 June 2018, the notional principal amounts of outstanding cross currency interest rate swaps was USD 458,000,000 and sterling interest rate swaps was GBP75,000,000 (2017: USD 500,000,000 and GBP75,000,000). A net loss of GBP1.1 million (2017: net gain GBP13.8 million) on these instruments was offset by a fair value movement of GBP1.1 million (2017: GBP13.8 million) on the private placement loans, both of which were recognised in the income statement in the period.

c) Redemption liabilities

The redemption liabilities represent the valuation of the put options provided in the shareholders agreements of JLT Specialty Insurance Services Inc., JLT Sigorta ve Reasurans Brokerligi Ltd Sirketi, JLT SCK Corretora e Administradora and Construction Risk Partners, LLC.

No new redemption liability was recognised in the period.

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 derivatives in the balance sheet.

10. Trade and other receivables

 
                                                          As at      As at 
                                                        30 June    30 June 
                                                           2018       2017 
                                                                  Restated 
Current                                                 GBP'000    GBP'000 
----------------------------------------------------  ---------  --------- 
Trade receivables                                       475,639    449,956 
                                                      ---------  --------- 
Less: provision for impairment of trade receivables    (20,727)   (22,414) 
----------------------------------------------------  ---------  --------- 
Trade receivables - net                                 454,912    427,542 
                                                      ---------  --------- 
Other receivables                                        40,506     42,141 
                                                      ---------  --------- 
Prepayments                                              40,782     37,471 
----------------------------------------------------  ---------  --------- 
                                                        536,200    507,154 
----------------------------------------------------  ---------  --------- 
 
 
                       As at     As at 
                     30 June   30 June 
                        2018      2017 
                              Restated 
Non-current          GBP'000   GBP'000 
------------------  --------  -------- 
Trade receivables      2,706     1,700 
                    --------  -------- 
Other receivables     19,196    19,278 
                    --------  -------- 
Prepayments              212        15 
------------------  --------  -------- 
                      22,114    20,993 
------------------  --------  -------- 
 

As at 30 June 2018, 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.

11. Cash and cash equivalents

 
                                As at     As at 
                              30 June   30 June 
                                 2018      2017 
                              GBP'000   GBP'000 
-------------------------  ----------  -------- 
Cash at bank and in hand      610,882   527,878 
                           ----------  -------- 
Short-term bank deposits      432,483   437,886 
-------------------------  ----------  -------- 
                            1,043,365   965,764 
-------------------------  ----------  -------- 
Fiduciary funds               870,935   783,974 
                           ----------  -------- 
Own funds                     172,430   181,790 
-------------------------  ----------  -------- 
                            1,043,365   965,764 
-------------------------  ----------  -------- 
 

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 effective interest rate in respect of short-term deposits was 1.37% (2017: 1.03%). These deposits have an average maturity of 14 days (2017: 14 days).

12. Trade and other payables

 
                                              As at       As at 
                                            30 June     30 June 
                                               2018        2017 
                                                       Restated 
Current                                     GBP'000     GBP'000 
---------------------------------------  ----------  ---------- 
Insurance payables                        1,020,458     913,823 
                                         ----------  ---------- 
Social security and other taxes              21,097      21,160 
                                         ----------  ---------- 
Other creditors and accruals                234,136     207,546 
                                         ----------  ---------- 
Deferred and contingent considerations        5,863       7,759 
---------------------------------------  ----------  ---------- 
                                          1,281,554   1,150,288 
---------------------------------------  ----------  ---------- 
 
 
                                                            As at       As at 
                                                          30 June     30 June 
                                                             2018        2017 
                                                                     Restated 
Non-current                                               GBP'000     GBP'000 
----------------------------------------------------  -----------  ---------- 
Other creditors and accruals                               34,823      36,247 
                                                      -----------  ---------- 
Deferred and contingent considerations                     17,233      15,931 
----------------------------------------------------  -----------  ---------- 
                                                           52,056      52,178 
----------------------------------------------------  -----------  ---------- 
The trade and other payables include GBP106,633,000 of non-financial 
 liabilities (2017: GBP94,307,000). At 30 June 2017, GBP52,178,000 
 of rent free accruals within other payables and deferred and contingent 
 considerations have been split between current and non-current. 
 
 
13. contract assets 
                                                             As at           As at 
                                                           30 June         30 June 
                                                              2018   2017 Restated 
                                                          --------  -------------- 
                                                           GBP'000         GBP'000 
--------------------------------------------------------  --------  -------------- 
Estimated contract values                                   78,740          59,366 
                                                          --------  -------------- 
Asset recognised for costs incurred to fulfil contracts     22,950          21,157 
                                                          --------  -------------- 
Other contract values                                        2,482           2,996 
--------------------------------------------------------  --------  -------------- 
                                                           104,172          83,519 
                                                          --------  -------------- 
Less: Provision for loss allowance                         (1,441)               - 
--------------------------------------------------------  --------  -------------- 
Total contract assets                                      102,731          83,519 
--------------------------------------------------------  --------  -------------- 
 
  Analysis of contract assets 
                                                          --------  -------------- 
Current                                                     69,611          66,031 
                                                          --------  -------------- 
Non-current                                                 33,120          17,488 
--------------------------------------------------------  --------  -------------- 
Total contract assets                                      102,731          83,519 
--------------------------------------------------------  --------  -------------- 
 
 
14. contract liabilities 
                                       As at           As at 
                                     30 June         30 June 
                                        2018   2017 Restated 
                                    --------  -------------- 
                                     GBP'000         GBP'000 
----------------------------------  --------  -------------- 
Claims handling provision             48,293          48,611 
                                    --------  -------------- 
Other post-replacement activities     15,865          14,630 
                                    --------  -------------- 
Cancellation and refund provision      9,076           9,656 
                                    --------  -------------- 
Cash received in advance              13,330           7,107 
----------------------------------  --------  -------------- 
Total contract liabilities            86,564          80,004 
----------------------------------  --------  -------------- 
Analysis of contract liabilities 
                                    --------  -------------- 
Current                               59,303          52,136 
                                    --------  -------------- 
Non-current                           27,261          27,868 
----------------------------------  --------  -------------- 
Total contract liabilities            86,564          80,004 
----------------------------------  --------  -------------- 
 

15. Financial instruments by category

The accounting policies for financial instruments have been applied to the line items below:

 
                                              Financial       Financial 
                                                 assets          assets 
                                                at fair         at fair      Financial 
                                          value through   value through         assets  Derivatives 
                                    other comprehensive          profit   at amortised     used for 
                                                 income         or loss           cost      hedging       Total 
At 30 June 2018                                 GBP'000         GBP'000        GBP'000      GBP'000     GBP'000 
---------------------------------  --------------------  --------------  -------------  -----------  ---------- 
Assets 
                                   --------------------  --------------  -------------  -----------  ---------- 
Other financial assets                            8,623           4,890        149,840            -     163,353 
                                   --------------------  --------------  -------------  -----------  ---------- 
Derivative financial instruments                      -               -              -       83,914      83,914 
                                   --------------------  --------------  -------------  -----------  ---------- 
Trade and other receivables 
 (a)                                                  -           1,234        516,086            -     517,320 
                                   --------------------  --------------  -------------  -----------  ---------- 
Cash and cash equivalents                             -         142,008        901,357            -   1,043,365 
---------------------------------  --------------------  --------------  -------------  -----------  ---------- 
Total                                             8,623         148,132      1,567,283       83,914   1,807,952 
---------------------------------  --------------------  --------------  -------------  -----------  ---------- 
 
 
                                    Other financial 
                                        liabilities  Derivatives         Total 
                                            GBP'000      GBP'000       GBP'000 
---------------------------------   ---------------  -----------  ------------ 
Liabilities 
                                    ---------------  -----------  ------------ 
Borrowings                                (765,780)            -     (765,780) 
                                    ---------------  -----------  ------------ 
Trade and other payables (b)            (1,226,977)            -   (1,226,977) 
                                    ---------------  -----------  ------------ 
Redemption liabilities - option 
 contracts                                        -     (80,040)      (80,040) 
                                    ---------------  -----------  ------------ 
Derivative financial instruments                  -     (29,947)      (29,947) 
----------------------------------  ---------------  -----------  ------------ 
Total                                   (1,992,757)    (109,987)   (2,102,744) 
----------------------------------  ---------------  -----------  ------------ 
 
 
                                                    Derivatives 
                                         Loans and     used for  Available- 
                                       receivables      hedging    for-sale       Total 
At 30 June 2017 (restated)                 GBP'000      GBP'000     GBP'000     GBP'000 
------------------------------------  ------------  -----------  ----------  ---------- 
Assets 
                                      ------------  -----------  ----------  ---------- 
Available-for-sale financial assets              -            -     141,536     141,536 
                                      ------------  -----------  ----------  ---------- 
Derivative financial instruments                 -      101,308           -     101,308 
                                      ------------  -----------  ----------  ---------- 
Trade and other receivables (a)            490,661            -           -     490,661 
                                      ------------  -----------  ----------  ---------- 
Cash and cash equivalents                  965,764            -           -     965,764 
------------------------------------  ------------  -----------  ----------  ---------- 
Total                                    1,456,425      101,308     141,536   1,699,269 
------------------------------------  ------------  -----------  ----------  ---------- 
 
 
                                           Other 
                                       financial 
                                     liabilities  Derivatives         Total 
                                         GBP'000      GBP'000       GBP'000 
---------------------------------   ------------  -----------  ------------ 
Liabilities 
                                    ------------  -----------  ------------ 
Borrowings                             (747,180)            -     (747,180) 
                                    ------------  -----------  ------------ 
Trade and other payables (b)         (1,108,159)            -   (1,108,159) 
                                    ------------  -----------  ------------ 
Redemption liabilities - option 
 contracts                                     -     (78,377)      (78,377) 
                                    ------------  -----------  ------------ 
Derivative financial instruments               -     (36,374)      (36,374) 
----------------------------------  ------------  -----------  ------------ 
Total                                (1,855,339)    (114,751)   (1,970,090) 
----------------------------------  ------------  -----------  ------------ 
 

(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 30 June 2018.

