From 1 January 2005, the Group is required
to prepare its accounts under IFRS. The
following summarises the main changes to the
Group’s accounting policies which will have
an effect on the opening net asset position:
- Dividends: the final dividend for each
financial year is usually declared after
the balance sheet date. Under IFRS
this represents a post balance sheet
event and therefore our final dividend will
not be shown as a liability at the end of
the financial period. Rather, the proposal
will be disclosed in the notes to the
financial statements;
- Intangible assets: Our current accounting
policy for syndicate capacity and goodwill
on recent acquisitions has been to capitalise
the payments and to amortise the balances
over the useful economic life of the
capacity/goodwill.
Under IFRS syndicate capacity will be treated
as an indefinite life intangible asset. It will
therefore be initially carried at cost but will
be subject to an annual impairment review.
Similarly goodwill will be initially carried at
cost and will then be subject to an annual
impairment review;
- Share options and incentives: Amlin has a
number of share incentive schemes for
executives. Historically they have been
disclosed in the notes and on exercise have
been recognised immediately as share
capital. Under IFRS, we will charge the
income statement with the fair value of the
options over the period from grant date to
vesting date. Given the size and nature of
our incentive schemes we do not believe that
this change will be material to the Group.
Our accruals for our share based incentives
are currently held at nominal value. Under
IFRS these need to be accounted for at fair
value. The adjustment to fair value will more
than offset the initial cost of other share
based payments:
- Pension scheme: The Group has three
main pension schemes. The multiemployer
scheme and the defined
contribution scheme will be accounted for
in a similar way to their current treatment.
However the net liability for the Angerstein
scheme, which is modest, will be
accounted for within the Group’s
consolidated balance sheet.
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