Report & Accounts - JLT

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.