 
                                             Level 1    Level 2    Level 3       Total 
At 30 June 2018                              GBP'000    GBP'000    GBP'000     GBP'000 
------------------------------------------  --------  ---------  ---------  ---------- 
Assets 
                                            --------  ---------  ---------  ---------- 
Derivatives used for hedging                       -     83,914          -      83,914 
                                            --------  ---------  ---------  ---------- 
Other financial assets at fair value 
 through comprehensive income (FVOCI) 
                                            --------  ---------  ---------  ---------- 
 - equity securities                               -          -        961         961 
                                            --------  ---------  ---------  ---------- 
 - debt investments                                -          -      7,662       7,662 
                                            --------  ---------  ---------  ---------- 
 Other financial assets at fair value 
  through profit or loss (FVTPL) 
                                            --------  ---------  ---------  ---------- 
 - cash equivalents                          142,008          -          -     142,008 
                                            --------  ---------  ---------  ---------- 
 - other receivables                               -          -      1,234       1,234 
                                            --------  ---------  ---------  ---------- 
 - other financial assets                          -          -      4,890       4,890 
------------------------------------------  --------  ---------  ---------  ---------- 
Total                                        142,008     83,914     14,747     240,669 
------------------------------------------  --------  ---------  ---------  ---------- 
Liabilities 
                                            --------  ---------  ---------  ---------- 
Contingent consideration                           -          -   (16,603)    (16,603) 
                                            --------  ---------  ---------  ---------- 
Redemption liabilities - option contracts          -          -   (80,040)    (80,040) 
                                            --------  ---------  ---------  ---------- 
Derivatives used for hedging                       -   (29,947)          -    (29,947) 
------------------------------------------  --------  ---------  ---------  ---------- 
Total                                              -   (29,947)   (96,643)   (126,590) 
------------------------------------------  --------  ---------  ---------  ---------- 
 
 
                                             Level 1    Level 2    Level 3       Total 
At 30 June 2017                              GBP'000    GBP'000    GBP'000     GBP'000 
------------------------------------------  --------  ---------  ---------  ---------- 
Assets 
                                            --------  ---------  ---------  ---------- 
Derivatives used for hedging                       -    101,308          -     101,308 
                                            --------  ---------  ---------  ---------- 
Available-for-sale financial assets 
                                            --------  ---------  ---------  ---------- 
 - equity securities                               -          -        992         992 
                                            --------  ---------  ---------  ---------- 
 - debt investments                                -          -     10,392      10,392 
                                            --------  ---------  ---------  ---------- 
 - fixed deposits                            130,152          -          -     130,152 
------------------------------------------  --------  ---------  ---------  ---------- 
Total                                        130,152    101,308     11,384     242,844 
------------------------------------------  --------  ---------  ---------  ---------- 
Liabilities 
                                            --------  ---------  ---------  ---------- 
Contingent consideration                           -          -   (16,458)    (16,458) 
                                            --------  ---------  ---------  ---------- 
Redemption liabilities - option contracts          -          -   (78,377)    (78,377) 
                                            --------  ---------  ---------  ---------- 
Derivatives used for hedging                       -   (36,374)          -    (36,374) 
------------------------------------------  --------  ---------  ---------  ---------- 
Total                                              -   (36,374)   (94,835)   (131,209) 
------------------------------------------  --------  ---------  ---------  ---------- 
 

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 period there were no transfers between level 1, 2 and 3. There were no changes in valuation techniques during the period.

Instruments included in level 3 are financial instruments for which one or more of the significant inputs are 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 reconciliation of the movements in level 3 is provided below:

 
                                             Level 3 
                                      --------------------- 
                                        Assets  Liabilities 
                                       GBP'000      GBP'000 
----------------------------------    --------  ----------- 
At 1 January 2018                       11,196     (89,724) 
                                      --------  ----------- 
Remeasurement on adoption of IFRS 
 9                                       1,219            - 
----------------------------------    --------  ----------- 
At 1 January 2018 (restated)            12,415     (89,724) 
                                      --------  ----------- 
Exchange differences                       252      (1,372) 
                                      --------  ----------- 
Additions                                2,284            - 
                                      --------  ----------- 
Fair valuation                            (11)            - 
                                      --------  ----------- 
Utilised in the period                       -          261 
                                      --------  ----------- 
Companies acquired                           -      (3,587) 
                                      --------  ----------- 
Charged to income statement                  -      (2,221) 
------------------------------------  --------  ----------- 
At 30 June 2018                         14,940     (96,643) 
------------------------------------  --------  ----------- 
 
 

Of the GBP2,221,000 charged to the income statement GBP2,276,000 is charged to net finance costs and GBP55,000 is credited to other operating costs.

 
16. Borrowings 
                               As at     As at 
                             30 June   30 June 
                                2018      2017 
                             GBP'000   GBP'000 
--------------------------  --------  -------- 
Current 
                            --------  -------- 
Bank overdraft                17,709    16,605 
                            --------  -------- 
Unsecured loan notes               -    34,010 
                            --------  -------- 
Bank borrowings                  187       239 
                            --------  -------- 
Finance lease liabilities      1,233       239 
--------------------------  --------  -------- 
                              19,129    51,093 
--------------------------  --------  -------- 
Non-current 
                            --------  -------- 
Unsecured loan notes         420,167   439,005 
                            --------  -------- 
Bank borrowing               322,363   256,555 
                            --------  -------- 
Finance lease liabilities      4,121       527 
--------------------------  --------  -------- 
                             746,651   696,087 
--------------------------  --------  -------- 
Total borrowings             765,780   747,180 
--------------------------  --------  -------- 
 

The borrowings include secured liabilities (finance leases) of GBP5,354,000 (2017: GBP766,000).

 
17. Provisions for liabilities and charges 
                                     Property 
                                      related   Litigation 
                                   provisions   provisions     Other     Total 
                                      GBP'000      GBP'000   GBP'000   GBP'000 
--------------------------------  -----------  -----------  --------  -------- 
At 1 January 2018                       2,104        6,274        36     8,414 
                                  -----------  -----------  --------  -------- 
Exchange differences                       39          (9)         1        31 
                                  -----------  -----------  --------  -------- 
Utilised in the period                  (251)        (517)         -     (768) 
                                  -----------  -----------  --------  -------- 
Charged to the income statement            18        5,846         -     5,864 
                                  -----------  -----------  --------  -------- 
Interest charge                            25            -         -        25 
                                  -----------  -----------  --------  -------- 
Companies acquired                          -            -        12        12 
--------------------------------  -----------  -----------  --------  -------- 
At 30 June 2018                         1,935       11,594        49    13,578 
--------------------------------  -----------  -----------  --------  -------- 
 
 
At 1 January 2017                  2,919    7,442   36   10,397 
Exchange differences                (32)     (44)    -     (76) 
                                  ------  -------  ---  ------- 
Utilised in the period              (16)    (970)    -    (986) 
                                  ------  -------  ---  ------- 
Charged to the income statement       40    5,088    -    5,128 
                                  ------  -------  ---  ------- 
Interest charge                       30        -    -       30 
--------------------------------  ------  -------  ---  ------- 
At 30 June 2017                    2,941   11,516   36   14,493 
--------------------------------  ------  -------  ---  ------- 
 
 
                                       As at     As at 
                                     30 June   30 June 
                                        2018      2017 
                                     GBP'000   GBP'000 
--------------------------------    --------  -------- 
Analysis of total provisions 
                                    --------  -------- 
Current - to be utilised within 
 one year                             11,962    12,695 
                                    --------  -------- 
Non-current - to be utilised in 
 more than one year                    1,616     1,798 
----------------------------------  --------  -------- 
                                      13,578    14,493 
  --------------------------------  --------  -------- 
 

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 principally relate to the US and UK and relate to a variety of lease commitments. The longest lease term expires in 2026.

Litigation provisions

At any point in time the Group can be involved in a variety of litigation, regulatory and other government authorities investigations and disputes around the world. A provision is established in respect of such issues when it is probable that the liability has been incurred and the amount of the liability can be reasonably estimated. The Group analyses its litigation exposures based on available information, including external legal consultation where appropriate, to assess its potential liability. Where appropriate the Group also provides for the cost of defending or initiating such matters. However, the final outcome could differ materially from the amount provided.

Where a litigation provision has been made it is stated gross of any third party recovery. All such recoveries are included as "Other receivables" within trade and other receivables. At 30 June 2018, in connection with certain litigation matters, the Group's litigation provisions include an amount of GBP0.1 million (2017: GBP0.1 million) 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 period ended 30 June 2018 (2017: nil).

18. Other reserves

 
                                          Share    Fair value   Exchange 
                                        premium   and hedging   reserves      Total 
                                        GBP'000       GBP'000    GBP'000    GBP'000 
-------------------------------------  --------  ------------  ---------  --------- 
At 1 January 2018                       104,111         9,290     48,604    162,005 
                                       --------  ------------  ---------  --------- 
Change in accounting policy in 
 respect of IFRS 15                           -             -        359        359 
-------------------------------------  --------  ------------  ---------  --------- 
At 1 January 2018 (restated)            104,111         9,290     48,963    162,364 
                                       --------  ------------  ---------  --------- 
Recycling of the fair value reserves 
 to retained earnings (IFRS 9)                -          (81)          -       (81) 
-------------------------------------  --------  ------------  ---------  --------- 
At 1 January 2018 (restated)            104,111         9,209     48,963    162,283 
                                       --------  ------------  ---------  --------- 
Fair value gains net of tax: 
                                       --------  ------------  ---------  --------- 
 - cash flow hedges                           -      (11,078)          -   (11,078) 
                                       --------  ------------  ---------  --------- 
Currency translation differences              -             -    (1,448)    (1,448) 
-------------------------------------  --------  ------------  ---------  --------- 
Net losses recognised directly 
 in equity                                    -      (11,078)    (1,448)   (12,526) 
-------------------------------------  --------  ------------  ---------  --------- 
At 30 June 2018                         104,111       (1,869)     47,515    149,757 
-------------------------------------  --------  ------------  ---------  --------- 
 
 
                                      Share    Fair value   Exchange 
                                    premium   and hedging   reserves     Total 
                                    GBP'000       GBP'000    GBP'000   GBP'000 
---------------------------------  --------  ------------  ---------  -------- 
At 1 January 2017 (restated)        104,111      (54,453)     83,561   133,219 
                                   --------  ------------  ---------  -------- 
Fair value losses net of tax: 
                                   --------  ------------  ---------  -------- 
 - available-for-sale                     -            35          -        35 
                                   --------  ------------  ---------  -------- 
 - cash flow hedges                       -        39,639          -    39,639 
                                   --------  ------------  ---------  -------- 
Currency translation differences 
 (restated)                               -             -   (21,625)  (21,625) 
---------------------------------  --------  ------------  ---------  -------- 
Net gains/(losses) recognised 
 directly in equity                       -        39,674   (21,625)    18,049 
---------------------------------  --------  ------------  ---------  -------- 
At 30 June 2017 (restated)          104,111      (14,779)     61,936   151,268 
---------------------------------  --------  ------------  ---------  -------- 
 

