Report & Accounts - JLT

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Intangible assetsComputer softwareAcquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specificsoftware. These costs are amortised over their estimated useful lives. Costs associated with developing or maintaining computersoftware programmes are recognised as an expense as incurred. Costs that are directly associated with the production ofidentifiable and unique software products controlled by the Group, and that will generate economic benefits exceeding costsbeyond one year, are recognised as intangible assets. Direct costs include the software development employee costs and anappropriate portion of relevant overheads. Computer software development costs recognised as assets are amortised over theirestimated useful lives (not exceeding three years).Capitalised employment contract paymentsThe Group makes payments to certain key employees in recognition of them signing a long-term employment contact, usually threeto five years. These payments are capitalised as intangible assets since legal rights protect the expected benefits that the Group willderive from the contracts. The asset recognised is then amortised over the duration of the underlying contract.OtherFor acquisitions completed after 1st January 2004 the business acquired is reviewed to identify assets that meet the definition of anintangible asset per IAS 38. Examples of such assets include customer contracts and expectations of business renewal. Theseassets are valued on the basis of the present value of future cash flows and are amortised to the income statement over the life ofthe contract or their estimated economic life. The current maximum estimated economic life is ten years.Impairment of assetsAssets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that aresubject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amountmay not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds itsrecoverable amount.The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessingimpairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).Property, plant and equipmentAssets are stated at their net book value (historical cost less accumulated depreciation). Depreciation is calculated to write off thecost of such assets over their estimated useful lives.The principal rates of depreciation are as follows:• Freehold land and buildings: between 0% and 2% per annum.• Leasehold improvements: between 10% and 20% per annum or over the life of the lease.• Furniture and office equipment: between 10% and 20% per annum.• Computer hardware: between 20% and 100% per annum.• Motor vehicles: between 25% and 33 1/3% per annum.Available-for-sale financial assetsPrior to 1st January 2005, available for sale financial assets were categorised according to their nature into one of two categories:1. Other investments, which included unlisted securities and investments held for strategic purposes, were held at cost less anyprovision for permanent diminution of value.2. Investments and deposits, which consist mainly of Bonds, Commercial Paper and Fixed Deposits - these are non-derivativesthat were included in non-current assets unless there was an intention to dispose of the investment within 12 months of thebalance sheet date. Purchases and sales of investments were recognised on trade-date – the date on which the Groupcommits to purchase or sell the asset. Investments were recognised at fair value plus transaction costs for all financial assetsnot carried at fair value through profit or loss. Investments were de-recognised when the rights to receive cash flows from theinvestments had expired or had been transferred and the Group had transferred substantially all risks and rewards ofownership.Subsequent to 1st January 2005, following the adoption of IAS 39, “Other investments” are included at fair value unless it is notpossible, due to their nature, to determine a fair value. In these circumstances they continue to be held at cost less any provisionfor impairment.Financial Statements Jardine Lloyd Thompson Group plc Annual Report & Accounts 200553
Financial StatementsAccounting PoliciesAvailable-for-sale financial assets are carried at fair value. Any subsequent unrealised gains and losses arising from changes in thefair value are recognised in equity. When available-for-sale investments are sold or impaired, the accumulated fair value adjustmentsare recognised in the income statement together with the underlying gain or loss on the transaction.Interest on deposits and interest-bearing investments is credited as it is earned.Employee benefit trustThe Group operates a deferred compensation scheme by way of a discretionary, employee benefit trust. Investments held by thisscheme, other than own shares, are classified as fixed assets on the balance sheets and charged to the consolidated incomestatement over the vesting periods of the award.54Insurance broking debtors and creditorsInsurance brokers act as agents in placing the insurable risks of their clients with insurers and, as such, are not liable as principalsfor amounts arising from such transactions. In recognition of this relationship, debtors from insurance broking transactions are notincluded as an asset of the Group. Other than the receivable for fees and commissions earned on a transaction, no recognition ofthe insurance transaction occurs until the Group receives cash in respect of premiums or claims, at which time a correspondingliability is established in favour of the insurer or the client.In certain circumstances, the Group advances premiums, refunds or claims to insurance underwriters or clients prior to collection.These advances are reflected in the consolidated balance sheet as part of trade receivables.Cash and cash equivalentsCash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments withoriginal maturities of three months or less. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.BorrowingsBorrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for atleast 12 months after the balance sheet date. Borrowings are measured at amortised cost using the effective interest rate method.Deferred income taxThe charge for taxation is based on the result for the year at current rates of tax and takes into account deferred tax.Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assetsand liabilities and their carrying amounts in the consolidated financial statements. However, if the deferred income tax arises frominitial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affectsneither accounting nor taxable profit or loss, it is not recognised. Deferred income tax is determined using tax rates (and laws) thathave been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferredincome tax asset is realised or the deferred income tax liability is settled.Jardine Lloyd Thompson Group plc Annual Report & Accounts 2005Deferred tax is charged or credited to equity in respect of any item similarly charged or credited directly to equity. Subsequentrecognition of the deferred gain or loss in the consolidated income statement is accompanied by the corresponding deferred tax.Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against whichthe temporary differences can be utilised.Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where theGroup controls the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reversein the foreseeable future.Employee benefitsPension costsThe Group operates a number of defined benefit pension schemes and defined contribution pension schemes.A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee will receive on retirement,usually dependent on one or more factors such as age, years of service and compensation.
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Jardine Lloyd Thompson Group plcAnn
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Page 23 and 24: DirectorsDirectors221 2 34 5 6Jardi
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Company AccountsCompany AccountsPre
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Financial StatementsBalance SheetAs
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Company AccountsAccounting Policies
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Advisers/Shareholder Information112
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Registered Office:6 Crutched Friars
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Report & Accounts - JLT

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