Report & Accounts - JLT

Financial StatementsNotes to the Financial Statementsfor the year ended 31st December 200534. Restatement SummaryThe Group published a "Restatement of 2004 Interim and Full Year Accounts" on 7th July 2005. This document detailed the effects of theadoption of International Financial Reporting Standards (IFRS) and restated the 2004 published financial information for the Group. As aconsequence a full restatement of the December 2004 figures has not been included with these financial statements for 2005.However in accordance with the requirements of IFRS 1 a summary table is presented in note 35 on pages 99 to 102 showing the effects ofadoption on the Consolidated Income Statement and the Consolidated Balance Sheet. The main changes are explained below and details ofthe changes are given in the Accounting Policies on page 50.98a) ReclassificationsThe adoption of IFRS has given rise to a number of accounting changes and reclassifications, which are detailed below. In addition thereare significant changes to both format and terminology, which the Group is required to reflect. The reclassifications arising from thesechanges have no impact on the reported profits or shareholders funds of the Group for the year ended 31st December 2004.For the sake of clarity they have been set out in the adjustment analysis included as part of this note.b) Share based paymentsImplementation of IFRS 2 "Share based payments" requires the fair value of options granted in respect of Executive Share OptionSchemes and Sharesave Schemes since 7th November 2002 to be recognised and amortised to the Income Statement over the vestingperiod of the options.In 2004 the total additional cost attributable to these schemes was £1,173k. Where applicable minority interests have been adjusted toreflect this increased cost.c) DividendsUnder UK GAAP, companies are required to charge dividends, both paid and proposed, to the profit and loss account and to showunpaid dividends as a liability on the balance sheet in advance of the dividend being approved by the Shareholders at the Annual GeneralMeeting.Under IAS 10 "Events after the Balance Sheet Date" the dividend cannot be provided in the year-end balance sheet, as, at that date, thedividend does not represent a liability until declared and approved at the Annual General Meeting. At 31st December 2004 accrueddividends of £24,161k were excluded from the Balance Sheet.Additionally under IFRS, dividends are not charged to the Income Statement but are reflected as a reduction in Shareholders’ Equity oncedeclared and approved. Consequently the 2004 dividend charge to the Profit and Loss account of £41,635k has been reversed in theIncome Statement.d) Intangible assetsIFRS 1 requires the first-time adopter to apply IAS 36 "Impairment of assets" in testing goodwill for impairment at the date of transition toIFRS and recognise any resulting impairment loss in retained earnings. Goodwill is no longer amortised to the Income Statement,consequently amortisation of £7,680k charged in 2004 has been reversed to the Income Statement.Jardine Lloyd Thompson Group plc Annual Report & Accounts 2005Arising from the transitional review the goodwill, tangible assets and sundry debtors of Intermediary Insurance Services Inc. were impairedat 1st January 2004 and an impairment loss was recognised. Following the adoption of IFRS the loss arising on disposal of this companyduring 2004 has been restated to reflect the impairment of assets at 1st January 2004 and in addition, depreciation charged on impairedassets during 2004 under UK GAAP - £72k - has been reversed.IAS 36 requires goodwill to be tested for impairment at least on an annual basis; a further review was carried out as at 31st December2004 which resulted in an impairment loss of £1,192k in respect of JLT Re Solutions (£1,134k at closing balance sheets exchange rates).IAS 38 "Intangible Assets" requires that assets meeting the criteria for recognition as "Intangible" should be reclassified on the BalanceSheet and amortised over their useful economic life.Intangible assets arising on acquisitions completed during 2004 which were previously included in Goodwill have been reclassified as"Other intangibles". The net book value transferred at 31st December 2004 £3,733k which is after charging amortisation in 2004 of£180k.Capitalised employment contract payments have been reclassified from the debtors. The amount reclassified at 31st December 2004 is£9,389k.Computer software and capitalised software development costs have been reclassified from property, plant and equipment, the net bookvalue at 31st December 2004 of these assets was £4,069k.e) Investment in associatesUnder IFRS, the share of profit from associates within the Income Statement is required to be shown after taxation and minority interestcharges, the 2004 contribution from associates has been reclassified on this basis.In 2003 the Group's French associate, Marot Participations, sold its shareholding in the Group and used the proceeds to repay bankborrowings. Following this transaction the entire issued capital of Marot Participations was acquired by a new holding company, CourcellesParticipations, as part of a shareholder restructuring. Courcelles acquired Marot at fair value and subsequently recognised the resultinggoodwill on acquisition. The Group exchanged its 31% shareholding in Marot for a 31% shareholding in Courcelles and £31,663k in cash.UITF 31 issued in October 2001 provided the appropriate Group accounting treatment under UK GAAP.