19. Cash generated from operations

 
                                                         6 months   6 months 
                                                            ended      ended 
                                                          30 June    30 June 
                                                             2018       2017 
                                                                    Restated 
                                                          GBP'000    GBP'000 
------------------------------------------------------  ---------  --------- 
Profit before taxation                                     89,453     98,261 
------------------------------------------------------  ---------  --------- 
Investment and finance income                             (6,195)    (4,588) 
                                                        ---------  --------- 
Interest payable on bank loans and finance leases           9,050      8,235 
                                                        ---------  --------- 
Fair value losses/(gains) on derivative financial 
 instruments                                                1,083      (371) 
                                                        ---------  --------- 
Net pension financing expenses                              2,102      2,812 
                                                        ---------  --------- 
Unwinding of liability discounting                          2,345      2,473 
                                                        ---------  --------- 
Depreciation                                                6,071      6,248 
                                                        ---------  --------- 
Amortisation of other intangible assets                    18,975     17,965 
                                                        ---------  --------- 
Amortisation of share based payments                       15,052     13,031 
                                                        ---------  --------- 
Share of results of associates' undertakings              (2,549)    (2,051) 
                                                        ---------  --------- 
Non cash exceptional items                                  3,487      1,054 
                                                        ---------  --------- 
Gains on disposal of businesses                                 -    (1,455) 
                                                        ---------  --------- 
Gains on disposal of property, plant and equipment           (92)       (11) 
                                                        ---------  --------- 
Gains on held-for-sale assets                                 (4)          - 
                                                        ---------  --------- 
Impairment of available-for-sale financial assets               -        122 
                                                        ---------  --------- 
Increase in trade and other receivables                  (39,595)   (11,126) 
                                                        ---------  --------- 
Increase in contract assets                              (16,682)    (9,774) 
                                                        ---------  --------- 
Decrease in trade and other payables - excluding 
 insurance broking balances                              (24,561)   (57,289) 
                                                        ---------  --------- 
Decrease in contract liabilities                          (1,105)    (3,415) 
                                                        ---------  --------- 
Increase in provisions for liabilities and charges          3,446      3,957 
                                                        ---------  --------- 
(Decrease)/increase in retirement benefit obligations        (66)        385 
------------------------------------------------------  ---------  --------- 
Net cash inflow from operations                            60,215     64,463 
------------------------------------------------------  ---------  --------- 
 

20. Business combinations

Adjustments in respect of prior year acquisitions

During the period, the deferred 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 
                                       Consideration    consideration   Consideration 
                                           at 31 Dec        impacting       at 30 Jun   Paid during 
                                                  17         goodwill            2018      the year 
Revisions to deferred consideration 
 impacting goodwill                          GBP'000          GBP'000         GBP'000       GBP'000 
====================================  ==============  ===============  ==============  ============ 
Belgibo NV                                     1,477               42           1,519          (42) 
====================================  ==============  ===============  ==============  ============ 
                                               1,477               42           1,519          (42) 
====================================  ==============  ===============  ==============  ============ 
 

Current year acquisitions

During the period the following new business acquisitions and additional investments were completed:

 
                                                            Percentage 
                                                                voting 
                                               Acquisition      rights      Cost 
                                       Notes         dates    acquired   GBP'000 
====================================  ======  ============  ==========  ======== 
International Risk Consultants, 
 Inc.                                      i      Feb 2018      100.0%    18,775 
                                      ------  ------------  ----------  -------- 
Acquisition of other new businesses              Jan - Jun 
 completed during the period              ii          2018      100.0%    13,485 
====================================  ======  ============  ==========  ======== 
                                                                          32,260 
  ========================================================  ==========  ======== 
 

i) Acquisition of Insurance Risk Consultants, Inc. (IRC)

On 28 February 2018, the Group completed the acquisition of Insurance Risk Consultants, Inc. one of the leading trade credit and political risk specialty brokers in the USA. The acquired business contributed revenue of GBP2,583,000 and net loss, including acquisition and integration costs incurred to date, of GBP107,000 to the Group for the period since acquisition. If the acquisition had taken place on 1 January 2018, we estimate the contribution to Group revenue would have been GBP3,484,000 and net loss, including acquisition and integration costs incurred to date, would have been GBP287,000.

 
Goodwill calculation                        GBP'000 
                                            ======= 
Purchase consideration 
                                            ------- 
 - cash paid                                 18,775 
==========================================  ======= 
Total purchase consideration                 18,775 
                                            ------- 
Less fair value of net assets acquired        4,064 
==========================================  ======= 
Goodwill                                     14,711 
==========================================  ======= 
 

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             51          51 
                                  ----------  ---------- 
Other intangible assets                    -       1,877 
                                  ----------  ---------- 
Trade and other receivables              340         340 
                                  ----------  ---------- 
Cash and cash equivalents 
                                  ----------  ---------- 
 - own cash                              501         501 
                                  ----------  ---------- 
 - fiduciary cash                        857         857 
                                  ----------  ---------- 
Insurance payables                     (857)       (857) 
                                  ----------  ---------- 
Trade and other payables               (124)       (124) 
                                  ----------  ---------- 
Current taxation                          17          17 
                                  ----------  ---------- 
Non-controlling interests              1,402       1,402 
================================  ==========  ========== 
                                       2,187       4,064 
  ==============================  ==========  ========== 
 
 
                                                            GBP'000 
=========================================================   ======= 
Purchase consideration settled in cash                       18,775 
 
Cash and cash equivalents - own cash in subsidiary 
 acquired                                                     (501) 
==========================================================  ======= 
                                                             18,274 
 --------------------------------------------------------- 
Cash and cash equivalents - fiduciary cash in subsidiary 
 acquired                                                     (857) 
==========================================================  ======= 
Cash outflow on acquisition                                  17,417 
==========================================================  ======= 
 

As at 30 June 2018, the process of reviewing the fair values of assets acquired had not been completed, consequently the fair values stated above are provisional. Goodwill recognised is expected to be deductible for income tax purposes.

ii) Other acquisitions and additional investments

 
Goodwill calculation                        GBP'000 
                                            ======= 
Purchase consideration 
                                            ------- 
 - cash paid                                  8,719 
                                            ------- 
 - contingent consideration                   3,587 
                                            ------- 
 - deferred consideration                     1,179 
==========================================  ======= 
Total purchase consideration                 13,485 
                                            ------- 
Less fair value of net assets acquired        3,483 
==========================================  ======= 
Goodwill                                     10,002 
==========================================  ======= 
 

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              38          38 
                                   ----------  ---------- 
Other intangible assets                    12       1,933 
                                   ----------  ---------- 
Trade and other receivables             1,913       1,914 
                                   ----------  ---------- 
Cash and cash equivalents 
                                   ----------  ---------- 
 - own cash                               983         983 
                                   ----------  ---------- 
 - fiduciary cash                       2,519       2,519 
                                   ----------  ---------- 
 Insurance payable                    (2,519)     (2,519) 
                                   ----------  ---------- 
Trade and other payables              (1,009)     (1,009) 
                                   ----------  ---------- 
Current taxation                        (196)       (196) 
                                   ----------  ---------- 
Deferred taxation                         (3)         (3) 
                                   ----------  ---------- 
Borrowings                              (165)       (165) 
                                   ----------  ---------- 
Provisions for liabilities and 
 charges                                 (12)        (12) 
=================================  ==========  ========== 
                                        1,562       3,483 
  ===============================  ==========  ========== 
 
 
                                           GBP'000 
======================================     ======= 
Purchase consideration settled 
 in cash                                     8,719 
 
Cash and cash equivalents - own 
 cash in subsidiary acquired                 (983) 
 
Borrowings                                     165 
=========================================  ======= 
                                             7,901 
   --------------------------------------  ------- 
Cash and cash equivalents - fiduciary 
 cash in subsidiary acquired               (2,519) 
=========================================  ======= 
Cash outflow on acquisition                  5,382 
=========================================  ======= 
 

As at 30 June 2018, 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 GBP3,587,000, of which the largest individual consideration is GBP3,071,000, is based upon the expected profit before tax of the business for future periods up to 2022. The deferred consideration of GBP1,179,000 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

 
                                                     IRC    Others     Total 
                                                 GBP'000   GBP'000   GBP'000 
==============================================  ========  ========  ======== 
Purchase consideration: 
                                                --------  --------  ======== 
 - cash paid                                      18,775     8,719    27,494 
                                                --------  --------  ======== 
 - contingent consideration                            -     3,587     3,587 
                                                --------  --------  ======== 
 - deferred consideration                              -     1,179     1,179 
==============================================  ========  ========  ======== 
Total purchase consideration                      18,775    13,485    32,260 
==============================================  ========  ========  ======== 
Less fair value of net assets acquired             4,064     3,483     7,547 
==============================================  ========  ========  ======== 
Goodwill on acquisitions occurring during 
 the period                                       14,711    10,002    24,713 
==============================================  ========  ========  ======== 
Impact of revisions to deferred consideration                             42 
==============================================  ========  ========  ======== 
Net increase in goodwill                                              24,755 
==============================================  ========  ========  ======== 
 

Group summary of cash flows

 
                                                          IRC    Others     Total 
                                                      GBP'000   GBP'000   GBP'000 
===================================================  ========  ========  ======== 
Purchase consideration settled in cash                 18,775     8,719    27,494 
                                                     ========  ========  ======== 
Borrowings                                                  -       165       165 
Cash and cash equivalents - own cash in subsidiary 
 acquired                                               (501)     (983)   (1,484) 
===================================================  ========  ========  ======== 
                                                       18,274     7,901    26,175 
                                                     --------  --------  -------- 
Cash and cash equivalents - fiduciary cash 
 in subsidiary acquired                                 (857)   (2,519)   (3,376) 
===================================================  ========  ========  ======== 
Cash outflow on acquisitions in the period             17,417     5,382    22,799 
===================================================  ========  ========  ======== 
Impact of revision to fair value adjustment 
 on cash in relation to prior period acquisitions 
 completed in 2017                                                             42 
===================================================  ========  ========  ======== 
Net cash outflow on acquisitions during the 
 period                                                                    22,841 
===================================================  ========  ========  ======== 
 

21. Business disposals

During the period, the Group completed disposals, none of which were individually significant.

 
                                                          Total 
Net liabilities and proceeds of disposal                GBP'000 
====================================================   ======== 
Non-controlling interests                                 (124) 
=====================================================  ======== 
Net liabilities at disposal                               (124) 
                                                       -------- 
Equity movement on transaction with non-controlling 
 interest                                                    47 
=====================================================  ======== 
Proceeds on disposal                                         77 
=====================================================  ======== 
Deferred proceeds                                            77 
=====================================================  ======== 
Total consideration                                          77 
=====================================================  ======== 
 

22. 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.

An updated triennial valuation of the Jardine Lloyd Thompson UK Pension Scheme was undertaken as at 31 March 2017. The Group has agreed an updated recovery plan with the scheme trustees to eliminate the funding deficit over a period of 8 years and 3 months from 1 July 2018 by the payment of additional funding contributions of GBP16,500,000 per annum. The triennial valuation resulted in the recognition of a net experience loss arising from updates to financial assumptions, and experience related to actuarial factors and liability transfers over the period.

The pension service costs accrued for the period are as follows:

 
                                   UK Scheme        Overseas Schemes         Total 
                               ==================  ==================  ================== 
                               6 months  6 months  6 months  6 months  6 months  6 months 
                                  ended     ended     ended     ended     ended     ended 
                                30 June   30 June   30 June   30 June   30 June   30 June 
                                   2018      2017      2018      2017      2018      2017 
                                GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000 
=============================  ========            ========  ========  ========  ======== 
Defined benefit schemes               -         -        66         -        66         - 
                               ========  --------  ========  ========  ========  ======== 
Defined contribution schemes     10,474    10,269    11,446    12,020    21,920    22,289 
=============================  ========  ========  ========  ========  ========  ======== 
                                 10,474    10,269    11,512    12,020    21,986    22,289 
=============================  ========  ========  ========  ========  ========  ======== 
 

The amounts recognised in the consolidated income statement are as follows:

 
                                      UK Scheme        Overseas Schemes          Total 
                                  ==================  ==================  =================== 
                                  6 months  6 months  6 months  6 months  6 months   6 months 
                                     ended     ended     ended     ended     ended      ended 
                                   30 June   30 June   30 June   30 June   30 June    30 June 
                                      2018      2017      2018      2017      2018       2017 
                                   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000    GBP'000 
================================  ========  ========  ========  ========  ========  ========= 
 
Service cost                             -         -      (66)         -      (66)          - 
-------------------------------- 
Expenses                              (58)     (180)     (122)     (205)     (180)      (385) 
--------------------------------  ========  ========  ========  ========  ========  ========= 
Total (included within salaries 
 and associated expenses)             (58)     (180)     (188)     (205)     (246)      (385) 
                                  ========  ========  ========  ========  ========  ========= 
Interest cost                      (7,802)   (9,170)   (1,046)   (1,247)   (8,848)   (10,417) 
-------------------------------- 
Expected return on assets            5,897     6,605       849     1,000     6,746      7,605 
--------------------------------  ========  ========  ========  ========  ========  ========= 
Total (included within finance 
 costs)                            (1,905)   (2,565)     (197)     (247)   (2,102)    (2,812) 
================================  ========  ========  ========  ========  ========  ========= 
Expenses before taxation           (1,963)   (2,745)     (385)     (452)   (2,348)    (3,197) 
================================  ========  ========  ========  ========  ========  ========= 
 

The amounts disclosed in respect of both the UK and Overseas defined benefit schemes ("the Schemes") have been projected from previous valuations of the Schemes and updated for the results of the latest triennial valuation where relevant. They do not represent the results of a full actuarial valuation. In respect of 30 June 2018 the Group has updated its assumption regarding the discount rate applicable to the Schemes' liabilities in line with current market information.

The amounts included in the consolidated statement of comprehensive income are as follows:

 
                                                   UK Scheme          Overseas Schemes          Total 
                                             =====================  =====================  ========== 
6 months ended 30 June 2018                     GBP'000          %    GBP'000           %     GBP'000 
===========================================  ==========  =========  =========  ==========  ========== 
Actual return less expected return 
 on Scheme assets                              (20,969)                  (23)                (20,992) 
-------------------------------------------  ----------  ---------  ---------  ----------  ---------- 
% of period end market value 
 of Scheme assets                                           (4.6%)                      -      (4.1%) 
-------------------------------------------  ----------  ---------  ---------  ----------  ---------- 
Experience losses arising on 
 Scheme liabilities                            (25,039)               (1,163)                (26,202) 
-------------------------------------------  ----------  ---------  ---------  ----------  ---------- 
% of period end present value 
 of Scheme liabilities                                      (4.0%)                 (1.6%)      (3.8%) 
-------------------------------------------  ----------  ---------  ---------  ----------  ---------- 
Changes in assumptions underlying 
 the present value of the Scheme 
 liabilities                                     36,265                 3,350                  39,615 
-------------------------------------------  ----------  ---------  ---------  ----------  ---------- 
% of period end present value 
 of Scheme liabilities                                        5.8%                   4.7%        5.7% 
===========================================  ==========  =========  =========  ==========  ========== 
Actuarial losses recognised in 
 reserves (1)                                   (9,743)                 2,164                 (7,579) 
===========================================  ==========  =========  =========  ==========  ========== 
% of period end present value 
 of Scheme liabilities                                      (1.6%)                   3.1%      (1.1%) 
===========================================  ==========  =========  =========  ==========  ========== 
 
                                       UK Scheme           Overseas Schemes            Total 
                                 ======================  ====================  ====================== 
                                   6 months    6 months   6 months   6 months    6 months    6 months 
                                 ----------  ----------  ---------  ---------  ----------  ---------- 
                                      ended       ended      ended      ended       ended       ended 
                                    30 June     30 June    30 June    30 June     30 June     30 June 
                                 ----------  ----------  ---------  ---------  ----------  ---------- 
                                       2018        2017       2018       2017        2018        2017 
                                 ----------  ----------  ---------  ---------  ----------  ---------- 
                                    GBP'000     GBP'000    GBP'000    GBP'000     GBP'000     GBP'000 
===============================  ==========  ==========  =========  =========  ==========  ========== 
Defined benefit obligation 
                                 ----------  ----------  ---------  ---------  ----------  ---------- 
Present value of funded 
 obligations                      (626,009)   (644,242)   (70,770)   (71,441)   (696,779)   (715,683) 
                                 ----------  ----------  ---------  ---------  ----------  ---------- 
Fair value of plan assets           457,891     483,395     59,767     56,734     517,658     540,129 
===============================  ==========  ==========  =========  =========  ==========  ========== 
Net liability recognised 
 in the balance sheet             (168,118)   (160,847)   (11,003)   (14,707)   (179,121)   (175,554) 
===============================  ==========  ==========  =========  =========  ==========  ========== 
 
                                                                                       Total 
                                 ----------  ----------  ---------  ---------  ====================== 
                                                                                 6 months    6 months 
                                 ----------  ----------  ---------  ---------  ----------  ---------- 
                                                                                    ended       ended 
                                                                                  30 June     30 June 
                                 ----------  ----------  ---------  ---------  ----------  ---------- 
                                                                                     2018        2017 
                                 ----------  ----------  ---------  ---------  ----------  ---------- 
                                                                                  GBP'000     GBP'000 
===============================  ==========  ==========  =========  =========  ==========  ========== 
Defined benefit obligation 
                                 ----------  ----------  ---------  ---------  ----------  ---------- 
Retirement benefit surpluses                                                          337         125 
                                 ----------  ----------  ---------  ---------  ----------  ---------- 
Retirement benefit obligations                                                  (179,458)   (175,679) 
===============================  ==========  ==========  =========  =========  ==========  ========== 
Net liability recognised 
 in the balance sheet                                                           (179,121)   (175,554) 
===============================  ==========  ==========  =========  =========  ==========  ========== 
 
                                       UK Scheme           Overseas Schemes            Total 
                                 ======================  ====================  ====================== 
                                   6 months    6 months   6 months   6 months    6 months    6 months 
                                 ----------  ----------  ---------  ---------  ----------  ---------- 
                                      ended       ended      ended      ended       ended       ended 
                                    30 June     30 June    30 June    30 June     30 June     30 June 
                                 ----------  ----------  ---------  ---------  ----------  ---------- 
                                       2018        2017       2018       2017        2018        2017 
                                 ----------  ----------  ---------  ---------  ----------  ---------- 
                                    GBP'000     GBP'000    GBP'000    GBP'000     GBP'000     GBP'000 
===============================  ==========  ==========  =========  =========  ==========  ========== 
Reconciliation of defined 
 benefit liability 
                                 ----------  ----------  ---------  ---------  ----------  ---------- 
Opening defined benefit 
 liability                        (156,412)   (184,496)   (12,872)   (13,916)   (169,284)   (198,412) 
                                 ----------  ----------  ---------  ---------  ----------  ---------- 
Exchange differences                      -           -      (222)        609       (222)         609 
                                 ----------  ----------  ---------  ---------  ----------  ---------- 
Pension expense                     (1,963)     (2,745)      (385)      (452)     (2,348)     (3,197) 
                                 ----------  ----------  ---------  ---------  ----------  ---------- 
Employer contributions                    -           -        312          -         312           - 
                                 ----------  ----------  ---------  ---------  ----------  ---------- 
Total (loss)/gain recognised 
 in reserves (1)                    (9,743)      26,394      2,164      (948)     (7,579)      25,446 
===============================  ==========  ==========  =========  =========  ==========  ========== 
Net liability recognised 
 in the balance sheet             (168,118)   (160,847)   (11,003)   (14,707)   (179,121)   (175,554) 
===============================  ==========  ==========  =========  =========  ==========  ========== 
 
 

(1) Amounts recognised in reserves have been taken through the consolidated statement of comprehensive income

23. Related-party transactions

The Group has applied the exemption available under IAS 24 Related Party Disclosures, not to disclose details of transactions with its subsidiary undertakings. For the period, the Group's related parties are the same as those disclosed on page 160 of the Group's Annual Report for 2017. The basis of the remuneration of the Directors and key management remains consistent with that reported in the Group's Annual Report for 2017.

24. subsequent events

On 29 June 2018, the Group acquired, subject to regulatory approval, JLT March Re, Correduria de Reaseguros, S.A.U., the Reinsurance subsidiary of the Group's associate March-JLT for a consideration of EUR3,211,000 payable on completion.

Also subject to regulatory approval, the Group acquired Moola Systems Limited on 18 July 2018, a digital saving and investment service business for a consideration payable on completion of GBP2,500,000 followed by a contingent consideration capped at GBP10,000,000.

25. CHANGES IN ACCOUNTING POLICIES

IFRS 9 Financial Instruments ('IFRS 9') and IFRS 15 Revenue from Contract with Customers ('IFRS 15') became mandatorily effective on 1 January 2018. The Group adopted IFRS 15 and the requirements of IFRS 9 in respect of classification and measurement and impairment on 1 January 2018 (the 'date of initial application'), which resulted in changes in the Group's accounting policies. The Group has elected to continue to apply the IAS 39 Financial Instruments ('IAS 39') requirements in respect of hedge accounting as provided by paragraph 7.2.21 of IFRS 9.

This note explains the impact of the adoption of IFRS 15 and IFRS 9 on the Group's financial statements and also discloses the new accounting policies that have been applied from 1 January 2018, where they are different to those applied in prior periods.

The Group has applied IFRS 15 retrospectively and has restated comparatives for the 2017 financial period, with the cumulative impact on retained earnings recognised in the opening balance sheet as at 1 January 2017. IFRS 9 has been applied prospectively without restating comparatives for the 2017 financial period. The adjustments arising from the adoption of IFRS 9 are not reflected in the restated balance sheet as at 31 December 2017, but are recognised in retained earnings as at 1 January 2018. Consequently, the amendments to IFRS 7 Financial Instruments: Disclosures ('IFRS 7') disclosure requirements, which are consequential to IFRS 9 becoming effective, have been applied to the current period. The comparative period notes disclosures mandated by IFRS 7 repeat those disclosures made in the prior year.

A) NEW ACCOUNTING POLICIES IN RESPECT OF FINANCIAL INSTRUMENTS AND REVENUE RECOGNITION

Financial Instruments

The adoption of IFRS 9 has resulted in changes in the Group's accounting policies for the recognition, classification and measurement of financial assets and financial liabilities and impairment of financial assets. Set out below are the Group's accounting policies relating to financial instruments on adoption of IFRS 9. These accounting policies were applied to the Group's financial instruments from 1 January 2018. Financial instruments disclosed for the comparative 2017 financial period were accounted for in accordance with the accounting policies disclosed on pages 114 and 115 of the Group's 2017 annual report.

The Group continues to apply the accounting policy disclosed under 'Derivative Financial Instruments' on page 116 of the 2017 annual report in respect of hedge accounting.

FINANCIAL ASSETS

On initial recognition, a financial asset is measured at fair value plus, for an instrument not measured at fair value through profit or loss, transaction costs that are directly attributable to its acquisition. Trade receivables without a significant financing component are measured at the transaction price, rather than fair value, at initial recognition.

On initial recognition, the Group further classifies its financial assets as measured at amortised cost, fair value through other comprehensive income (debt or equity instrument) or fair value through profit or loss. The classification of financial assets is based on the business model under which a financial asset is managed, and its contractual cash flow characteristics. These classification categories also describe the measurement of financial assets subsequent to initial recognition.

Financial assets at amortised cost

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as measured at fair value through profit or loss:

-- it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

-- its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets in this category are measured at amortised cost using the effective interest method. The amortised cost is reduced by accumulated impairment losses. Interest income, foreign exchange gains and losses and impairment losses are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.

Financial assets at fair value through other comprehensive income ('FVOCI')

Debt instruments

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as measured at fair value through profit or loss:

-- it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

-- its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Such financial assets are measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment losses are recognised in profit or loss. Other net gains and losses are recognised in other comprehensive income ('OCI'). On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.

Equity instruments

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment's fair value in OCI. This election is made on an investment-by-investment basis.

Such financial assets are measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI. On derecognition, gains and losses accumulated in OCI may be reclassified to another component of equity, but will never be reclassified to profit or loss.

Financial assets at fair value through profit or loss ('FVTPL')

All financial assets not classified as measured at amortised cost or FVOCI as described above are classified as measured at FVTPL.

Financial assets in this category are measured at fair value subsequent to initial recognition. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.

IMPAIRMENT OF FINANCIAL ASSETS

At each reporting date, the Group assesses whether financial assets carried at amortised cost and debt instruments measured at FVOCI are credit-impaired. A financial asset is 'credit-impaired' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

The Group measures credit loss allowances on credit-impaired financial assets on either of the following bases:

-- Lifetime expected credit losses ('ECLs'): ECLs that result from all possible default events over the expected life of a financial instrument; and

-- 12-month ECLs: The portion of lifetime ECLs that result from possible default events within the 12 months after the reporting date.

The Group measures credit loss allowances on financial assets at an amount equal to lifetime ECLs, except for the following financial assets, which are measured as 12-month ECLs:

   --      debt instruments that are considered to have low credit risk at the reporting date; and 

-- other debt instruments and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group's historical experience and informed credit assessment and including forward-looking information.

The Group considers a financial asset to be in default (i.e. loss incurred) when:

-- there is evidence that the amount is unlikely to be paid in full, without recourse by the Group to actions such as realising collaterals (if any is held); or

   --      the financial asset is more than 2 years past due. 

The Group applies the IFRS 9 simplified approach to measure ECLs on trade receivables and certain contract assets which represent unbilled consideration for which goods or services have been delivered, but the right to consideration is contingent on something other than passage of time. Under the simplified approach, ECLs are measured at an amount equal to lifetime ECLs.

Lifetime ECLs on trade receivables and contract assets are measured based on the actual credit loss experience over the preceding 5 years. The actual credit loss experience is adjusted, if considered significant, by scalar factors to reflect the differences between economic conditions during the period over which the historical data was collected, current conditions and the Group's view of economic conditions over the expected lives of the assets.

Credit loss allowances on financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.

Credit loss allowances on financial assets measured at FVOCI are recognised in OCI, instead of reducing the carrying amount of the asset.

Credit loss allowances relating to trade and other receivables, including contract assets, are presented separately in the Income Statement.Impairment losses on financial assets other than trade and other receivables are presented as 'finance costs'.

Revenue Recognition

Revenue comprises both commission and fees for the services undertaken to place and administer contracts of insurance, employee benefits arrangements and other related services. Revenue may comprise a combination of fees, commissions and other forms of variable consideration. The transaction price considers all of the elements for each contract and applies constraints to variable consideration based on the past performance of similar contracts.

Where past performance has been volatile and has little predictive value, the constraint applied can be significant. Where appropriate, revenue is deferred to account for the possibility of a cancellation or a refund liability. Performance obligations are assessed on the basis of the specific arrangements in the contract, or where such is not defined, on the basis of each separate and distinct obligation for which a market value can be ascribed.

The Group satisfies some performance obligations at a point in time, and others over time where the customer is receiving a simultaneous benefit, or the Group has a contractual right to payment for the work both performed and transferred to the client.

For contracts where the revenue is expected to be collected more than 1 year from its recognition and is not an estimate of a variable amount, consideration is given to the time value of money. Where relevant the deemed interest is recognised as a component of finance income.

Where the value of revenue is beyond the control of the Group and it cannot be estimated reliably, it will not be recognised until the amount is known with reasonable certainty. In these cases any associated costs are expensed as incurred.

Contract warranties and indemnities are not a significant feature of the Group's business.

Incremental costs to obtain a contract and contract fulfilment costs are capitalised and amortised to profit or loss on a systematic basis to match the recognition of revenue as the service is delivered to the client. Such costs are capitalised only where the Group expects to recover these costs, and, in the case of incremental costs to obtain a contract, where the amortisation period of the asset is more than 1 year. Additionally, in respect of contract fulfilment costs, these costs must relate directly to the contract, generate assets used to satisfy the contractual performance obligations, and do not qualify to be recognised as an asset under other accounting standards.

Assets recognised on the Group's balance sheet arising from the capitalisation of incremental costs to obtain a contract and contract fulfilment costs are presented as part of contract assets.

Insurance Broking and Related Services

Revenue may comprise a combination of fees, commissions and other forms of variable consideration. Where the contract specifically identifies the performance obligations then revenue is recognised accordingly.

Where there is no separate arrangement, revenue is considered to be wholly related to the placement activity and recognised at the later of the policy inception date, or the date on which the placement is complete and confirmed. Where there are separate arrangements or where other performance obligations are separate and distinct from placement, revenue is deferred to cover the provision of services that are more than administrative in nature and that are separate and distinct. In the main these post-placement performance obligations relate to the provision of claims related services.

Contract modifications are treated on a cumulative catch-up basis or as a new contract depending on the circumstances in each case.

A deferral of revenue is made to cover the likelihood of contract cancellation.

Fulfilment costs, which mainly represent the direct costs incurred from appointment or renewal instruction to the point at which placement is confirmed, are amortised in full when the placement revenue is recognised.

Revenue deferrals and fulfilment costs are mainly calculated on a portfolio basis, with estimates made based on past history.

Incremental costs to obtain a contract are capitalised where they can be directly identified and are expected to be recovered.

Employee Benefits

Fee-based revenue is recognised in line with the distinct and separate performance obligations in the contract.

Fulfilment costs, which may include data transfer and other set up costs, are amortised in line with the recognition of revenue for the specific performance obligation.

The likelihood of cancellation is assessed based on past performance of similar contracts and a resulting deferral of revenue is made.

Commission-based remuneration follows the same recognition criteria as insurance broking and related services.

Other Services

These are mainly fee-based arrangements and revenue is recognised in line with the distinct and separate performance obligations in the contract.

Fulfilment and other incremental costs to obtain the contract are capitalised where they are expected to be recovered and amortised as the revenue is recognised for each specific performance obligation.

B) Impact on the financial statements

The following tables show the adjustments recognised for each individual line item in the Group's Balance Sheet as at 31 December 2017, interim Income Statement as at 30 June 2017 and Statement of Comprehensive Income as at 30 June 2017.

Consolidated Balance Sheet as at 31 December 2017 and 1 January 2018

 
                                             31 Dec        31 Dec        31 Dec         1 Jan    1 Jan 2018 
                                               2017          2017          2017          2018 
                                      As previously       IFRS 15            As        IFRS 9        IFRS 9 
                                           reported   adjustments      restated   adjustments      carrying 
                                                                                                    amounts 
                                                                                                   Restated 
                                      -------------  ------------  ------------  ------------  ------------ 
                                            GBP'000       GBP'000       GBP'000       GBP'000       GBP'000 
====================================  =============  ============  ============  ============  ============ 
NET ASSETS 
                                      -------------  ------------  ------------  ------------  ------------ 
Non-current assets 
                                      -------------  ------------  ------------  ------------  ------------ 
Goodwill                                    577,778             -       577,778             -       577,778 
                                      -------------  ------------  ------------  ------------  ------------ 
Other Intangible assets                     108,954             -       108,954             -       108,954 
                                      -------------  ------------  ------------  ------------  ------------ 
Property, plant and equipment                68,645             -        68,645             -        68,645 
                                      -------------  ------------  ------------  ------------  ------------ 
Investments in associates                    53,055             -        53,055             -        53,055 
                                      -------------  ------------  ------------  ------------  ------------ 
Available-for-sale financial 
 assets                                      16,858             -        16,858      (16,858)             - 
                                      -------------  ------------  ------------  ------------  ------------ 
Other financial assets at fair 
 value through other comprehensive 
 income                                           -             -             -         6,137         6,137 
                                      -------------  ------------  ------------  ------------  ------------ 
Other financial assets at fair 
 value through profit or loss                     -             -             -         4,870         4,870 
                                      -------------  ------------  ------------  ------------  ------------ 
Other financial assets at amortised 
 cost                                             -             -             -         5,851         5,851 
                                      -------------  ------------  ------------  ------------  ------------ 
Derivative financial instruments             82,569             -        82,569             -        82,569 
                                      -------------  ------------  ------------  ------------  ------------ 
Trade and other receivables*                  9,882        11,727        21,609          (37)        21,572 
                                      -------------  ------------  ------------  ------------  ------------ 
Contract assets                                   -        18,249        18,249         (165)        18,084 
                                      -------------  ------------  ------------  ------------  ------------ 
Retirement benefit surpluses                     92             -            92             -            92 
                                      -------------  ------------  ------------  ------------  ------------ 
Deferred tax assets                          54,266         9,485        63,751           310        64,061 
====================================  =============  ============  ============  ============  ============ 
                                            972,099        39,461     1,011,560           108     1,011,668 
====================================  =============  ============  ============  ============  ============ 
 
Current assets 
                                      -------------  ------------  ------------  ------------  ------------ 
Trade and other receivables*                600,624     (104,899)       495,725         (104)       495,621 
                                      -------------  ------------  ------------  ------------  ------------ 
Contract assets                                   -        68,576        68,576         (610)        67,966 
                                      -------------  ------------  ------------  ------------  ------------ 
Derivative financial instruments              5,545             -         5,545             -         5,545 
                                      -------------  ------------  ------------  ------------  ------------ 
Other financial assets at amortised 
 cost                                             -             -             -       115,080       115,080 
                                      -------------  ------------  ------------  ------------  ------------ 
Available-for-sale financial 
 assets                                     115,080             -       115,080     (115,080)             - 
                                      -------------  ------------  ------------  ------------  ------------ 
Held-for-sale financial assets                  189             -           189             -           189 
                                      -------------  ------------  ------------  ------------  ------------ 
Cash and cash equivalents                 1,015,087             -     1,015,087             -     1,015,087 
====================================  =============  ============  ============  ============  ============ 
                                          1,736,525      (36,323)     1,700,202         (714)     1,699,488 
====================================  =============  ============  ============  ============  ============ 
 
Current liabilities 
                                      -------------  ------------  ------------  ------------  ------------ 
Borrowings                                 (19,226)             -      (19,226)             -      (19,226) 
                                      -------------  ------------  ------------  ------------  ------------ 
Trade and other payables                (1,256,074)        43,086   (1,212,988)             -   (1,212,988) 
                                      -------------  ------------  ------------  ------------  ------------ 
Contract liabilities                              -      (60,392)      (60,392)             -      (60,392) 
                                      -------------  ------------  ------------  ------------  ------------ 
Derivative financial instruments           (10,265)             -      (10,265)             -      (10,265) 
                                      -------------  ------------  ------------  ------------  ------------ 
Current tax liabilities                    (10,290)             -      (10,290)             -      (10,290) 
                                      -------------  ------------  ------------  ------------  ------------ 
Provisions for liabilities and 
 charges                                    (6,865)             -       (6,865)             -       (6,865) 
====================================  =============  ============  ============  ============  ============ 
                                        (1,302,720)      (17,306)   (1,320,026)             -   (1,320,026) 
====================================  =============  ============  ============  ============  ============ 
Net current assets                          433,805      (53,629)       380,176         (714)       379,462 
====================================  =============  ============  ============  ============  ============ 
 
Non-current liabilities 
                                      -------------  ------------  ------------  ------------  ------------ 
Borrowings                                (690,872)             -     (690,872)             -     (690,872) 
                                      -------------  ------------  ------------  ------------  ------------ 
Trade and other payables                   (49,475)             -      (49,475)             -      (49,475) 
                                      -------------  ------------  ------------  ------------  ------------ 
Contract liabilities                              -      (27,278)      (27,278)             -      (27,278) 
                                      -------------  ------------  ------------  ------------  ------------ 
Derivative financial instruments           (85,516)             -      (85,516)             -      (85,516) 
                                      -------------  ------------  ------------  ------------  ------------ 
Deferred tax liabilities                   (11,411)         (362)      (11,773)         (141)      (11,914) 
                                      -------------  ------------  ------------  ------------  ------------ 
Retirement benefit obligations            (169,376)             -     (169,376)             -     (169,376) 
                                      -------------  ------------  ------------  ------------  ------------ 
Provisions for liabilities and 
 charges                                    (1,549)             -       (1,549)             -       (1,549) 
====================================  =============  ============  ============  ============  ============ 
                                        (1,008,199)      (27,640)   (1,035,839)         (141)   (1,035,980) 
====================================  =============  ============  ============  ============  ============ 
                                            397,705      (41,808)       355,897         (747)       355,150 
====================================  =============  ============  ============  ============  ============ 
 
TOTAL EQUITY 
                                      -------------  ------------  ------------  ------------  ------------ 
Capital and reserves attributable 
 to the owners of the parent 
                                      -------------  ------------  ------------  ------------  ------------ 
Ordinary shares                              11,008             -        11,008             -        11,008 
Share premium                               104,111             -       104,111             -       104,111 
Fair value and hedging reserves               9,290             -         9,290          (81)         9,209 
Exchange reserves                            48,604           359        48,963             -        48,963 
Retained earnings                           204,781      (41,709)       163,072         (646)       162,426 
==================================== 
Shareholders' equity                        377,794      (41,350)       336,444         (727)       335,717 
Non-controlling interests                    19,911         (458)        19,453          (20)        19,433 
==================================== 
                                            397,705      (41,808)       355,897         (747)       355,150 
==================================== 
 

*GBP9,882,000 of other receivables have been reclassified from current to non-current.

Consolidated income statement

For the six months ended 30 June 2017

 
                                            As originally        IFRS 15 
                                                presented    adjustments    Restated 
                                                  30 June        30 June     30 June 
                                                     2017           2017        2017 
                                                  GBP'000        GBP'000     GBP'000 
Fees and commissions                              686,912          1,826     688,738 
Investment income                                   3,021              -       3,021 
Total revenue                                     689,933          1,826     691,759 
Salaries and associated expenses                (423,083)        (1,419)   (424,502) 
Premises                                         (35,564)              -    (35,564) 
Other operating costs                           (105,469)        (1,393)   (106,862) 
Depreciation, amortisation and impairment 
 charges                                         (16,668)              -    (16,668) 
Operating profit                                  109,149          (986)     108,163 
Analysed as: 
Operating profit before exceptional items         110,040          (986)     109,054 
Acquisition and integration costs                 (1,022)              -     (1,022) 
Other exceptional items                               131              -         131 
Operating profit                                  109,149          (986)     108,163 
 
Finance costs                                    (13,520)              -    (13,520) 
Finance income                                      1,567              -       1,567 
Finance costs - net                              (11,953)              -    (11,953) 
Share of results of associates                      2,051              -       2,051 
Profit before taxation                             99,247          (986)      98,261 
Income tax expense                               (28,730)          (221)    (28,951) 
Profit for the period                              70,517        (1,207)      69,310 
Profit attributable to: 
Owners of the parent                               68,316        (1,153)      67,163 
Non-controlling interests                           2,201           (54)       2,147 
                                                   70,517        (1,207)      69,310 
Earnings per share attributable to the 
 owners of the parent during the period 
 (expressed in pence per share) 
Basic earnings per share                            32.4p         (0.5p)       31.9p 
Diluted earnings per share                          31.8p         (0.6p)       31.2p 
 

Consolidated STATEMENT OF COMPREHENSIVE INCOME

for the six months ended 30 June 2017

 
                                                    As originally        IFRS 15 
                                                        presented    adjustments   Restated 
                                                          30 June        30 June    30 June 
                                                             2017           2017       2017 
                                                          GBP'000        GBP'000    GBP'000 
Profit for the period                                      70,517        (1,207)     69,310 
Other comprehensive (expense)/income 
 
Items that will not be reclassified to 
 profit or loss                                            25,446              -     25,446 
Remeasurement of post employment benefit 
 obligations                                              (4,774)              -    (4,774) 
 
Total items that will not be reclassified 
 to profit or loss                                         20,672              -     20,672 
Items that may be reclassified subsequently 
 to profit or loss 
Fair value gains/(losses) net of tax: 
  - available-for-sale                                         35              -         35 
  - cash flow hedges                                       39,639              -     39,639 
Currency translation differences                         (23,097)            243   (22,854) 
 
Total items that may be reclassified subsequently 
 to profit or loss                                         16,577            243     16,820 
Other comprehensive income/(expense) net 
 of tax                                                    37,249            243     37,492 
Total comprehensive income for the period                 107,766          (964)    106,802 
Attributable to: 
Owners of the parent                                      106,821          (937)    105,884 
Non-controlling interests                                     945           (27)        918 
                                                          107,766          (964)    106,802 
 
 
C) IFRS 15 Revenue from Contracts with Customers - Impact of adoption 
 The Group adopted IFRS 15 from 1 January 2018. In accordance with 
 the transition provisions in IFRS 15, the Group has applied the 
 new rules retrospectively and restated the comparatives for the 
 2017 financial year, with the cumulative impact on retained earnings 
 recognised in the opening balance sheet as at the earliest comparative 
 period (1 January 2017). In restating the comparatives for the 
 2017 financial year the Group has elected to apply the transitional 
 expedients availed in paragraph C5 of IFRS 15, the most significant 
 of which exempts the Group from restating contracts which had been 
 completed as at 1 January 2017, and, for contracts entered into 
 during the 2017 financial year if they were also completed within 
 2017. There was no significant impact on the 2017 financials in 
 applying these transitional expedients. 
 The table below summarises the adjustments recognised in the Group's 
 Balance Sheet at the date of initial application. 
 
 
                                                   As previously        IFRS 15    As restated 
                                                        reported    adjustments         31 Dec 
                                                          31 Dec         31 Dec           2017 
                                                            2017           2017    As Restated 
                                            Notes        GBP'000        GBP'000        GBP'000 
NET ASSETS 
Trade receivables and other receivables 
 (non-current)                                (2)              -         11,727         11,727 
Contract assets (non-current)             (1),(2)              -         18,249         18,249 
Deferred tax assets                                       54,266          9,485         63,751 
Trade receivables and other receivables 
 (current)                                    (2)        610,506      (104,899)        505,607 
Contract assets (current)                 (1),(2)              -         68,576         68,576 
Trade and other payables (current)            (3)    (1,256,074)         43,086    (1,212,988) 
Contract liabilities (current)            (1),(3)              -       (60,392)       (60,392) 
Contract liabilities (non-current)        (1),(3)              -       (27,278)       (27,278) 
Deferred tax liabilities                                (11,411)          (362)       (11,773) 
Retained earnings                         (2),(3)      (204,781)         41,709      (163,072) 
Exchange reserves                                       (48,604)          (359)       (48,963) 
Non-controlling interests                               (19,911)            458       (19,453) 
 

The impact on the Group's retained earnings as at 31 December 2017 and 1 January 2017 is as follows:

 
                                                              31 Dec 
                                                                2017  1 Jan 2017 
                                                    Notes    GBP'000     GBP'000 
Retained earnings - before IFRS 15 restatement               204,781     183,919 
Deferral of revenues for claims handling services     (3)   (33,509)    (33,492) 
Other deferral of revenues                            (3)   (32,075)    (26,076) 
Cancellation provision                                (3)    (7,868)     (7,076) 
Recognition of fulfilment cost assets                 (2)     27,982      25,612 
Other                                                        (5,360)     (5,290) 
Adjustment to retained earnings from adoption 
 of IFRS 15                                                 (50,830)    (46,322) 
Taxation on adjustments                                        9,121       8,169 
Net adjustment to retained earnings from adoption 
 of IFRS 15                                                 (41,709)    (38,153) 
Retained earnings - restated for adoption 
 of IFRS 15                                                  163,072     145,766 
 

(1) Presentation of contract assets and contract liabilities

The Group has voluntarily changed the presentation of certain amounts in the Balance Sheet to reflect the terminology in IFRS 15. IFRS 15 introduces the concepts of contract assets, fulfilment costs assets and contract liabilities.

Contract assets represent an entity's right to consideration in exchange for goods or services which have been transferred to a customer, but are not yet billed at balance sheet date. They are distinct from accrued revenue recognised on the balance sheet in that the right to consideration is contingent on something other than the passage of time. Such assets were previously presented as part of trade and other receivables.

Also included as contract assets on the Group's Balance Sheet are fulfilment costs assets. Fulfilment costs assets relate to direct costs incurred which generate assets used to satisfy the contractual performance obligations, are expected to be recovered, and which do not qualify to be recognised as an asset under other accounting standards. Previously, such costs were expensed as incurred. Fulfilment costs assets are amortised and recorded as an expense in the income statement when the related revenues are recognised.

Contract liabilities are defined as performance obligations to be satisfied in the future periods for which an entity has received consideration. These were previously presented as part of trade and other payables.

(2) Trade and other receivables, contract assets and fulfilment costs

The GBP104.9 million decrease in current trade and other receivables as at 31 December 2017 relates to:

-- GBP59.1 million reclassified to contract assets in respect of our proportional treaty book in the Reinsurance division (GBP13.6 million as non-current and GBP45.5 million as current);

-- GBP32.6 million derecognised to align the revenue recognition to the timing of satisfaction of the related performance obligations as required by IFRS 15 and;

-- GBP11.7 million reclassified to non-current trade receivables to reflect the timing of expected settlement.

   --      GBP1.5 million of other adjustments. 

As at 31 December 2017, GBP27.7 million of fulfilment costs were recognised on the Group's Balance Sheet, giving rise to a positive impact on cumulative retained earnings. These comprise:

-- GBP23.0 million (presented in current contract assets) mainly relates to placement activity.

-- GBP4.6 million (presented in non-current contract assets) in respect of pension administration and investment solution services in our Employee Benefits division. These costs are related to data transfer for the set up of the IT platform related to long term contracts.

(3) Trade and other payables and contract liabilities

On adoption of IFRS 15 the Group reclassified GBP43.1 million from trade and other payables to contract liabilities. These balances related to deferred revenue and claims handling and other post-placement services to be provided in future periods. Additional contract liabilities of GBP37 million relating to claims handling and other post placement services have been recognised as at 31 December 2017, with a negative impact on cumulative retained earnings. A further GBP8 million of revenues have been deferred to account for cancellation risk. The adjustment was calculated based on the Group's historical experience of contract cancellation.

D) IFRS 9 Financial Instruments - Impact of adoption

The Group adopted the requirements of IFRS 9 in respect of classification and measurement and impairment from 1 January 2018 on a prospective basis in accordance with the transition provisions of IFRS 9. The 2017 comparatives have not been restated; any impact to retained earnings on adoption of the new requirements has been recognised in the Group's Balance Sheet as at 1 January 2018. The Group has elected to continue to apply the IAS 39 requirements in respect of hedge accounting as provided by paragraph 7.2.21 of IFRS 9.

The total impact on the Group's retained earnings as at 1 January 2018 is as follows:

 
                                                             1 Jan 2018 
                                                                GBP'000 
Retained earnings - restated for adoption of IFRS 
 15                                                             163,072 
Increase in provision for trade receivables and contract 
 assets, net of tax                                               (727) 
Recycling of the fair value reserves to retained earnings            81 
                                                             ========== 
Adjustment to retained earnings from adoption of IFRS 
 9 on 1 January 2018                                              (646) 
                                                             ========== 
Retained earnings - restated for adoption of IFRS 
 15 and IFRS 9                                                  162,426 
 
 
 
i) Classification and measurement 
 IFRS 9 replaces the provisions of IAS 39 that relate to the recognition, 
 classification and measurement of financial assets and financial liabilities, 
 derecognition of financial instruments, impairment of financial assets 
 and hedge accounting. IFRS 9 eliminates the previous IAS 39 categories 
 for financial assets of held-to-maturity ('HTM'), loans and receivables 
 and available-for-sale ('AFS'), and replaces these categories with 
 two principal measurement and classification categories - fair value 
 through other comprehensive income ('FVOCI') and amortised cost. The 
 fair value through profit or loss ('FVTPL') classification category 
 for financial assets has been retained. IFRS 9 has not significantly 
 changed the classification and measurement rules in respect of financial 
 liabilities. 
 On 1 January 2018, the Group's management has assessed which business 
 models apply to the financial assets held by the Group and has reclassified 
 its financial instruments into the appropriate IFRS 9 categories. 
 The main effects resulting from this reclassification are as follows: 
                                          Closing balances 
                                                as at 
                                             31 Dec 2017                        Opening balances 
                                            (restated for                             as at 
                                              IFRS 15)                             1 Jan 2018 
                                        Original measurement                    New measurement 
                                           category under                      category under IFRS 
                                               IAS 39                                   9 
                                                                Loans       FVOCI 
                                                                  and      (debt/    Amortised 
                                      Available-for-sale  receivables     equity)         cost      FVTPL 
                               Notes             GBP'000      GBP'000     GBP'000      GBP'000    GBP'000 
               Reclassify 
                fixed term 
                deposits, 
                bonds and 
                certificates 
                of deposit 
                from AFS to 
Investments     amortised 
 and deposits   cost             (1)             120,931            -           -      120,931          - 
               Reclassify 
                other 
                investments 
Other           from AFS to 
 investments    FVOCI/FVTPL      (2)              11,007            -       6,137            -      4,870 
               Reclassify 
                trade 
                receivables 
                from loans 
                and 
                receivables 
Trade           to amortised 
 receivables    cost             (3)                   -      426,178           -      426,178          - 
               Reclassify 
                other 
                receivables 
                from loans 
                and 
                receivables 
Other           to amortised 
 receivables    cost/FVTPL       (3)                   -       63,989           -       62,770      1,219 
               Reclassify 
                cash and 
                cash 
                equivalents 
                from 
                loans and 
                receivables 
Cash and cash   to amortised 
 equivalents    cost/FVTPL       (4)                   -    1,015,087           -      991,050     24,037 
                                                 131,938    1,505,254       6,137    1,600,929     30,126 
(1) Reclassification from available-for-sale to amortised cost 
 Certain investments in fixed term deposits were reclassified from 
 available-for-sale to amortised cost on adoption of IFRS 9. At the 
 date of initial application the Group's business model is to hold 
 these investments for the collection of the principal and the interest. 
 As no fair value movement had been recognised in previous periods, 
 there is no impact on retained earnings on reclassification. 
 (2) Reclassification from available-for-sale to fair value through 
 other comprehensive income/fair value through profit or loss 
 A receivable relating to contingent consideration was classified as 
 an available-for-sale debt instrument under IAS 39. The contractual 
 cash flows of this receivable do not represent solely payments of 
 principal and interest, with the result that the receivable does not 
 qualify to be measured at amortised cost or fair value through other 
 comprehensive income under IFRS 9. Consequently, it has been reclassified 
 to the fair value through profit or loss measurement category on adoption 
 of IFRS 9. As no fair value movement had been recognised in previous 
 periods, there is no impact on retained earnings on reclassification. 
 
 

(3) Reclassification from loans and receivables to amortised cost/fair value through profit or loss

These reclassifications to the appropriate IFRS 9 measurement categories have no impact on the presentation on the balance sheet.

(4) Reclassification of cash and cash equivalents from loans and receivables to amortised cost/FVTPL

These reclassifications to the appropriate IFRS 9 measurement categories have no impact on the presentation on the balance sheet. Money market funds investments are measured at fair value through profit or loss under IFRS 9 as they do not meet the criteria to be measured at amortised cost, on account of the contractual cash flows not representing solely payments of principal and interest. The investments continue to be classified as cash equivalents on the basis of their liquid nature.

ii) Impairment of financial assets

IFRS 9 replaces the incurred loss model in IAS 39 with an expected credit loss ('ECL') model. The new impairment model applies to financial assets measured at amortised cost, certain contract assets and debt instruments measured at fair value through other comprehensive income, but not to investments in equity instruments measured at fair value through other comprehensive income. Under IFRS 9 an entity is required to make ongoing assessments of estimated ECLs to reflect the general pattern of deterioration or improvement in the credit quality of financial assets since initial recognition. One consequence of this change is that credit losses are recognised earlier than under IAS 39.

The application of IFRS 9's impairment requirements at 1 January 2018 resulted in GBP0.8 million at additional credit loss allowance, which has been recognised as a reduction of the Group's retained earnings as at 1 January 2018. Related net deferred tax assets amounting to GBP0.1 million has been recognised.

The Group applies the IFRS 9 simplified approach to measure ECLs on trade receivables and certain contract assets. Under this approach, the credit losses expected over the life of trade receivables and contract assets are recognised on the Balance Sheet at each reporting date. Contract assets within the scope of IFRS 9's impairment requirements represent unbilled consideration for which goods or services have been delivered, but the right to consideration is dependent on other additional conditions unrelated to the passage of time. They are therefore considered to possess the same risk characteristics as trade receivables, and have been assessed together with trade receivables as a single group of financial assets. The average loss rate of trade receivables is considered a reasonable approximation of the ECLs on contract assets when they are eventually invoiced.

ECLs on financial assets other than trade receivables and contract assets are calculated based on the ECLs within the next 12 months when no material increase of credit risk has occurred between the inception and the reporting period. The impact of the change in methodology on the Group's retained earnings and equity is immaterial.

Cash and cash equivalents are also subject to the impairment requirements of IFRS 9. The ECLs related to these assets are immaterial.

The following table analyses the ECLs recognised on trade receivables and contract assets as at 1 January 2018, by age category.

 
                                                   Restated for IFRS 15                            IFRS 9 
                                                                                             Expected 
                                                         Contract                              credit        Provision 
                                      Trade receivables    assets              Total        loss rate   for impairment 
1 January 2018                                  GBP'000   GBP'000            GBP'000          GBP'000          GBP'000 
Not overdue                                     335,408    59,137            394,545             1.0%          (3,939) 
Past due not more than three months              68,880         -             68,880             1.4%            (978) 
Past due more than three months and 
 not more than six months                        20,704         -             20,704             4.9%          (1,012) 
Past due more than six months and 
 not more than one year                           7,826         -              7,826            38.6%          (3,020) 
Past due more than one year and not 
 more than two years                              5,304         -              5,304            73.7%          (3,911) 
Past due more than two years                      6,231         -              6,231           100.0%          (6,231) 
Opening balances at 1 January 2018 
 (IFRS 9/IFRS 15)                               444,353    59,137            503,490             3.8%         (19,091) 
 
  The loss allowances for trade receivables and contract assets as at 31 December 2017 reconcile 
  to the opening loss allowances on 1 January 2018 as follows: 
                                                                   Trade receivables  Contract assets            Total 
                                                                             GBP'000          GBP'000          GBP'000 
Loss allowance at 31 December 2017 
 (IAS 39)                                                                   (18,175)                -         (18,175) 
Amounts restated through opening 
 retained earnings                                                             (133)            (783)            (916) 
Loss allowance at 1 January 2018 
 (IFRS 9)                                                                   (18,308)            (783)         (19,091) 
 

26. PRINCIPAL RISKS

As a global company, JLT faces a range of risks, each of which has the potential to impact on the achievement of our strategic business objectives, as well as providing opportunity in the right circumstances.

The Group takes a holistic approach to risk management and the control environment with the responsibility and accountability shared across all the Group companies, and the ultimate responsibility resting with the Board.

The outcome of the EU referendum on 23 June 2016 introduced uncertainty in future periods. The future development and performance of the UK economy remains subject to volatility in the near term as the negotiation of the UK's exit from the EU accelerates. The Group has continued its preparatory work for Brexit and to strengthen its representation in the EU, including through the recent acquisitions of OWL Marine Insurance Brokers and Belgibo. JLT does not anticipate that Brexit will materially impact its ability to serve clients and access markets in the EU. The Group continues to monitor events closely working with its (re)insurance partners and clients.

The principal risks to which the Group will be exposed in the second half of the financial year are substantially the same as those discussed on pages 43 to 45 of the Group's Annual Report for 2017. These are summarised below:

 
PRINCIPAL RISKS          NATURE OF RISK 
STRATEGIC RISKS 
Economic Instability     JLT's business is driven more by economic activity 
                          and growth than by (re)insurance market rates. 
                          There is a risk that economic instability reduces 
                          client demand. 
Strategic Risks          There are risks to the Group's strategic plan 
                          arising from changes in the external environment 
                          as well as risks arising from acquisitions, 
                          strategic change initiatives and the execution 
                          of the Group's strategy. JLT is an agile organisation 
                          that seeks to ensure it maximises opportunities 
                          for the benefit of clients and other stakeholders, 
                          and is well controlled and resilient. There 
                          is a risk that the appetite of the Group for 
                          change, exceeds its capability and capacity 
                          to deliver and absorb change(s) effectively. 
Reputation               JLT recognises the strategic importance and 
                          value of its reputation, and takes a wide range 
                          of measures to protect it. Damage to reputation 
                          can potentially occur as a result of any principal 
                          risk crystallising. 
OPERATIONS RISKS 
Business Interruption    The Group operates from over 100 offices in 
                          41 territories across the world. There is a 
                          risk of a business interruption due to a large, 
                          unexpected incident. The Group is also reliant 
                          on the ability to process its transactions on 
                          behalf of its clients. Risks arise from non-performance 
                          or failure of IT, whether in-house or from an 
                          outsourcing provider/IT supplier, malicious 
                          act and/or cyber-crime, and internal operational 
                          issues. 
PEOPLE RISKS 
Loss of Key Staff/Teams  The Group's principal asset is its people; there 
                          is a risk that the organisation may not be able 
                          to attract and retain market leading talent. 
IT RISKS 
Information Security     Intermediaries and pension administrators process 
 & Cyber                  and retain confidential data in the normal course 
                          of business. Risks relate to loss of customer 
                          records or breach of confidentiality due to 
                          inadequate security and other key controls. 
LEGAL AND COMPLIANCE 
 RISKS 
Data Privacy             Risks arising from non-compliance with or misinterpretation 
                          of local or international data privacy regulation/legislation. 
E&O claims               Intermediaries run a risk of incurring a loss 
                          if the operating procedures in place across 
                          the Group in relation to market security, placement 
                          and claims are not complied with or alleged 
                          negligence/ breach of contract in the provision 
                          of services/advice becomes apparent. 
Litigation (Non E&O      Litigation risk can arise from the number of 
 litigation)              different sources such as M&A litigation (eg 
                          breach of Sale & Purchase Agreement), breach 
                          Employment Law and tortious liability arising 
                          from the recruitment of individuals. 
Competition/Anti-trust   Engagement in anti-competitive/anti-trust practices 
                          could result in infringement of competition/anti-trust 
                          laws and/or regulations. 
Bribery and Corruption   Risks relating to the engagement in corrupt 
                          practices could result in a breach of Bribery 
                          & Corruption legislation and regulation. 
Regulatory               The Group's footprint brings with it an increasingly 
                          complex regulatory landscape to be anticipated 
                          and managed. There is a risk that JLT may fail 
                          to take into consideration the requirements 
                          leading to legal and/or regulatory breach. Risk 
                          can also arise from regulators conducting a 
                          review of past business activities which causes 
                          it to revise its view of the product/proposition 
                          and results in regulatory sanction and/or additional 
                          cost to the business for remediation which could 
                          result in sanctions, fines or remediation costs. 
Sanctions                As a global Group supporting international clients, 
                          brokers run the risk of engaging with sanctioned 
                          territories and/or individuals/entities which 
                          could give rise to a breach in sanctions/export 
                          control orders. 
FINANCIAL RISKS 
Liquidity/Financing      Risks arising from non-compliance with or misinterpretation 
                          of local or international data privacy regulation/legislation. 
Foreign Exchange         The Group has foreign exchange exposures to: 
                          -- risk arising from the need to convert currencies 
                          into GBP for reporting purposes 
                          -- risk arising from revenues and costs being 
                          denominated in different currencies 
Counterparty Risk        Counterparty risk can arise for JLT from two 
                          key sources: banks and (re)insurers. 
Defined Benefit Pension  Risk of adverse financial impact as a consequence 
 Scheme                   of an increase in the Defined Benefit Pension 
                          Scheme deficit. 
Interest Rate            Risk of volatility of earnings and cash flows 
                          arising from exposure to movements in Interest 
                          Rates. This may also impact the Defined Benefit 
                          Pension Scheme assets and liabilities. 
Financial Reporting      The risk of inaccurate accounting and reporting, 
                          internally and externally. 
Fraud                    Risks relating to the theft or mis-use of JLT 
                          and client monies. 
 

27. legal and other loss contingencies

Jardine Lloyd Thompson Group plc and its subsidiaries are subject to various claims, legal proceedings, investigations by regulatory and other government authorities and disputes around the world including alleged errors and omissions in connection with the placement of insurance and reinsurance risks and consulting services.

IFRS requires that liabilities for contingencies be recorded when it is probable that a liability has been incurred before the balance sheet date and the amount can be reasonably estimated. Significant management judgement is required to comply with this guidance. The Group analyses its litigation exposure based on available information, including external legal consultation where appropriate, to assess its potential liability.

On the basis of present information, amounts already provided, availability of insurance coverages and legal advice received, it is the opinion of management that the disposition or ultimate determination of such claims will not have a material adverse effect on the consolidated financial position of the Group. However, it is possible that future results of operations or cash flows for any annual period could be materially affected by an unfavourable resolution of these matters.

In addition, 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 provisions have been made to cover known liabilities. It is too early to determine the extent of any potential further liabilities.

28. forward-looking statements

Certain statements in this interim report are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements.

The Group undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

Statement of directors' responsibilities

The Directors confirm that this consolidated interim financial information has been prepared in accordance with IAS 34 as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

-- An indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

-- Material related-party transactions in the first six months and any material changes in the related-party transactions described in the last Annual Report.

The Directors of Jardine Lloyd Thompson Group plc are listed in the Annual Report of the Company for the year ended 31 December 2017, subject to the following change which has taken place since the publication of that document: Lynne Peacock joined the Board as a Non-Executive Director on 1 May 2018.

On behalf of the Board

Charles Rozes

Finance Director

26 July 2018

independent review report to

jardine lloyd thompson group plc

report on the consolidated interim financial statement

Our conclusion

We have reviewed Jardine Lloyd Thompson Group plc's consolidated interim financial statements (the 'interim financial statements') in the interim results of Jardine Lloyd Thompson Group plc for the 6 month period ended 30 June 2018. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

What we have reviewed

The interim financial statements comprise:

-- The consolidated balance sheet as at 30 June 2018;

-- The consolidated income statement and consolidated statement of comprehensive income for the period then ended;

-- The consolidated statement of cash flows for the period then ended;

-- The consolidated statement of changes in equity for the period then ended; and

-- The explanatory notes to the interim financial statements.

The interim financial statements included in the interim results have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

As disclosed in note to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

responsibilities for the interim financial statements and the review

Our responsibilities and those of the directors

The interim results, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim results in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

Our responsibility is to express a conclusion on the interim financial statements in the interim results based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

What a review of interim financial statements involves

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We have read the other information contained in the interim results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

PricewaterhouseCoopers LLP

Chartered Accountants

London

26 July 2018

 
a.  The maintenance and integrity of the Jardine Lloyd Thompson 
     Group plc website is the responsibility of the directors; the 
     work carried out by the auditors does not involve consideration 
     of these matters and, accordingly, the auditors accept no responsibility 
     for any changes that may have occurred to the interim financial 
     statements since they were initially presented on the website. 
b.  Legislation in the United Kingdom governing the preparation 
     and dissemination of financial statements may differ from legislation 
     in other jurisdictions. 
 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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